Earnings call transcript Q2 2023

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Operator

Good afternoon. 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 Second Quarter 2023 Financial Results Conference Call. [Operator Instructions].

I would now like to turn the call over to Josh Yankovich, Investor Relations. ahead. go please Sir,

Josh Yankovich

CEO; Good Emerging our and our the call. second call President, President join Flake, on operator. Price, will CFO; joining Executive who and our With you portion Kirk us Q&A call. the Vice our Matt are for quarter Strategy today for Mehok, afternoon, you, of our thank Jonathan and everyone, of for me David Businesses; Thank us XXXX our conference Coleman,

Investor actual the the SEC, from which cause Actual with materially the that be results statements copies including services prove differ forward-looking are statements, any Holdings contains could today Relations financial and subject discuss our subsequent our section press Important expectations quarterly regarding the periodic to and industry. filed our afternoon on for uncertainties, by call This distributed or materially the can found statements operating to contemplated QX our that those that and these release this and in statements filings, may results Form forward-looking risks forward-looking are XX-Q we factors reports including to performance in be such of may with report of expectations financial the significant forward-looking and our for of to correct. will results respect on and give the differ of from will filed future reflected we those today. website, no financial included assurance

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

We also on to materials published Investor website. additional have related our today's Relations results

our remind And ESG our to report we and we'd released month like everyone last on finally, annual before website. begin, was is also that accessible

over Matt. Let me now the turn to call

Matthew Flake

across hand more today's provide businesses Thanks, discuss into by then sharing from it second business. I'll detail. and results Josh. will highlights to guidance our in start then Jonathan over results David he oversees. I'll the the call financial to organization emerging and quarter our insights more

XX% or financial on in strong August over generated growth, our quarter of EBITDA non-GAAP XXX manage towards million with approximately past basis ability our expansion prudently another We especially year-over-year. executing been our managing profitability of strategy. strength up Since laser-focused business subscription recent to with results in well, of revenue. point which of had adjusted adjusted we year. as $XX.X EBITDA in reflected quarters, We're margin in is and pleased costs and the XX% our up demonstrate year, In we're was revenue profitable $XXX.X second revenue, saw the that that of on last continued we've which XX% results year-over-year quarter, we million,

to in We the performance the our Year-to-date, of half best resulting history. in had their the company sales of magnitude deals see bookings business. a few first second specific the solid quarter, we're trends regarding bookings continued in to in and types another winning, we've performance their impact

increase have continue to we as seen market. move price sales become more average a our up and has meaningful comprehensive, deals our First,

largely the solutions, half of by past grown center first new has approximately which the front ASP in in the the been were over net of driven XX% our deals majority This commercial our has year. Our by year. and expansion

to We see continue across adoption a also broader our of products from portfolio.

result Tier deals impact half deals. initial Tier first similar the the our many our X to X a in an had of ASP, from of As historical bookings expansion

For example, our largest billion the quarter deal was with $X a from credit second union.

highlight we're the I'd of trend year. the second The demonstrated competing XX% is half win as extremely well, a of for over rate that by first

digital uniquely Our positioned of landscape. banking Innovation become commercial both significant a digital key the quarter, in and whether to as continues our banking believe It from we every in win why span in retail driver single retail be a reinforcing digital the and QX was win Studio second in every of in the broad commercial. wins or included mix majority opportunity. has rate banking the deals, a digital the cited banking half differentiator virtually we're first

In to Technology side, we're this a a mobile-enabled On in earned leadership by the industry validates Vendor market. to Management commercial this with recognition Assessment in We're quarter, prominent recognized our Aite-Novarica. momentum market set our in up the as position Best-in-Class the comprehensive commercial wrapped the to in source to will by the banking and the be moving Providers us commercial XXXX experience. and contribute Leader a proud modern, digital such continue more believe and specifically, second recognition winning that's in approach user feature Cash

I'm this made line to businesses. solutions it navigate complex the over for importantly, company, proud conversion experience more time-intensive integrations for And included larger, support code in unique the our and deposits. retain customers, off win required work our of investments in functionality. And QX. started commercial as substantial and operate they see When our space. commercial heightened and acquire pressure It's hard, business to decade, to more we last broadening building the paying commercial first the we've to And

and several booking of half we're last first disruptions our environment, our continued the the at the broad the we're remains with set deals the a the believe in of pipeline a demand the of of demand some year. winning by our market opportunity our in the end quarters, despite year, over rate and signal of of encouraged strength adoption So in the And great strength the environment strong, second half we the for ongoing our solutions. even which

with as on using wins, in X digital second it two to quarter Tier was and net across X a and an adoption can Both with scenarios expansion new extends to a lead new also deal relationship institution because bank holding increase large of selected choice the XXX and of the institution X recently customer. Tier financial our holding relationship and agreement the relationship deals banking existing entering solutions loan additional top particularly by that mix the bank acquired opportunities the over U.S. including pricing activity we year. company. noteworthy from the time, deal by back The where expansion This deals, from solutions. relationship pricing momentum a And us landed is tools our initial the the relationship solid specifically, gives half of the company. Focusing pricing competitive expansion came our a net pricing our were were the with quarter

event conversations there customers, highlight. from began. overall positive, themes and attendees at annual for were from at few the the which was our highlight like partners. person hosted X,XXX key We the time pandemic our CONNECT, I'd was prospects the than major first from since a with sentiment The client in conference, customer more record Another quarter saw to and we CONNECT extremely attendance

