QTWO - Earnings call transcript Q4 2021

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Operator

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

Josh Yankovich

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

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

now call me the Matt. Let turn to over

Matt Flake

I'll and Josh. our quarter across more our Thanks, from results businesses detail full David the highlights hand quarter, in up insights guidance well today's emerging for I generated the call oversees. Non-GAAP first for business. the 'XX. more XX% then as year-over-year In to with the financial look I'll we start to the results by quarter million, over fourth was sharing organization year and call XX%. full to he discuss the as conclude $XXX.X X% $XXX.X of fourth million, then revenue and up revenue full provide a and up into will non-GAAP year Jonathan year sequentially. before ahead

I as of Our out And and registered the back our million, an We end year, year closed year-over-year team XX.X the the the I'm up X% at full on extremely look strong of count flat way performed. was proud XXXX user at sequentially. note.

be On two performance X the the by Bookings during it characterized impacted was the continued tasks. year sales distinct months front, first pandemic. to a by

and have best to company finish combined quarter the new of bookings activity, half, broad an significant stronger for second even the However, year the in quarter. base These the net with solid environment improvement in we history. the a in two saw buying fourth in quarters third

total our institution renewal Over platforms banking year than customers. more we digital of financial this over exited and the signed customer all we X contracts strong With lending the the X,XXX had Tier X,XXX X course year, activity, XX with and rates. across and customers, enterprise and

drive end our On users. and Studio their technology engagement, new our customers added that continue the than opportunities more deliver and can and for innovation innovative XX more teams We partners the solutions. front, Innovation QX even and to stickiness launched revenue

and named added and workplace with than capabilities, a year also continue row. our people, the more in invest the solutions to And land and to in accountholder and helped we X,XXX XXth for has us with year-over-year customers the acquisition digital year remote, key ClickSWITCH remain we more We relationships. employees, our profitable our were team success. key expand up which to culture year the our top our in exited drive We XX% in brand, a which primarily and

we visibility launched provide report but of also volumes social numerous least, unprecedented through Last environmental, not engagement. ESG governance support our digital into to our We and initial more and customers our initiatives. insight

to interact use as lending operate of we in more logged more on their apply more to believe the course ever, XXXX, from our customers data These approximately this this products significant customers' commercial illustrates digitizing in digital lenders digital. the platform banking X than business. and platform account $X helped of we trillion for times. our to commercial And Today, our Today expect than our well. in engagement customers. our into solutions and with Over holders. we entire banking And banking loans. our account is billion their the price and banking their success help $X year, our clients their be our Banking-as-a-Service holders And enhance levels than many how our deliver digital brands that both relationship data customers commercial and trillion digital moved engagement

Banking-as-a-Service platform types the In of pandemic we relationship. and illustrates the transactions. believe digital we our saw of in XXXX processed accelerated in further across to durable As all how total, billion and a $XX the in customer supported more users than financial engagement million aspects has shift XX more almost than year-end,

delivery focus innovation. from support that strong to mind, ability I'd perspective and constant discussion in work the engagement like to the specifically. is XXXX to sales level this teams, of fourth quarter in our Our and support lot With a shift the on execution of more hard digital of culmination a

in views Investor the December, capitalize we opportunity. believe converging, frontier where industry brands future business. on Day creating fintechs a our we First, why We and In their significant are on financial financial are will and to we position new our digitize the to shared favorable we new believe the institutions of a in look services. in aspect institutions, financial of had this frontier, every

assembled and and a execution play saw lending customers of where our the We this across uniquely sales believe broad in retail relationships. deliberately to out designed banking expanding from in this shift new with commercial. to capitalize based are solutions have existing sales customers both in We signing to business had to partner we on and portfolio quarter positioned small success we

before through technology institutions a a and and partners platform. quarter sales As financial to signal Innovation together innovative accelerating like new frontier, fourth moving Meanwhile, that size as lead opportunities the partners. in activity on the do second-best two with rapidly brands virtually ecosystem which the new and creating never developer refresh. QX our are this the pressures banking innovate bookings was are services, we in that into primary leverage Studio, like quarter result, view technology and engaging being a to fintechs is QX we partners every company in believe first And digital of bring new competitive history. widespread constituents offerings, the to our a business customers partner to these for We models, allows financial

gained partners financial solution, institution The their well. innovative brands, they the momentum need further technology fourth Banking-as-a-Service second offering emerging and the provides financial offerings quarter into services These in which is to embed our as ecosystems.

continued new meaningfully digital activity net add Studio and with banking Innovation deal customers. that new We QX to to wins technology and rapidly it new existing saw contribute to partners expansion

our contract On the largest the we strategic side, our customers customers reinforcing and multiyear platform with our roadmap. of have renewed in X extensions, Banking-as-a-Service confidence X

We also unveiled which new in just unpack Helix, called brand Jonathan for QX Banking-as-a-Service detail a more shortly. will

like the our are quarter, of had we performance to XXX for where of market agreement this creating bit that also I'll deeper from how demonstrates we dive these Solutions forces broad sales small now was our digital a and that while business. business deals revenue top banking, years, with a mix customers, I'd how tailwinds -- signed into Corporate the start renewed which believe including for bank, contribution bank customer. a and several retail one three committed Tier adding X our used the more U.S tripling So than

in Tier with our X second technology, with is commercial functionality. accelerating bank reason was commercial opportunity across unified implementing focus business channels. Tier here retail Where a investment selected platform discussed, for their particular a X and small for I a single on that The just client platform was gave the and expansion retail, all key rapidly big a QX was deal with a us

solutions continued customers. digital innovation of sales also banking side a the to banking set average Our time. on digital deals provide seen price broader us trend the we've our And result, over up of gives as a