is set digital retaining mind It's banking banking aspects the designed and clear deposits to deposit of and across year attracting, believe commercial retail industry. this solutions growing business. top of what's they First, broad was help strategies we their critical succeed the a given their customers them for happened have of and in to

these including We've language out of models of believe $X almost X.X and solutions, view this been logins one years. Second, at users, services. us over supported our to as AI our annual capabilities and the in in they financial machine artificial this a conference, partner by that excitement using our intelligence CONNECT, for data XX most there loans space. learning XX have almost customers comprehensive for was we the million of With power and machine Coming trillion large about potential solutions sets trusted a data end and the billion share in we lot buzz learning. of

quickly our fraud, drive experience. use teams Because banking offer we've for that established to efficiencies in of this to and position enabling domain tools. our cross-sell we We're products internal data-driven our within customers things digital our and expand deep AI, expertise and to this, we're have help evolve leadership both prevent and area, to target and leverage for excited to business. new utilize to the AI prepared we their customers Today, of the account a that's personalize our AI, in framework holders

at out engagement The a CONNECT had Thanks many of around attendees partner stories weeks, few on Innovation customers more final of stage QX the which Innovation over Studio, as virtual volumes combined with they're QX by theme we with in I'd highlight Innovation buzz the reducing on CONNECT. Based launching and to just outcomes driving a a name million fees Studio, cost model, at XX% such the energy some chatbot, $X was the our few. it's to solutions And from excited drove savings XXX event. QX more several achieving over Studio, about in new a easy it's partner ecosystem call quarters, and shared lot than around just financial to the key see playing a partnerships last role coming in institution high the of event. see why our fintech to win we're rates and to

the to on the with more roadmap full the want we're momentum and CONNECT of back to and existing our we business commitment channel. highly 'XX customers, they the key our contributed bringing into This best about our and conclusion, the has energy biggest excited prospects was was do in believe display. half digital to fintech and year across conference partners. In digital customers' They're yet our engaged,

highlights over hand the our from a to key businesses. With that, let to cover emerging few Jonathan call me

Jonathan Price

continue users more the than our Thanks, solutions the number the well to number as with QX them Matt. market. executing as last I'm in this of deployed it in our on fintech we're us QX by the business. continues Since will of year, for Studio doubled. flywheel vision Innovation has differentiate to customers Through Studio, our end role success the we're utilizing Innovation confident play pleased and of effect,

QX quarter. was our for Innovation reason a banking deals of in from fact, the Studio net new cited selecting digital QX as key In XXX% second

in previously every the deals majority the that contributed been it's it in a is to of reported one. driver single we've While our past quarters, key this has time first

provider in in activity solid and saw the a I'll in which QX Innovation insurance side significant X Studio Star played record. by institution, one with Bank, even a on second wins now. of move as the a of the Five highlighted Helix of Tier a addition to our a quarter, the role Helix win over market-leading quarter, bank

experience side. relationship initial Five through the their positive the digital the began with Studio, Star After banking with strategy bank determined Innovation Helix. and they QX could Our deposit with on partnering expand their

a that key Star savings and brands to will accounts infrastructure for a their of offer and Helix component As Five of checking provide our the customers, platform bank the depository record, offering. fintechs use to Helix

remain priorities retention like bank customer and are to existing generate outside of financial our their growth top this deposit for record way partnerships additional base. a customers, deposits institutions for of unique As

roll process, and gives the of ultimately this clients users' customers. our needs, a unique new of company and deal, out insurance company the selection we core and within of account personalization, company, like offer their a nation. scale. greater real-time During granular offering, products that for their control landed unique largest design this because because across the insurance and will for each across providers a to Helix products deal product deposit we Helix them solution drive highly multiple also flexibility embed In at helping With proven ability value to engagement net the quarter, chose a cloud-based, the with help will one Thank major in a competitive the support manage our their which them deeper the you.

David I'll that, financials. call the with over to discuss hand to And our

David Mehok

Thanks, Jonathan.

demonstrate favorable, quarter focused remains the growth environment second on executing to we're with demand enhanced on continue driving profitability. results Our and

of end the For and the the EBITDA adjusted our end guidance of exceeded quarter, revenue non-GAAP guidance. range top came in near high our

subscription and EBITDA basis with approximately see increased business, strength we've X adjusted points higher-margin in mentioned, by in Matt quarters, ARR. over to bookings is margins reflected past As XXX our the we continue associated which our our

increase second of for non-GAAP quarter year-over-year that, our $XXX.X an quarter was full updated sequentially. conclude XX%. the begin The With was by revenue, I'll increase well million, XX% results relationship reviewing up and deployment year-over-year with products. was year the guidance by the as for driven by third X% revenue revenue XXXX. year-over-year and Total net banking of mix growth in digital cross-sold subscription of as pricing and was new loan a driven growth The customers subscription-based which and

seen we've strong continued solutions. growth fraud from addition, our In risk and

was the continued the we in Our the quarter the previous some up with The of reflects with start for total strength of XX% from of subscription the from year. revenue, subscription revenue second of last revenue of bookings our strong quarter, total XX% year. core the prior the in half revenue go-lives associated and in solutions saw aligned

observe result the year growth to quarter. as the from of bill represented previous quarter, The Helix-based year, revenue transactional the of XX% continued transactional reduced is slowing we consistent in a total trends with of the prior down last started decline in secular Transactional and revenue year-over-year as pay including well for revenue. of period XX% revenue

During users growth. by organic more the the user users, largely year-over-year increase with XX.X than our of year-over-year. digital driven platform, we The to added and sequential quarter, million an was XXX,XXX increase ending quarter X% approximately banking registered

recurring up $XXX.X to Annualized XX% grew year-over-year. ARR, revenue, million, or

within quarter for subscription deals net by existing XX% business our the largely driven continued growth was with year-over-year, Our customers. digital and ARO expansion banking new

year-over-year is be increase the We to the over attributable within by $X.X year-over-year premium to ended the ARR million. past backlog over down in We growth ARR This growth total of new strength months. quarter year. banking net was will with expect for billion. a quarter at remainder the growth represents bookings, subscription of $X total particularly compared and The last to XX% digital XX marginally of

change sequential the backlog quarter-to-quarter the previously, within quarter. of given renewal opportunities based in on fluctuate mentioned we've a may As available number

mix our for in XX% in vesting subscription-based our quarter, slight Gross a XXXX. to revenue in half began reduced of backlog from year. we the up business, in margin business associated margins sequential increase bonus from we previous the in The and quarter. primarily year with payroll we our and in lower annual cost the of benefited full an and taxes higher-margin was in improvement efficiencies believe expenses XX.X% a the show the prior mix The by payout. pass-through gross from addition increase Helix driving towards equity XX.X% However, second in following margin gross continue to will year-over-year QX revenue for were period driven favorable

the related which our Total expenses, third-party sales $XX.X XXXX to were operating as and operating driven XX.X% productivity first the second to primarily sequential quarter from predominantly in The enhanced the cost revenue or marketing offsets development more the million than and research were of and expenses revenue in a improved $XX.X within of utilization revenue XX% through effective in of of for quarter million G&A scaling or which increase workforce percent revenue the and or and global decrease million were fees. of quarter of revenue year-over-year in XXXX. and to $XX.X of expenses second XX.X% compared

that to conference would As and, therefore, we quarter mentioned to in see cost year. and marketing second client in a costs incur of sales our additional in the reminder, scaling improvement annual revenue second the half the expect

associated developing, and workforce XXX was and across change solutions. ago, previous $XX.X as improvement EBITDA mix lower-than-anticipated sequential benefited $XX.X quarter, year of adjusted adjusted the from with basis EBITDA subscription period The prior the effective cost supporting and $X.X record, quarter. year second from organization. the million margin a adjusted company of million and efficiencies in from higher-margin debt from up our the Total the in utilization efficiencies in our for EBITDA a roughly delivering as million in more broad-based well bad benefited global towards revenue, The points

operations million equivalents emphasis We our million, and ended the end of cash strong capital $XXX.X on up at the positive We second management. of of quarter profitability result cash and quarter. from the continued million with $XX.X generated cash, working a $XXX of first as investments from

cash in on flow cash of the generated cash first the a delivered first based for in the cash first flow million for free period in first flow half positive is of more of the also we quarter, resulting free months challenged seasonal for Typically, flow We free year. our the half time our generation company for But positive history, the drivers. X year. $X.X

adjusted $XXX.X in Let We to me full wrap million sharing and to growth XX%. year. the EBITDA full range $XXX.X million revenue quarter million full by we're to to third our up XXXX updated a $XX million, to $XXX $XX million. of $XXX quarter non-GAAP XX% of and revenue $XX third We in million, guidance. the $XX year our quarter non-GAAP adjusted for third of the year of million range forecast And XX% of EBITDA representing to raising representing non-GAAP revenue X% year-over-year to year forecast approximately million range of

In for the EBITDA second with adjusted our top above end the guide revenue our at quarter, results results of delivered we summary, expectations.

the revenue the our XX the our our to This, EBITDA Rule by continue half target combined on continued focus We our total for see our as outlook our adjusted business. at ARR meet in gives to confidence raising subscription-based of of as us of higher-margin back ability growth year, driving well some remainder XXXX. in with cost point and driven efficiencies,

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

Matthew Flake

half Thanks, forward. our I'm year of performance pleased the moving In business the extremely direction closing, our of with the first David. in and

both rates solutions continued market. Our demand our competitive the in broad mix of deals positioning for and win consistently and the our high demonstrate

our our recognition we for from Looking like we the quarters, tailwinds lot solutions. focus of to driving execution anticipate on expect to a maintain the conference, our from pipeline laser-focused continue analysts favorable momentum. value executing when We ahead, our converting environment the growth against profitable positive and industry And a half we to recent second continued and consider Aite-Novarica customers client shareholders. believe you annual year in strategy of our remain demand employees, we enter sales deposits the on with and for

Thank you, and operator I'll for hand to it over the questions.