Tier As deals a bookings impact X carry can similar before, also of customer. that we have X mentioned Tier to a

in incorporate commercial largest ancillary business second we actually to gives key us booked small with that The solutions. retail, deal a digital fourth banking the X products. opportunities finally, and will And bank land Tier portfolio our quarter accounts was

quarter. of Tier risk also five addition loan easier X with activity four clients and we loan the lending new it Landing or comprised a origination signed new quarter of makes and important in and numerous digital our time. solutions. with standalone X solution enterprise with both enterprise it total, helps new our a In net we pricing the have in deals, Shifting booked is customer expansion expand over these example, establish the being areas and into -- and to net winds. For opportunities management we across solutions Tier banking portfolio other onboarding in and to included acquisition to X in deals meaningful deals side, because like ClickSWITCH relationship this digital one

pricing pricing loan opportunity included five Canadian a U.S full their our Canadian the and five opportunities bank solutions. businesses, wins and which included the the purchase side, bank, lending On suite seeing global top for U.S separate with we're reflecting loan a enterprise that our winning top

pricing We quarter. meaningful loan also expansion several shapes. expansion had take seen this in the we And activity have

three our more you which into With an this the quarter. a their a contribution new we Expansion solutions. key line average contracted of Bank for cross-sell top the functionality. finally, price a market with success the activity incremental a the pricing the of partnership into and encouraging buying with and starts more a Enterprise X enterprise Tier the seeing in product with pandemic, client slowed full have use the recurring the considerably is case in suite For customers, revenue -- existing then and 'XX. business than of provides revenue client, module XXXX activity years the driver started single in example, also the U.S we the largest double substantially. segment with XX solutions expansion fourth client grows loan heading with relationship. large with around height in lending had at of late our adopts is conventional of pricing when our seen in This and net X our first was consider purchase a buying new us We're where think optimism that environment of the the quarter And loan sales loan existing an we expand the

especially into front, existing had strong of cross-selling our On treasury with the origination onboarding loan customers, a we digital solution. banking particularly quarter

X banking institutions virtually with five of remained the are the wins Onboarding our largely success quality in manual clients and in fourth We such breadth we're market looking digital opportunity. recent in and sales have step ability every is both Overall, our financial one believe another relationship digitize critical to these broad two and in believe demonstrates the proof their Tier business. and quarter. to aspect this the serve deals. of in momentum paper We quarter, that lending including that pleased a area just a is commercial cross We has based. the point

strong businesses Jonathan call provide with organization. quarter over Studio exciting Helix. our And an I'll to activity had in and the now QX from hand emerging also We Innovation highlights to

Jonathan Price

Thanks, Matt.

financial for discussed we important throughout innovation critically As the pandemic, become has institutions.

high. entrants an are are incremental into pressures, space solutions all-time and the for digital expectations competitive creating New at innovative accountholder

rapidly, helping digital deeper Over experiences we the provides Innovation and shared about And banking with technology to deliver in QX which them Studio, extend last our new digital based enables environment fourth so, new customers and drive to success revenue. By adding our XX partners create our customers to we stories the to and API can engagement We saw than add value Studio, over Studio quarters, that our before. with their SDK our QX platform. faster several and new access solutions ever help banking add doing new generate in can quarter, time. the the Innovation partners for ecosystem. related Innovation continued digital customers believe and adding channel, In fintech non-interest substantial us QX that partners

First, contributions digital provide partners customers. these opportunities meaningful banking the from with with our us cross-sale

For Innovation And was that example, an the products in largest partner our of quarter one of QX's cross-sales. solution. yielded sold top product Studio also two individual cross

time. otherwise expanded can market advantage believe open can for HR second don't it unlock we The over currently access. like is we and in Segments us that insurance, an example, verticals which for which addressable

we another us market tap offer can quarter, During added the for we investing time. solution attractive this our the customers, allowing vertical first money and an that into to directly to now through fourth management

the because create we're advantages market. provides, competitive and it Studio seeing Finally, in of speed flexibility the Innovation the

context are add Innovation not the least helped a deals. I'd also looking in characterized digital strategic directly banking products, And of in During technology support the services programs. into to offering, modern financial but in which partner us to of The and the these Studio these to digital to brands products and nearly of our save, won expand on directly this the with in included Banking-as-a-Service our financial several new share. one brands of need the customers third embedded customer strategy. we finance borrow from products highlights build this business and required quarter, customers of in convergence a most accomplish they net had today, growth Innovation the key Studio only we're using regulatory allowing innovative components banking today reason recent spend this, services the them roughly relationships, half To their provide. as by to we've at brands is package their these ecosystems, like And which provide that continued seeing institution existing banking infrastructure. deploying a was We our also cited innovative some and

platform the we X. we the of to leverages resonate QX strategic embedded industry, mentioned, and February is are growing brands is our building as and our in context core our believe with the these to designed First, we that rebranding momentum, innovative important strategy opportunity. a By identity market a as brand personalized at a to to experiences Matt trend in announced Banking-as-a-Service how Helix, finance new Banking-as-a-Service future the Helix allows shared that easily shift is We've a view in the financial on target the distinct that scale. from and growth market embed making

evolution this in our in of of the the As to powering first and companies players one partners. for of Banking-as-a-Service some innovative the finance drive for next seeing future we most growth current and forward can look largest the market embedded and country, the platform

we net to clients. deals X new renewals the largest strong in sign side, Helix with a renewal significant and sales quarter, continue generate activity signing our of the On X

this largest Our scale, renewal paramount. was area our primary customer growing In model success highlighted where retaining our a usage Karma. with by in largest clients with of a is Credit driver the is and multiyear

innovative of competitive QX And quarter to to key like renewals. Innovation to such we as these the you. build for pass that, mutual we with David are our work together Thank while fintechs strong call were continue sustainable financials. traditional Helix parties their QX discuss a converge, helping to advantage. to benefit, Studio a thrilled believe brands see and enabling overall, financial institutions, So, and to And I'd