Operator

[Operator Instructions].

comes first BTIG. Matthew from VanVliet Your with question

Matthew VanVliet

I of as strength, for of the just that on as backlog Studio revenue? quickly little and speed but along appetite live of and the sort Innovation the dive only get to parts how the go bit how a going, the bookings progression customers helping to wanted in are of sort not rollouts process customers possible are of commentary sort to to various

David Mehok

talked we've over about, as quarters. last Matt, great we've the in bookings had strength few

a deals, of in complex there have lot And to Now revenue. elongated deals Studio Innovation in specifically, those were efficient. regard you you nature. have team the very gotten has larger certainly deals larger tend expecting to to more and that. When time We're

agreed So that on the customers. obstacle does with of on not become terms delivering implementation our dates we've an that in

So the about complexity of Implementation but deals it. incremental are if opportunity. and the an of digital digital What elongate overarching the does you it's think the elongates solution, size aspect banking Studio, banking not obviously it

Matthew VanVliet

included in Jonathan, this deal then adding, quarter you the of and And additional even digital helpful. on side, in the and Very all at of deal Helix features every the maybe on you're Studio. looking quarter banking mentioned Innovation sort the

of of of those how maybe brought from much enabling here, adoption? are rate but So touch increasing been banking over of side broad seeing nontraditional a an just question digital And that you then of capabilities? the what that sort are doing has for on some obviously, and the institutions kind

Jonathan Price

Yes.

there, a with digital scale. Studio. So I start banking at seeing lot on adoption the Yes, of side will we're Innovation

or we apps we ago, to conversation about multiple FIs. now if And a think numerous live X FIs. have small starting see would ago, of this been talking months segment across apps we're go on I X a X year had

adoption, products And of continues end get for so looking into hands what this to and to by getting products would hands say of their putting helping as to further more much their further I so these these if in the FIs of get is and the opportunities utilization just just flywheel users faster into and the they're the actually customers. really only end because their value adoption solutions not users, market importantly, more there's them in we're

that's how focus help they're extract in putting so the innovation we them the from we're on. It's their really getting do incremental is where that hands. this And value

the want it larger between to of want over cross-pollination then to Helix Innovation to side, seeing banks And embedded when program, Studio lot record translating that the Helix bank talking who are launching and to think to we an of comes participate program. finance to in talking about fintechs a

and to around is think some the we That's pipeline theme the deposits. of banking the going on similar about deposits, more financial had services. big the win focus there commentary When in the the around of just momentum common quarter sort focus and true I across is forward, digital and Matt's

really that's quarter. strategy. driving in the the about so big And the strategy certainly It's we the win driving of talked

of lots we getting things the to and good as deals fast in So and more these happening, just adoption door of but flywheel as facilitate rolling trying the can. these we're getting products

Operator

next Goldman of Your Hotchkiss from the comes with Adam question Sachs. line

Adam Hotchkiss

you is deeper going environment things little talked about. a larger could that how a do sort as to demand current just you sustainable much evolving, Matt, the and you particularly that what's guys, to how relates reminiscent broader of of over the of is driving now you multiyear environment? how you When think land think how are is it about ASPs with demand customers on the dig just And period?

Matthew Flake

right and to did go to in strong then about, we the a now, row. as talked we unusual we've as second, it's that mean I fourth a many Yes. first have quarter get -- the

and side, of first side had on a we X think pricing big Xs the the and X Tier in relationship the business. digital on Tier X I Tier then Xs, the banking quarter

pressure thirst the the a integrations they're the and then our and financial supporting with digital we experience them the and have. -- moved institutions the with we're around With deposits a -- now really to the big the other right of that that financial from commensurate that's that deposit the larger products, for in feeling deposits the unique them experience breadth position X, banking delivering in institutions

this as that see deposits any think I and I don't long you is relief the -- as bank this on billion in have really credit continue side for positioned $XXX demand have right future. space, to uniquely of we're so deposit to the around going now, the billion business. And $X the union you foreseeable we have

So a I having think this going demonstrates last finish It's continue pipeline is up and to we've closing strong for is after something while. X had, quarters I anticipate The that strong still that. the year. and the a those to deals

Adam Hotchkiss

your the do think like think product prospective breadth versus can sort -- the on can offering QX an that Great. then product that's And you you think helpful. on really Studio. working can I on that an where imagine just today? on where and perspective love adds depth a take Just the the are to of you a space the be and what with of are back, No, pipeline functionality. level how developers FI where for click look could do the you how dozens across both, the partners guys? world on you opportunity penetration in you of go. pieces double from higher that much big do you When and platform there you look commentary of look you Innovation perspective, at more When step of guys a would a different from

Matthew Flake

that? why take you Yes. business. You that Jonathan, built don't

Jonathan Price

products saying coming we we're the building that that to to think to of the their about of very banking, start much and we paradigm, see R&D and just universe and digital that when that an adding, I'd our these we embedding extension APIs are our Yes. within innovation widening can then customers Well, by what deliver users. end are our as aperture own of we our own partners

long-term you when there. perspective, you a lot there's R&D what about brings from of value a think P&L so about scaling, when that perspective, margin from a think And

I But seen perspective when quarter-over-quarter way for customers, it wins. from could last talk several of the what penetration net to terms about of impacting our sort it's the do we've in a it our mean, you new

talked selecting I as call, new for us. XXX% Innovation cited the digital of wins this net key banking Studio As about reason on a

then how rev these more tremendous you integration would the have as think about in as participating of of comes partners And fees share via interchange, going onetime amount and The more embedded in will within they over economics model. on and flow to ongoing overall fees cost we direct via subscription banks. banks the it are have when time revenue. a another around And that minimums if saving importantly, partner were they're they economics

with with everyone and And over be those all lead our an more ultimately, engagement customers, to long model retention that so better economic customers can stickiness these for the and, run involved. attractive

all the profile is of net long the over can very really at is help business. run it comes margins, think that because strategic associated come high piece revenue how the think the what margin -- the value we very business it intriguing it's this we economic and So and a can that and on it with from revenue