David Mehok

customer up with increases the we're for quarter finishing high of the guidance quarter fourth full were our year sequentially. driven by revenue we're Total million was XX.X The Both XXXX. with growth for sequentially. non-GAAP I revenue And and of the the year. non-GAAP Total guidance an and the the exceeding new X% the the X% We're Thanks, user of ended coming XX%. and organic up in year increase to year-over-year the revenue increase the We the user pleased well increase typical new quarter with year-over-year concentrated and $XXX.X flat our and primarily reflects before of results lives fourth by with the in back Jonathan. user the in year-over-year known year-over-year the with encouraged momentum users first full users, our an increase subscription year, Flat results combined installations seeing the registered million, financial or full growth, from was end user throughout and attributable new slowdown customer count was revenue XXXX continued review associated business. quarter $XXX.X deployment levels customers year and customers. the organic and with range. million, sequentially year X.X million sequential concentrated customer EBITDA in guidance half XX% for and for near end our go first an will of growth strong of for for over in approximately quarter existing organic churn.

down XXXX quarter. second XXXX. Transactional previous the we quarter, driven total XX% from XX% in represented the had half a by with a as installations pandemic's for total impact fourth second we revenue first result of of the XXXX. the in of revenue level we throughout We in of continue the and anticipate new the half observed prior before of installations the consistent will revenue previously lower the As quarter, bookings first year slowdown bookings on increasing XXXX this and half in XXXX half customer and customer of discussed, improvement expected the in of third period the of in

revenue XXXX, total represented with consistent Helix, part is full prior increased in transactional contribution year transactional of generated revenue to the year For XX% revenue revenue, from the the due of which growth of traditional significantly every Investor year. Day in generated disclosing revenue December, announced close we from At the or annualized recurring will growth outpace our begin that which we bill pay. ARR,

end a As a place revenue the from the $XXX.X of the at reminder, in revenue and XX% at addition the the at $XXX.X growth reflects period. of observed end all in contractually to of to generated metric of this from growth period, transactional rate services, XX% rate services view million, end subscription to recurring year-over-year premier an reporting committed the annualized of reporting end compares grew the at XXXX. ARR million This year-over-year up of XXXX. revenue

ARR half acceleration back cross-sale for growth particularly largely Our was the and of by bookings, year driven the year. the in new

In notably sequentially existing our due at from to the the ARR coming most run was numbers solutions. Investor fourth with ARR in from booking we observed observed primarily we strength addition, increasing growth Helix customers, up resulting the associated quarter. also we third rates X% disclosed quarter Day, our from

Our billion, sequentially, renewal ending to in addition strongest of in X% Sequential our sequential net year-over-year. X to The attributable increase a years. backlog bookings and million in also XX% and year-over-year new increase was $X.X by equated primarily are backlog or increased increases to $XXX.X driven expansion opportunities. quarter

renewals. are driver changes Renewals reminder, net the seasonality a the bookings as in and As well subject target. biggest as opportunities are to of of backlog number and new

believe quarter have to due of the a less in sequential we could result, strong year the scope, backlog will decline As first for a to in possible, of year-over-year backlog XXXX. growth we full having while it's XXXX see we a renewals

revenue of slightly year revenue down at in on the from for renewal X.X%, X.X% beginning strong expected was better was we XXXX XXXX. than Our activity. the based This churn churn

to to strengthen to broaden we end solution-base and with the users As work provide their we relationships. customers continue our

we recent the been those Of of revenue the opportunities of M&A saw As churn we mentioned, our customer, have XXXX activity. M&A which gives us of potential the activity, M&A minimal during from the that over continuation bank impact announcements historically and equals transactions, XX% a in of in made in merger we previously to we and involve have were customers in belief acquirer XXXX, which or beneficiary year that involved QX a a will trend. revenue

could expiration anticipated we XXXX, to the for in PPP around increase our year X%. Given churn solution modestly levels our of contracts the expect revenue

of customer count QX At this digital However, which existing revenue end from installed the the XXXX. change with was XXX in that was digital amongst incorporates customers down decline the year-over-year banking count belief XXX, end acquiring our of specifically will in M&A year-over-year. were churn increase activity associated base, at customer of banking our year, our instances the customers. the platform The bank including customer our

also in in fewer beginning place new lives had early buying We due impact XXXX the take pandemic's go to XXXX. on

months XX Our down for was in retention XXX%, net rate XXXX XXXX. trailing XXX% revenue from

XXXX associated decrease of due an acquisition XX.X% costs, our associated margins solutions. the Our PrecisionLender, the A period, in prior contribution some quarter. was and accounting with fourth of was of Gross in the previous for from fourth accelerated primarily fourth services elevated the the down progress decline XX.X% up margin the with in a for projects professional took XXXX. increase in costs place margin costs during in of in retention which the rates in quarter. lending quarter gross from gross included customers XX.X%, which installation in the in is recorded sequential quarter primary the the XXXX to adjustment from The resulting larger from an services driver lending cloud year in year-over-year digital increase of quarter

onboarding was million, compared fourth XXXX, expenses full of revenue, of the consistent year to year. $XX.X quarter fourth operating which was the For were $XX.X prior the XXXX or of or with million, gross Total revenue margin XX.X% XX.X%, in of the quarter for R&D the XX.X% by primarily additional revenue was as and the sales revenue as within of in concentrated of XX.X% operating XXXX. percent members third expenses well or The quarter increase marketing. a in of team and year-over-year as $XX.X million, driven

XXXX. with end $X.X the previous million at within EBITDA X,XXX from $X.X in R&D. from X,XXX was headcount the incremental of ClickSWITCH the ended with As XXXX quarter Adjusted year million, employees, quarter. of million in up were fourth the a We concentrated of the and associated $XX.X reminder, up acquisition the

to equivalents with of the of overall up for favorable was the spending guidance the cash cash investments driven the year-over-year. operating across XX% ended working expenses Adjusted quarter year end cash, from $XX.X largely by result million, of at for effectively resulting good categories. was XXXX, and quarter. up performance relative management was million $XXX.X full We primarily managing year up million, Our most $XXX.X million profitability in in EBITDA from This strong and capital increase third the a flow from $XX.X operations.

for Our $X.X were million. capital expenditures the quarter

year. on spend end of CapEx XXXX, range percent increased strength from X% year record. to total of is Our at fourth is revenue quarter to flow highest management near expect The for historically. X.X% we've from cash spend of the X% attributable good seasonality. operated low operating to was $XX.X $XX.X full which X.X% Cash prior quarter million, or profitability, a cash the the our favorable and CapEx total revenue, capital levels in we as be in was which operations the down was flow million, of the primarily In working for the

first seasonality of payroll of QX. cash a result will will in from reminder, XXXX, result of operations back that stated XXXX working likely the As in capital does in payroll the for an favorable extra cash This quarter. extra more QX in come operating which use run QX coupled with net previously we timing of a other cycle in

time cash generating However, positive $X.X for history we full of we free cash million year the XXXX. flow flow cash experience year. in full for free first the generated resulting We believe million, year will growth in for $XX.X free of flow operating the our during cash flow of the year-over-year the in quarter,

of year up the first range full wrap and million me non-GAAP guidance. Let growth $XXX XX%. We $XXX by quarter first of range in to non-GAAP revenue year-over-year representing sharing quarter to $XXX of revenue the million, to million, $XXX.X year in million forecast our XX% full and

to due until deals half those reminder, XXXX, of the the associated the the with back a back to revenue majority the in not commence As half timeline XXXX. bookings vast we booked recognition with expect do of of

believe guidance, our be the will in XXXX As in observed those half than revenue our we higher of year-over-year the indicated rates year. first growth exiting

to continue out closed bookings in positioned be We revenue year our non-GAAP year. remarks. for to with million and our representing of will XXXX. we in In call growth which to We generated of ARR. year $X.X X% turn closing delivered we leading XXXX, the $XX.X to adjusted his million, adjusted better-than-anticipated And full with as Now opportunity. market key indicators annual increases free quarter, full to and profitability. flow to the for record, opportunities, we over for believe driving for our first solid results the expect EBITDA back and forecast rate XXXX million year $X.X meaningful second-best in $XX.X quarterly the X% the fourth revenue position growth Matt performance to In quarter us invest on EBITDA that, I'll expansion summary, cash capitalize on revenue such for our we long-term positive million

Matt Flake

business close today's I our offer few to To 'XX. out David. want a comments outlook for Thanks, call, on

that which to financial the back now. customers. First, embrace is time a I'm enter from pandemic the execution extremely are as suggests a they we momentum is year The the and better backdrop thing the is the clearly sales by digital monitor of encouraged on macroeconomic the year we the with impact the pandemic continue ongoing our 'XX were position underscored to of institutions than in believe ago. that We one half purchasing

believe position unique questions. Helix, Studio capitalize to the technology investment for and and I'll and we substantial opportunity to turn anticipate it their competitive banking financial a are will accelerate And institutions, breadth as the in our the in entering to result, innovative consider market lending come. the new frontier of on in front a I fintechs advantage Innovation years brands you the that, QX We we portfolio, in digital when industry, and of operator with are a With financial and services over our us. in

Operator

[Operator of Instructions] the comes Truist. question with first Your Tillman line Terry from

open. Your line is

Terry Tillman

say feels and have over this you. and Thank Lots renewals to I all got Matt see of is mini another Credit morning, Jonathan. quarter, I top and bookings about strength think this Matt, I to is and for Jonathan, go were to to now talked the the to know Yes. customer X improving Karma. call but don't of name like out good get XQ. two It your in a and Day. you it's hear, lot Helix, X or Helix on there, did if stuff used Good and in questions, almost David the you I Analyst good

kind for this not time? CAGR right, that's to question little could hear. Day, be three maybe business user I So smooth spikes Have a Is grown the And be touch my the be base part there should growth math, or meaningfully? by second I it potential, of XX% rate a more linear But bit And on based some expand renewals. on XX% they registered the if then David. a of the may over those has is this then Analyst good to of rate? follow-up it mean, some have a capabilities? Did at you could the some a math Or is 'XX. growth

Jonathan Price

Yes. Thanks, Terry. It's Jonathan.

think rapid we're I good user We've to we products more So, think Helix. going road very as go. to to sign to would as belief we're our their the in and guide cases, three we the map for of in continue much examples, very all platform helping a have testament in expansion of say that. I expansion yes, where road us see us think think seen all And and I map, a to and these with I subscribing is going this what and to they're in about