So hopefully, that question. helps address the

Operator

with Tillman Terry from Truist comes question next Securities. Your

Terrell Tillman

Solid job on the results.

sizes. in about or me deal we're for is increases much not question hearing First ASPs large

this impressive been have is Are and So years evolving no of product the the a pun some growth of you growth? had of a with intended, QX big over curious, all I'm around actually. this that that the about And follow-up I there. Catalyst? some last catalyst, ASP it's question. X.X then with How XX% much packaging

Matthew Flake

me lot of happening product, room operating do he think it script, a and a has of it in mean our -- deal spearheaded every couldn't to the with at here. Yes. I said accounts running had lot and center but in He retail I better. that. the I well. have if of onboarding, timing But was what's demand -- relationships, the been as actually is think in Catalyst then the the with for I it fulfilling pricing the on clearly, Kirk is

on of So I in business. a -- small we're of pricing retail. winning were. We're winning thought pulled the on actually couple PrecisionLender, tool, what on commercial. they relationship We're deals is ahead winning

side just put much not particular, XX And marketplace, in on the both and nicely, in commercial we years, banking in the we ASPs. energy last product all X the up products solution but rates things. of very in up have, are QX the but and features of shows on and that X the that time that the win and stacking last or so really it's So the Catalyst the differentiated over Catalyst

Terrell Tillman

Got weak there's algorithm then point, I'm got and share 'XX, to of FRB discretionary takes anything the further out continue of kind you services, how if probably into in this strong you've that I just anything terms And of can and look some of those share takes? wise all at revenue. terms growth by some as are we puts some think guess string curious and it. can at in as to you ongoing you puts about going move mean transactional maybe offset of I bookings. dynamics, about all And

David Mehok

on Terry, expect specific there it's but you that know early it's a question the 'XX, covered get today, certainly we and variables into to based year. of off the pressures what would any that those as too to you're on we're would impact point we lot itself. outlook And make seeing in transactional that, some our 'XX. of I you're migrating thinking of the and sure platform about 'XX, services FRB at factoring during to in And continue -- also

they're said for that strong had the having in the side, On deals. but we've And question around sure, Matt asked large answering as question, times. delivery subscription bookings I

in that deals the the we're at And next factoring over make those the of of so go-lives that sure course XX looking months. X to as we've got to we're

the terms talked half talk and the to at out, we of to continue XX cost And the that Rule to path of well new them aggressively importantly, as vastly the the mentioned at it, we've be the we're about and of execute going of profile on we that is expansion. the mix plays expect net to have very some towards terms end efficiencies this cross of certainly EBITDA of of to continuing the the weighted all in as going in XXXX consistently, and to then business, point overarching relative shape understand how both size. we're back of And the bookings as 'XX about we to

Operator

the Joe next Vruwink of Baird. from question Your with is line

Joseph Vruwink

that on Maybe question. up just picking last

then related half and obviously, about pipeline might and obviously, to Rule sales opportunities the really year also wanted pipeline digital last the and can I kind vogue the question banking you're discussing? with opportunities, risk cycles, in of that factor about but trickier. booked bit sales just So how is of And adjusting think you're this a impact that adjusting of that cycles on to given, year, come be XX risk but about and how talking just timing you back of kind big ask now pipeline, anything of into next framework doesn't big

Matthew Flake

Yes.

as So long this pipeline, doing in far risk time. a been the we as have obviously adjustment

so the the the executive at off and at do good we're by an done level. look going to conversations, we to deals the pretty you are a the any done. engaged to live level the don't end factoring quarter, book at And able the can when At the of cutting both it comes on down we rep And We're because decisions deals. it. get revenue job in it we quarter at be the of of end the And month. of of really don't always end

I So close pipe the the as plan then they of on had feel look look half financial to where and and well for we at that year. continues of win I this the execute grow, both our -- deals, where and with ASP our as with it, size the good the ability really it back is that the are about the rates the institution, for to larger, we've -- as in I these pipe are rates at

larger. those skew to tend The PrecisionLender, relationship pricing, deals

also dealing a longer top So you're when those with XXX I'd But opportunities out institutions. a little those tremendous opportunity. point amount of expansion take that have

be You that of might you can get as geographies. -- one expand other and businesses and you other line then of business into as of on lines in line on well

to think I you're that happen in on 'XX. that product. going us seen have see We PrecisionLender unfold And happen the 'XX, for

And they're can to talk flow David about going how through.

nice sets the as sets to about of time. a apply bit up financial for this takes deliver of they through it 'XX deliver because the quarters it to have this, little well. half to quarters and are I sure when a with -- for how resources just you year for it. the products back delivered durability a talked really into like to just going the these add? and up the last that have the 'XX -- can strong have you to the institutions timing to what it he outlook When start anything us, as would in going That's matters of that for tell we to back David, the and this think it strong But half the X to look really a I they're start be rippled we products then space. this. time long we want getting at But

David Mehok

No, I it, think you Matt. hit

Joseph Vruwink

then off want David I to don't Okay. hook. let the And

him. one maybe So for question

foot you booking maybe XX-month to best the that kind the then Because it calculated the look of want RPO, next the booking quarter at on of place Just of take the your at. set in RPO, numbers think to getting strength? contribution the billings trends of kind some of do to decelerating, longest-term to on the strength, look in I just maybe segmentation relate looking even to or is to and best the