So, those and products expansion. seen belief. expansion we'll we've in of with customers, yes, definitely seen And see user we've more our

pretty we're So, there. optimistic

programs, it's new As wouldn't these shape their would when new When growth, if think far with launch -- first as you linear. the program, think growth debit it's and say, example. car, products, they're a the I for starting I about of often they

see going you're will we as be the revenue learn growth to to won't users then of to time see in spike. time. ramping stability find they as more And launch that create linear, and most transactions to over programs, continue realize active but and a users so, the and users new and they and then lead are shape And that active who then some over ways

to come I indicator that and our the platform you've launches growth So, got can revenue think watch product behind the that. transactional that launches, and for be and new will new

Terry Tillman

of second revenue through qualitative for XQ then Jonathan. the Thanks, but the we David. kind on you a just little think Okay. of year? know bit follow-up plus you some Could I the gave shape growth would of then more the of into touch 'XX, think commentary, point And a like on the how this about kind low you. do the is of we Thank that are And go we growth, as point you comfortable XX% and idea what part of growth? be? two-handle low shape reacceleration, type with

David Mehok

just similar QX context to on first a growth And growth quarterly Thanks. more good the see expect that morning, give year-over-year to we rate, half the Terry. of bit you base rate year, QX. a to Yes, little

of So, laid if QX to the XX% you XX% type a we you similar QX, growth accelerates with about there think from QX And then QX. into that accelerating can think in growth about in out QX.

have to in basis that think give lead still are what still We're to relative the on what acceleration set point FY Investor we relative the said well in to up growth absolutely 'XX acceleration we not going rate 'XX growth targeting. So, handle XXX that, December. we [ph] is 'XX in to a Day plus we're in but

Matt Flake

you, Terry. it. Appreciate Thank

Terry Tillman

you. Thank

Operator

with Your Lane comes of Parker line the Stifel. next question from

is open. line Your

Parker Lane

with seen conversations the quarter And the to the land? Thanks urgency and it retail end questions. taking history? the Yes. platform corporate? that what on you business take considerations some talked your are digital Matt, modular digital of those and seeing you are closer unions consistent in markets, wins decision to some banks guys. with and the you've determining more nice go company's Wondering in if that Tier this largely credit the place front could expansion about banking full versus Or for X initial is small really making, the and expand for for factors on a Hi, for banking. approach that with you

Matt Flake

faced And if task on daunting technology. automate I behind digitize what union lending proposition, the up Thanks. keep it's pretty facing say you they're Parker. would side and the is we a either Yes, a bank about house what simple is which fall and experiences. or and with, think are to that those of take deposit on credit side the the you and

them both ability the walk our able small corporate retail, platform covers, we about to lending credit think you that these and our are do unions on when side. area surface the offer and deposit so, the and banks to business, and technology into the And

they themselves, existing way we Dodd-Frank system great days. They in their for in compliant, use need banking. our we an be it's and and they vendor said, $XX retail XX customer, assets. decisions, have those that called another platform example So and a billion us of the wire that's desktop in October They about a corporate would manifest use mobile

on-demand do are both asking it's did had do English you an to and do And days, platform. Got foreign one because to of you live We that. we're it it. XX of version that it? this. We Which language in of an able a can

to and a on-demand So, wire that. we would wire install had system that the whole to other them functionality new for do vendor have

with very So those us examples on. vendors and to frame that other difficult time for compete are

kind need that allows banking well. customers' have of hands of Helix I to is they're either existing landscape up, them the as got the these the banks decisions. It of they're but business or the think that's to we partnerships the as customers get -- and user either fall side the feature on manifests their with they itself into like in So, also about have going expedite well, our when functionality driving they which going behind said, and what's technology they they've the you our the -- marketplace, experience, keep and to

up, standalone allow Internet and doesn't having you banking keep up of behind. retail So, any have it you to without system new a a to buying fall the idea commercial that system functionality attached to

I really Tier the think XX have and happen those the as messaging of back wins XX so you And in X we enterprise that is tell, year. 'XX. half can And of in resonating.

credit unions of are solution and surface is So and now it's the making they're about than these the decisions spending much out area bigger in anybody types thinking opening up marketplace. really that banks else the and we offer, a and

Parker Lane

Very maybe wanted and on and the Helix Got business. touch to And the on broader David, the guidance into philosophy transactional you predictability dive it. helpful. can then,

how or You some base? that XXXX do the you model upside some year. expansions have platform joined into ramp obviously some quarter, new key the what what's in on announced had in Thanks. the particular? just the this you've that front go during levers different much -- customers and customers you on are of in these the insights for Helix with of And customer Can

David Mehok

from the volume a of them. that Yes, throughout started question we've them, on working forecasting, them terms and to we've launch Parker. some year been great learned because meaningful seasonality it's It's as around we to have programs out one obviously started the these get the of in

were a intelligent FY heading we into I more heading think than 'XX. lot 'XX into we're FY

handle. as these better these one user in, some incorporated that volume the higher start do growth we an guidance. and example, with monitor some and factored obviously We is users. transactions we of associated going we're around into to have as they as and the launch, have So, of all We And to There to think season. tax adoption two, transaction seasonality. these see that's programs be continuing a

accurate So, a where models year we ago into around guidance. feel that and we've to about the to incorporated that's the have really were be we more expanded relative transactional good how

Parker Lane

Makes sense. Thanks, again.

David Mehok

Thanks, Parker.

Operator

of with line D.A. Your Heckmann next Davidson. Pete question is from the

open. line Your is

Pete Heckmann

first Jonathan. and you these thinking question. now? at for of for Thanks How be the look are about taking Fed programs? of like opportunities Good might morning, things the around some for real-time rollout debit are My there everyone. new mean, I opportunity to question payments the decouple

Jonathan Price

own it and the are our ecosystem. mean, both amongst track top Yes. innovation as I customer third-party our alternatives, team all looking is sorts at well of we as within increasingly base, a Pete,

looking for clear into clients' solution singular route the of going, I sort are But but of that’s hand. efficient figure mind is it's sorts fastest on So have union are customers yet and in where hands. of I credit out Studio what can bank we and come most we all think one that answer the don't trying at area to our our get just Innovation options way and to top a certainly today.

Pete Heckmann

Okay.

and very Didn't XXXX? on terms an former Can every then of us the in And Tier pricing, enterprise It's we much give like that business cloud of about a heard the how you hear deals. lending just lending Okay. lot side, performed loan side. update on quarter, X in strong. as

Matt Flake

treasury Yes. at is perspective, in the a tier mind, platform business Pete, deals quarter, keep we’ve from which the announced in lending multiple onboarding cloud work.

quarters, It the in with they’ve are a tough of compete the -- last lending the to also was enterprise. really done quarter small getting on PrecisionLender the great with business success X was It side that We job solution. seeing business. a

the there. the we want opportunities business and lending lending don't noise cloud having that success are the I on that take away onboarding are treasury from that So, to with small

even I an a think and into to platform. to have continue it's strong as integrate So, continues to and in going digital 'XX year year the the and we beyond product it mature banking just had better also

Jonathan Price

Yes.

The cloud cross-selling, that other quarter a They thing in had we overall, strength. a a once Pete, I had, is big quarter. were good again had good contributor cross-selling lending and to

Pete Heckmann

Good Okay. Thanks. hear. to

Matt Flake

Thanks, Pete.

Operator

question from Your with is Citi. next Andrew Schmidt

is line open. Your

Andrew Schmidt

to the here, the more pipeline It all predictability, helpful. bit I details. clients. for of just constructive your the a from a Thanks whether deal standpoint? normalization and taking that particularly to and appreciate comes from the terms you cycle. deal Tier back business decision-making cycle enterprise translate my sales might visibility about sounds and talk guys. a in little Thanks. Maybe like could questions when Super much dig tone wanted how and are getting is we to execution and it Hey, X into perspective

Matt Flake

more The have X just cover Andrew, mentioned credit to opportunities out Tier a The in side and on -- Yes, Tier the of I it's Tier and the X is tier the deal. X union the it. -- say quarter the movement nice we've activity where is deal thing pushes not where pipeline, now would that’s you and bank we enough business, can that a enterprise. the have have we it

they're environment, as side strategically bookings second-best with the are is feel had. and that picking their I M&A and said up. the 'XX up of up like opening performing more going the and that unions continue in So, keep The technology the what's banks on the is quarter a stocks are, happening we momentum rising earlier, trying we thinking books, company, to better, credit activity and little rate history pocket to interest their

to So, in we it's returning how to what get And also pandemic all the into I we in unfortunately, we're had had -- hoped, back. now. operate going the momentum we think, know 'XX 'XX would

us. for of So, you're some -- better The we creating are an is marketing more seeing team coming demand in. job doing activity, out unbelievable leads there

and us So, for it feels outlook that's gives 'XX 'XX, what for much confidence into better going we have 'XX. and the

Andrew Schmidt

for appreciate then David. Matt. Great just And it. to comments. maybe Got a those I follow-up hear,

back-end churn. Maybe XXXX? of you that user going some in And could user then how terms growth, mentioned on organic a little you just on? what's expand thinking into the you're bit customer On growth about

David Mehok

Andrew. Sure, Yes.

the remarks, churn which number, on was in down year, revenues digital we as comment to down again. said be want And next year-over-year. churn my I revenue banking expect, to I -- First, churn prepared

We in So and so than QX. been have just the biggest in associated drivers that financials. it revenue much churn obviously, concentrated those more it with has into one concentrated user and happened is past to be are quarter into the churn go do the that

we XX%. and we that quarter-over-quarter. So confident tight forward, in going impact are terms we going seeing areas before, in we of acquire, the seen confident customers of acquiring see continue are growth And have organic historically what that we’ve a that the We majority user remain situations. saw And user space of on pretty opportunity the you vast in range to because talked between about is M&A our some these remain X% to was fairly that. where the we be side as the do

So, we opportunities have there.

that but that incorporated to We in we are talked about. capitalize to X% opportunities, feel on going those that we've that’s XX%

Andrew Schmidt

Perfect. Appreciate help, guys. Thanks much, David. the so

David Mehok

Thanks, Andrew.

Operator

question line of James. from Sklar Raymond the Your Andrew next is with

Your is open. line

Alex Sklar

Thanks. Great.

and Andrew's and appreciate you technology? to your off-platform can post-pandemic from this question, tailwinds. in between are at response buy in the alluded I change offerings? customers interest there's does and what digital rate lending hearing terms to growth first banking your propensity and all prospects the You multiple But of And that

Matt Flake

Yes, for Alex, that's so in. -- our inevitably the obviously that the positive are customers for we going union credit rates everything space but are are interest rising watching the on, bank and

And so of the fintech then the kind conversations, more everybody. enough ecosystem activity brands, to things. are RFPs, I And there business Banking-as-a-Service the more of that's side activity where there's more think you translate pressure and out that on into this place the deals, and seeing is more putting starting take on

their figure We to on then quarter do as things. call looking partnering are customer, finance, banks banks, a into for rollout out a partnering BaaS get earnings a ways trying with well. customer are large fintechs innovative brands brands are last and had with embedded how to and initiative to So,

of So, faster -- have their people that keep cover move that lending up, fall realizing critical, and of them just is side surface Omicron, going to and are to variant the whether and to allows behind. we're a said, or out come they operate is I with are coming pandemic the the not up invest digitization an And deposit activity allows channels, this side. as realizing we to them and and the may to area they have for it's in that the but we business