David Mehok

opportunities at. an it's you to we time, the a would leaning on Joe, have look that the type to of that say it's horizon. that going at it if understand look I you of things, in over one Yes, revenue we period regard elongated of care you into The thing one an couple -- RPO. idea give that of And

of in look amount very that renewals can you at are it by head If quarter-to-quarter, the be scope. you easily faked

emphasizing saw I So in QX important but we've do in year. it's last to know that XX% -- you renewals did really of because last and been our of we year, that, of QX

backlog a huge as a at of in result, end you spike our the So QX. saw

ARR you're terms seeing and which going our we renewals growth what That's tell this in growth well. loaded seasonally how rate that, telling strong year-over-year, not to side. disclosed be so subscription you is would is the I more thing at only it's look which we XX% to as terms subscription within so that's We on that important, of expect of you year, that it's back-end the typically really have. what one is building, The

data And may point couple you level ARR question help we've that then is of XX% and the not seen one other years. in a regard there's your yet, of live that's that highest in that's specifically to

an horizon there revenue gives of course of next into you sort to of out to be months. also be idea the to that XX booked -- on XX over the what's So turned the

Operator

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

Matthew Kikkert

unions for banks is layers Parker. the credit Matthew on the what curious spend? I'm impacting Kikkert on is thoughts services start, regional your banking the how now QX particularly health of revenue off coming of of This guidance discretionary remainder around your and are that of year, To crisis. the right for And

Matthew Flake

guidance jump the the Kirk, unions? one. then do credit the can banks you want we the to into of And and take just health

Kirk Coleman

sure. Yes,

and first and credit that the doesn't banks the unions change the crisis mean I at for people mini of sound had and reasons quarter that. fine need we that end So the little -- are

it's -- -- the of as terms banks credit of just very the tend they providing there's in to amongst paint institutions that the to serve so truth and the they're is wealth kind thing, people that themselves. we think unions thing a tend the great services diversity I And and one is, and read last the often in they communities and paper. that of But

lot and highest a their pricing to way period in see deposit strategic remains also we're digital in, strength customer and got on focused and and see And they a because to. high all we those operational We rocky priorities lot our focused they're strong the base top of accounts the and prospects that. see think focus on we they're amongst all credit, thinking talking whatever on operating customers of So of of really really although one the through their we're priorities. retaining

Matthew Flake

add talking he's some just move was frustrated communication you running follow-up, industry or the and and to to already follow-through, the thing you're would you and customers whether be you relationship that I at a responsiveness, available in. financial to other one and small with move some me the hear have -- pricing. business, beginning challenges, that whether it's need banking understand I community to have or with deposits When big, in a they're they're the a he The of is banks, $XX institution, telling larger some that of probably customers our billion was it's

unions, And people retail both just that that's with things of to our it's understanding and banks it's lot and credit whether commercial, that those problems solve them one the and customers, a bring, or of them. access that for ability

So guidance, fill a XX probably I bit. a but... think I that's little but say down once from trend March to that can dust just be in, going the folded David, continues settles that probably it's in the on you would

David Mehok

ago. component folded of part was That's discretionary we in. took question. in midpoint. top, about, result, the did a Matthew, at at that $X the million We related May the that we probably your X was when as than at bottom, our same the revenue range $X to the guidance, answer, That's have It short and And the spending now is. tightened do down predominantly it we've not million we've months certainty surprising. more by it's been talking

is have low back bit. end So with we're high how just viewing we May and viewed spending still today. aligned how the a It's relatively that in discretionary it the tightened end

Matthew Kikkert

the plans That's let's of a bit capital hear. really X free And the interesting then And you your talk say, years? expansion X next cash Okay. to you on side. part margin good to generate your strategy. to Could as over, start allocation about relationship flow additional secondly,

David Mehok

the in the Sure. That of March debt levers to There's discount. I'll capital let us. cash think different one we generate best We're a constantly levers our have. of out that a of those convertible buying outstanding to optimizing that sort are obviously, at We're terms biggest for then constantly and there, Jonathan investments generated opportunities in we're was return And to if and allocation. perusing going that M&A landscape at there's understand environment talk looking some the nice opportunities large. obviously back deploying about We internally pulled at return. the we of internally our the and

biggest talked more terms the our some much about of being and to our both last X things to that, of generate of you the investments de-investing in customers well most areas going And cost are M&A the we we're going as to and XX had in. the Jonathan, going Matt in we capital that's think our to return. talk to as we're of to the sure in about terms want making our of where that do to year, that And we're are And over shareholders. that environment? months. our where focused last the aren't, doing And structure course began the August provide allocation value

Jonathan Price

there's for we're M&A constantly X X-plus going across would the mentioned sort in, value I we the we here and consolidation is that overall to at environment get cash to evaluating lot our think is the opportunity just the say would the mentioned of be balance I long you scarcity there's now David landscape. financing fintech Yes, what We lots out pipeline sitting as have. landscape. the of we're we looking a years, But run, of say, and like converts think years that over between out,

what M&A we'd here yet, haven't view, both approach especially prudent And come towards the of pretty to to a making happen be that and seen, and private but sure asset very XX so have we've our coming come in line. X value markets, the line in things in expect we're that going And capital about M&A those to allocating X to disciplined over months. quality thinking in and

watching always for So opportunity. that but cautiously waiting it,

Operator

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

Alexander Sklar

all rest for the in year? earlier for comments of historically for and year saw first bookings But the the referenced or know closings a are what on the you isn't bookings of that underwriting demand some pipeline half third the in you backdrop earlier I of of seasonally. what quarter for kind you to sales you cycles of your subscription given then David, and terms big quarter Matt deal PrecisionLender, relative

David Mehok

QX is we growing and subscription both you relative know, as We continue transactional on other that premium is going that QX -- what other that guidance obviously we revenue to significant subscription as be Alex, don't believe well. we don't services. to But those Yes. going give will to a say absolutely very into is streams. revenue and two to think -- those both at We specific

growth sequential QX services, likely standpoint, combination sequential And reduction in in and fact, contemplates if a subscription. offset by the you from what at will transactional specifically guide the look a of be in

So in that point will relative subscription strong again, a help growth see give to into transaction. and to off where, you expect we jumping continued QX, subdued services

Alexander Sklar

a just your of Okay. to on then And want that. about follow-up, Great or I solutions. some more as Matt color did Kirk. ask data-oriented

So But year-to-date demand driving great on uptick the PrecisionLender more those for a can you elaborate bit success backdrop? this bucket. just lump that in I'll in quarter. little And in the what's SMART well, as current QX

Kirk Coleman

think sure. aspect both cases, really, I relationship -- this PrecisionLender. for applies -- for the particularly in think the but pricing to I Yes, question. particularly Thanks It's

commercial of of a a banks. of bankers in, have and about have business you a rank files the sort lot of don't environment We think if that just lot practice

those And with the tools focus there the running of day relationship terms we're coaching can that. breadth data that their in interest allows working to And those able right, it thing that so them a really have makes and we on -- database them, that that's put for part of in have, able and some to we're We that they special, with of strength every individuals the them work provide them businesses. important think really kind of we're customers. use seeing why is to with they the

if down And even go change. point, some to not going that rates environment at is

in for terms environment we're here space think a just while in is. I the different quite a competitive what of

focused as work, customer, the data banker, of they it But lot are in as the a can. And really continue to our that the at the that day, every base where on. to so what work of -- of solutions to data end, putting that down comes to person they'll need kind put much and that's

Matthew Flake

then in use fraud Yes. of payments on the analytics doing those that that lot stopped data It's We be and the I really they're our identifying addition actually to that, the doing we would fraud who with systems. a they're system for through analytics tools of that these things to and on what and all just the supposed off. demand paying who's and add the is roof.

months last all billion on log-ins of the X Not said good I people. the XX those think application. are I in

existing it. it it's that don't attached using fraud line to to and and almost deal, we every stop are customers that single So in get are data to have

net most So and us, cross-sell as deals item for new it's big well. it's a the attached to of

seriously want our to and for the as cross-sell products said are possible we way we very make time, team stop have fraud. -- have in worked So data we to we in a and best a with -- or our we the sure we're customers, take data script, long that for better, that using it whether we I we it's come understand in, that's customers

So really excited about that us. opportunity for

Alexander Sklar

to did Catalyst see are the core Got I it. and package. added great Insights announcements, know That's I those the QX new color. Security

Matthew Flake

Alex. Thanks, Absolutely.

Operator

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

Adib Choudhury

for on Bob. This Choudhury is Adib

brands bigger an on demand in then seeing competitive and of landscape insurance the picture of question, as the you financial with products just Helix. but acceleration embedded diversified well. the there one maybe broadly a institutions? Helix finance of for just Could have So on guys that from more you one, obviously, nonfinancial if kind And bit fintechs kind for and frame opportunity you're or terms

Jonathan Price

sure. Yes,

is let's very aperture ago financial broad. to loyalty the brand a where with Basically base to finance any a and contemplating that So large of embedded that very, yes, user get say, entering ton this brand was that year had looking from, economy something services. a was was has into of industries the vertical evolved any of their

launch to year finance As sense, enter embedded and really the every where strategy, narrow. the of economy with out last makes finance focusing across has on an and areas seen the industry we've played business, this their embedded with willing and they're folks act universe core where

would you've that been of wins recently traditional have And come I of for we've financial success. areas particular, services. Areas adjacent call that's like a focus in so in and seen our verticals where us to lot insurance and why wealth, had

still embedded opportunity the a think brands launch But of to strategy, see and long been space willing certainly and and a smaller last programs. over we universe core the are so still go year finance. enter value And undertake has their lot will to primary it's in that business. and We run fintechs not folks of the this really if

color. gives So a hopefully, of you that bit

like work the as that's procedures is the funded relative of traditional landscape, popped been was a provider And providers to and the and same for of shift. how being And last an we BaaS competitive as X core in you the up framework well a from differences, over though regulators, years, -- terms are. a actual to much OCC bank. and the terms the far a in middleware bank. haven't middleware providers popped how opposed fintech that I'll the and as we it's regulatory expectations really lot X, What even has controls where your focused up seen are As fintech can say being a and the there's

competitive And differentiation some it's in the whether folks. environment, those versus source of core, being so whether real actually the we the have truth it's regulatory

have been And time. adjusting done businesses Dot in over to of play that or that space, this space it some and acquisitions well Galileo, a their and the players in have then larger known a there's are are Green the continue changed be and

is a positioned, to what So focus we're have it's terms just on an at executing we in And on think we're a are in to we with product, our Helix evolving of unique space, strategy. right position and level where we our that. of and go-to-market the well where product the we terms high trying win, in think we're

And been the so that's focus.