Alex Sklar

where of user And go color. kind Great XX% -- to Okay. think split we growth kind I should guess of coming your your kind the in benefit pandemic? up X% on be base? fact, terms between on that -- to David, baseline in kind just then, within gotten How lives contributor following that about of from same comment. go your lives in you've terms installed post expansion base? existing of the penetration going kind And within curious of now forward versus of I'm of it still

David Mehok

we've has Yes. We lot the obviously, in certainly a of come the into from contributor, of is, that installed over as the seen half of that second 'XX. seen new with last new few base What we the net bigger be expect 'XX quarters, particularly existing heading over and XXXX. into half second to a momentum we've get

where bookings in those lag about we’ve terms and seen of the growth time XX-month if revenue acceleration online. there's in the net come speaking, a So second you when that think to roughly half, users again, new

that you relative to into I factor to going think you the your the if modeling, lag So, mix get that's between two.

Alex Sklar

you. Thank right. All Great.

David Mehok

Thank you, Alex.

Operator

Your with Dan is from next RBC. Perlin question

is open. Your line

Daniel Perlin

of morning, understood I and was in about the and question sure everyone. XQ Thanks, what seeing potentially making the good David sequential momentum kind decline bookings. saying I had business a just of a reconciling

help at the to of it decline that, see with So June maybe, expect I just mix? understand play you could you we quarter? would what's material guess, sequentially into first, go And more the us kind if and if dynamics acceleration at happening does then there as

David Mehok

commentary sequential Dan, hey, about to I no clear. bookings. decline want There's in a be Yes,

given the quarter. this typically exception slow is for renewals renewals. key two is seasonality cross I renewals drivers. is bookings one think And in been And might in is to predicated and referring other a is the the -- is what's the And constitutes have in that -- of target and net is QX One so quarter target us you number activity, and a backlog no remember, a backlog. new lot XXXX. for for wise, on

expect strong have target. quarter year backlog one full in renewals the So, XXXX. of growth we we where the for certainly QX is fewer

going be a slightly to quarters pressured 'XX. FY result, as to it's other So relative in

Daniel Perlin

Yes. that it. it. Thanks I clarification. appreciate for Got

David Mehok

Sure.

Daniel Perlin

lot more And to sense makes that me. a

front, modular. them differences in their forward? calls you're on the curve coming yet RFPs about clearly, hearing more you We conference are Matt, we are it you. Thank from And in players big the just just all much and you the componentized the needing pushing up every be heard core earnings seeing they're recently. guys. to On competitive of that one most wondering, that behind hearing where might market the guys you I’m any to be discernible relative But they're

Matt Flake

Dan. are let's big clear, in be we the where Thanks, Yes. processor. the all just core I Yes. three the deals mean, are

them continue number in to you all they a show to outwardly with level there's what the But production got on favorably. do. we you of still to and you deals, with in and compete messaging all them of the drive ACH we've and the those and have continue actually compete So, can things them what wires and that

but continue we against don't take to all providers very them, point against but good solution lightly. So, there out not as them well. only favorably I the companies, compete They're

Daniel Perlin

Okay. Thank you.

Matt Flake

Dan. Thanks,

David Mehok

Dan. Thanks,

Operator

Your William with next Bob Napoli from is Blair. question

Your line open. is

Robert Napoli

and additional back in normal, to is guess. morning also It's information appreciate, I see wood, Really seems business renewals. the Good with you. really like the The world thank momentum It good good wins, presentation. knock-on helpful. to the is the

Just on new deals …

Matt Flake

[Indiscernible].

Robert Napoli

generated it technology to you change But offices. -- What The our outside your Yes, the hope. we of about, what historically? business Matt, how what is that's is returns important that you're winning? the deals pricing, you've going -- the price pricing has over I on the has versus today of And Yes. on years, -- Or competition? been can't think much CAC based why that LTV generating how soon, How deals you still is do the is been? there versus to are if and and based?

Matt Flake

with our gave that in up. a of earlier It's pipeline examples I that player example these it. we needed success function if a at about shows in compete talk the of wire quarter, Bob, the X in days, winning moving breadth the of digital David I let to confident real last big our customer comes the just will piece and in the at of I think pace. had have the we It's are that But everybody to Dan, names party on we look about where forward. as talked quarters, I’m And couldn't other deals. XX products. everybody you just the ability the transformation. the

So, important than the track over going it a driving to key rather of of deals, a is is it. over doing you're to do and and innovation very promise these record

people, they're tell believe going going says to at look in take if do, what to done a always we So, what somebody the they've you're past.

on unmatched that and forward. of innovation we to for use side And digital move continue we is so, digital as banking lending, record intend our track a as and differentiator the to us

David Mehok

We bringing did the Josh Yes. a provide to And before on want I up And, job more for you thanks that question Bob, question, the that good transparency, the and team information. more answer together. with economics. answer to deal putting actually, deck.