Operator

Markets. next Global the Andrew question from Your of Schmidt Citi line is with

Andrew Schmidt

there apologize there's -- Congrats been What driving results asked. dig a continues rate love a supporting bit, function wanted product rate? in and elevated, like it. Obviously, win of as this positive. I But is apologies terms into a market rate. of into here. late, or to win I is set, that's you a is dive win supporting it? on be has hopped just the on self-driven also capability the very a feel little to dynamic the that what's But Would competitive -- do steady if I well think to the your part commercial elevated elevated

Matthew Flake

a it's Andrew. a great pleased When people service Thanks, they're of software had couple they at of we going had that happy this our just problems, I The the a every the get of do to we they'll in customers as Yes. up -- not And were middle solve delivery, know I've you early of our last around this tell it. company conference experience associated provide They that have night. will day products and I that. don't lot do sells that X,XXX wake work the things. customer of for up, the to us. they with but as

a all struggling profitable, are have may applications the aren't not that the products are environment that then -- a on and stuff customers with with there's but where get companies the -- push folks. are prospective customer that difficult going do things all reason, with companies a business names, matters things and traded that. of a just be for out highly that that why, the any for right come financial have just I I into of And don't smaller talked lot be it's that, focus banking want for when use aren't that that regulatory on on are And Obviously, a will there you institutions, coming publicly I and you where are collection down those larger digital don't of an there's the differentiated feeling now, of different earlier. the about to providers but next other space some don't know to thing in in marketplace.

banks. that smaller you to larger customers, these difficult churn it's to that's there the the thrash and which that regulatory So around deals get you little have the been of then out ones get on done to going providers some the really And a have with have the gates, are the kind of for the or longer.

now. I for to what that's contribute rate the So us would win say right

Andrew Schmidt

you a past. have know a the about Maybe bases, over a you Very and on talk just things your what guys the to nice. -- are reminder. dig And whether there initiatives in I a the just on, always moving cloud, public progress technology little that. I and but of then maybe little going number into things you're streamlining guys doing doing time? know bit. this then we lot, gross workloads influence code like it's margin talked then through Maybe internally

Matthew Flake

Why can if you gross about improvement stuff that the margin through. talk don't about David, you you're products? then the talk And seeing

Kirk Coleman

Yes, sure.

the never question. asset. milking of just kind this history legacy the right? still, that 'XX of mean, it's kind few I out matter of right, we're pointed never for The into So kind of you the We company, of where truth thanks, Andrew, over standing a them. is get the go the if of you back mindset

And the going code to always product it -- and our forward, we think market and how or we're pushing whether underlying the infrastructure, so the even supporting itself it's that's about customers.

And it things, every would like prioritize and the of really simpler better every be inside that sure good there's you complexity interest having doing of way making processes. there as look, kind smaller It initiatives, that very some cloud that, of And the are choices also clear but compound naturally and making. us. we're so we day add I things kind get it's say migration, could that like just the chase that lots a on do of could from things right it's the the focused of company, we operators -- out big sight day, of That up. line being work whether with be making business happens to single that that that into we're just

that. we've think really good at gotten I

our terms little going a throughout in add opportunity ahead we of excited helps up. better about also things the see in terms areas there. might that things that and all like company pays for like as that It's of lie you mean to in artificial opportunities the some lot We're of dividends us that And really those that how be products. early us some helping but play that's of also exactly to a just operators, but what out, really say intelligence

it's of of and right, of it that repeatedly. lot of way swing other sustainable one the kind not could that on right? operating, makes stacked of a also that one big just a axe, for but It's like do something it's the things So we -- top

David Mehok

on of an initiatives, margin that's to impact touched gross have you them, one Yes. And on not that P&L. Andrew, the the one immediate to going and is

zero positively have workloads You've sure to in X migrating to absolutely X with to impact look material to feedback doing starts out gross and years our disruption. out concert that cloud. and making the that margin, customers there's that's got on We're before with their

can in workloads migrated following XX% about year. of next happening And we're of the get do to it's fashion. assume going another And we'll gradual over year, it. a last that you years this the We XX%. about so And X remainder the very

pretty gross in obviously seen we've you've significant increase that term, margin. shown But some shorter

do workforce, it think by XXX some of about improvement. to without migrating Most can't that like global you basis points is things that our our driven it's with of and I process year-over-year. doing tasks

much So more the and with We're we've were XX to we drive repeatable organization, ago. a improvement much to support. our even able things so predictable, across able process months result, able same been and than the to as make workforce thing more effectively global doing utilize

so process, customers extracting providing and using on way. lot that a much then packaging, make we're to deals internally we the thoughtful doing and have renewal going in levers and not renewals. different obviously, pricing tools that And also sure and also as a only we're that we're through through the with through value we're process to that We're but new doing that's our more

of that adding X are from those what gross accretion that's seen other, X of top last the quarters. type margin the start each and us all over So up, those to stacking you've you on of drives

Operator

further This no time. today's Ladies gentlemen, participating. concludes you at and questions this are call. for There thank

may You disconnect. now

Q2 (QTWO) 2 Aug 232023 Q2 Earnings call transcript