So, XX% please go you to life that we things get site every the yet, of margin, talked fairly that going the when But the range you renewal. in the over seeing landing that Investor in can it. new to was On that out quarter is should XX%. about customer deal forward. seen haven't IR extensively to economics, deals, the dramatic things expansion Day we're expect one the margin we're of And of those when of and it one that we pretty the and range access

solutions XX%. flexibility And gross about lot that service period. So, us when of renewal, new we average to to reprice gives get a with the and renewal customers obviously those margin for it is continue the to

feel deal changed more customer. but importantly, of economics probably only the not good we not expansion see dramatically, now, where margin are the the the about really which we over have we So, life

Matt Flake

of since the And Innovation on particular, emerging was -- to want kind seeing him I add we in Yes. we room, quarter momentum in a what and the is the little on saw I Jonathan Bob, businesses, Studio going there. in are bit have

expand Jonathan, that. on So,

Jonathan Price

two I yes. mentioned just now in big is, of that Studio I we or net answer when one the was differentiators digital think are remarks and the to have is to differentiation Innovation see of necessarily for deals three Bob, prerecorded quarters add No, Hey, an we impact didn't something day, David's will and like end ago, banking. new you about that the that Matt at driving the seeing just how

wins for XX% And and specifically so, in in roughly as key cited QX. Studio the new that a quarter, cited I a selecting reason of Innovation the differentiator the comment net

wanted will to us going obviously pop seeing when competitive point in bid landscape sort a frequently, more forward. So, the in about I sort now I you way are because we out differentiation, and tracking help of think help that us and QX of going just that ask it and and to up that’s

Robert Napoli

the And products of talked XX% think, revenue we’ve per I user revenue was the helpful. per revenue my in very per on follow-up -- That's this earlier user? of user, up to And that XXXX. user each growth you grow just thoughts, is for per the mean, the the you. full user. Thank the about growth think on call I the user, but growth your how number about year revenue just do of and and ability

Jonathan Price

is a more we $X Yes, you of see and And things And full I retail, ARPU as continuously layer that in seeing more we that’s -- that about rate and good helps saw rate stronger saw user year-over-year. than see Bob, there, above year we we ARPU, growth that in did surprising, a that it commercial, rate. terms which was the is up exit -- us. the think was the one of don't

not only saw we momentum rate And again, a we saw year. momentum the So year-over-year, was the for did full exited see you we what but throughout that year. above

Robert Napoli

it. I appreciate Thank Right. you.

Jonathan Price

Thanks, Bob.

Operator

Matt from Your with question VanVliet is next BTIG.

is open. line Your

Matt VanVliet

the earlier those decision are you that still that come large pipeline? pent-up had Thanks Matt, are how I think more following to if been hesitant deals a question you Curious detailed up morning. had us in help that throughout of bit think discussions in how of about earlier sort think up deals performance obviously question. many out on either across terms highlighted, pipeline make 'XX different the Andrew's products. little were can total a decision-making, half you coming little many the I of of it early there deals the about that was And in through demand I taking later good bit and versus a still see 'XX? opportunities pretty kind you’ve net bookings the in could delayed for guess 'XX second and as new customers maybe with in Yes, XX

Matt Flake

for Matt, Yes, the thanks question, and I take the will liberty.

we asking we in confidence the from in QX, as the backlog clearly, full the you're I think built-up quarter tell was -- the in very that empty is occurred, in but of will about what moving there? and bullets kind forward? is the I some there's good demand you have feel you 'XX the QX pipeline did year visibility well. our of And And all I do what's the pipeline that that’s which

think bookings what to XXXX. strong out -- in I to year compared coming had a see very we've going you're of 'XX for

grow. we land it's number more it So, -- there. we been as pipeline The to out you deals them. quarter deals are not continues in not has as tight in The to the as have, of have the there's past where

and good that and a and now, think move will where seasonality business of but feel may pipe on to Helix the of see quarter. about in have we There's the both that, little I well. out QX, as the of credit is the side So, always we bank, very deals union I bit the it multiple

-- kind while pent-up I but think, upgrading decisions propel lot of on digital there's due and more for are the able to to has us -- now a they that some catalyst is demand the decisions channels because there, demand delayed then were demand sure, for the to be a their about coming is that So and pent-up out of so going us been talk to technology.

beyond. it's a really we about storm of and good extent happening, and feel 'XX some to So, perfect what's

Matt VanVliet

to making investments the overall margin including relative demand typical would And I investments? Okay. But Very here and the more the scale sales curve lot to we sort you then, of of we are growth even end market. expect in And on step as within to expansion maybe where to a guess, cost function potentially EBITDA a of OpEx reinvest at should ready on be in business, helpful. an even from some of look Or your that continue it, those terms David, been of capture you’ve of upside sort to provide annual the we as you any it basis? side? reaccelerate, see see leverage renewal

David Mehok

some do we will you accelerate as this yes. is margin see expansion. answer half growth I The see revenue the throughout the second mean, we of think, year

So in. are feel that’s going we something your get going to have as we efficiencies. are been -- scale to investing point, and we We like that get to

as will we investments, offset growth, to and going we going But feel you are are see that to efficiencies those in business margin of However, half. slightly to revenue the like invest second see the as accelerated in some the continue well. expansion we

Matt VanVliet

All right. Great. Thanks the for taking questions.

Matt Flake

Matt. Thanks,

David Mehok

Matt. Thanks,

Operator

to now the call to would over turn I the Matt Flake, call. like to CEO back close

Matt Flake

Yes. We certainly Thank and 'XX about thank very for QX are today. results optimistic for and for attending pleased with ahead you and the you, everybody, what's us.

thanks, So, everybody.

We the hopefully to talk during you quarter. will

Operator

conference participation. concludes call. Ladies gentlemen, This your for today's and thank you

now You disconnect. may

Q2 (QTWO) 16 Feb 222021 Q4 Earnings call transcript