QTWO - Earnings call transcript Q2 2024

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

Operator

Good afternoon. My name is Alex, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Holdings Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] Thank you.

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

Josh Yankovich

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

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

differ forward-looking Important from filed factors that Investor materially which periodic SEC, are in with in statements may reflected the reports on copies those our could found the cause of included actual results be to the and quarter Relations on Form second today. discuss quarterly section our and this of regarding release press report XXXX results our subsequent the for of we will distributed XX-Q website, filings afternoon the financial including the

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

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

now me to over the Matt. Let call turn

Matthew Flake

sharing saw and across generated I'll detail. In I'll to results discuss start Jonathan businesses. by highlights hand call strong revenue provide revenue, into of flow another and adjusted second quarter results from with it XX% in had Josh. of solid then $XXX.X guidance. David end of financial subscription more year-over-year, XX% the our up improvement on then today's exceeded high $XX.X of emerging our million second of guidance We cash delivered we and quarter and year-over-year. quarter, our to will was business. more free or insights that million, we our in financial strategy non-GAAP EBITDA Thanks, the results XX% revenue, we generated million. the and We continued over which up $XX.X profitability of strength

X, X sales We in Tier X activity, highlighted win. enterprise a In continued and strong to by financial X deliver we addition results balance deals, performance, was the including Tier to sales which quarter. saw X good an of the

market. single to differentiate banking the like continue we in Studio in performed factors in digital Innovation how platform, we're QX quarter, On with pleased and were side, new net commercial our us the the strength

QX innovation to platform deliver Innovation means our a retail, our X of billion of single wins as $X differentiators. to exemplified and to to business have and consolidate incumbent Studio replace quarter The customers. QX's will use in all commercial. the for multiple more to solutions X those One plans small Tier And [indiscernible] platform their they use

Tier the that pricing relationship banking institution. to relationship and digital pricing a quarter won our the pricing deal wins, meaningful new also with loan across both net purchased support treasury platform to bank commercial addition X in our we In the

we the in with specifically. had wins On side, highlight several the I noteworthy expansion quarter wanted a to couple

M&A customer way had The announced We a of merger. first Tier X strategic transaction. an a recently came by

quarter, hedge customer current put During original lending the more they our to time, the services. to the At their treasury price staff. solutions expanded available optimally platform to QX of their pricing agreement loan same commercial our their make

solutions. still customer a with institutions our coverage relationship into expansion expanding is opportunity space, our X here. relationship substantial is have This usage believe we aggressively QX this enterprise years overall in pricing their of And its we a which given

another of lending, great solutions climate. just pricing our lending example a challenging solutions, more relationship our not utilizing broad It's in application also relationship of pricing for customer a the demonstrating especially

to summary, of our to an prioritize performance. and technology investments QX. it's strength pleased we that of customer with view strong quarter well-rounded In activity, environment remains we consecutive continuing sales diversity credit several And quarters sales the clear and With of to we're another the base unions asset continue banks believe are as strong. demand that

the We unions. recent their rankings of XX% credit are XX% of and the XXX banks from Forbes top top

position customer of up opportunity terms the quality picks in to expansion well serves insulate Our and base in the M&A event back us our business and space. that in

annual better map the product our Another we with shared customers into road priorities major for and acquire innovation that banking [indiscernible] the momentum and half. and highlight conference, compete from deposits. Connect, can our [ second retain quarter they prospects, in ] so Connect, customer heading builds At consumer strategic our was which

it side, value solutions. and institutions and to of on drive ultimately with we our Engage, consumer the with under proposition, In they consumer consumer us solution, merit. our bringing differentiation make QX we'll further enhance With all can are do banking financial see our so, for and umbrella capabilities all easier digital one consumer doing surrounding

hear is Andi to for specifically, implement to shared Copilot artificial thing products of QX portfolio. more AI the product example Another was and about AI strategy key Centrix Andi at within to our the a customers across practical banker-facing we our of plans Solutions. that across risk and eager the includes intelligence were which addition products generative our fraud management. conference, application announced We holistic One

interface with Andi The fraud risk holders the in and disputes reviews, streamlined enroll account protections. bankers improve check can to

We of program, developing early Andi process which our a are adopter our beta Copilot a actively customers. with also through demo we shared

The capabilities of new, cases Andi customers. to use is range next knowledge with deep of of Copilot tackle generation being large industry designed model banking a our high-value the for combine language our advanced to

of still in to developmental with clearer help While only in banking. early adopter us response stage, to from wave this the navigate it and is partner program are them ready made Connect the the customers AI next

a for than but was QX Innovation components least, Studio attend And not banner more customers year their to part the which it conference partners had leverage take stories in Innovation discuss for the Connect. a at will ways share Studio, main had we first the of giving ever. key stage, success last new for on and Jonathan their in We And moment. inspiration time, fintech peers

continue technology that the and It's to for the ecosystem apparent leverage excited maturity differentiators and and market want of customers breadth broader from us, we're many to partner expanding. are our significant

investing contributed technology customers 'XX yet. It are prospects the of person half was In into conference to continue customers, the in they're attended the partners. for our most and Connect prospect plan interest we're successful moderately to conclusion, rates. fintech that cautiously reinforced deeply back us with in optimistic momentum about The our engaged. They and highest lower of and existing bringing the year buzz has around Connect

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

Jonathan Price

our QX Studio, with our customers partner start more success the and of mentioned, innovation Innovation I'll role year. Matt. Thanks, vital as of helping drive which, better played ecosystem in faster. what Connect critical customer reinforced biggest event a in plays a the Matt our role

attendance alongside have who of in roughly the our we're the exhibit product QX's event's comprise embedded this and We team. majority XXX contest partners deeply in hall year,

several we on outcomes mentioned, QX Studio. to our creative some use present stage As keynote Matt of to of Innovation business compelling customers invited through driving the they're also

road customer Connect. platform fintech uses that business retail, long-term example, in In a that bank $XX Studio at QX the via for their growth they're Take, delivery and experience a XX far watched for they SMB more solutions billion in Tier where business a Innovation quickly their into year, segment, X been than They're Texas would they total, X conventional partners X more commercial. particular, with payment shared small driving near-term in And on model. in in possible focused launched map. have

increase The bank revenue-generating has activity. used drive services business a to these meaningful in

our an and card had invoicing enroll from to service it Autobooks payment merchant For credit drive example, and partner XX,XXX transactions. used in XX,XXX they've businesses

clients And is for enabling more aggregate markets. speed valuable partners results, and of than the bank compete to quality commercial the in their these new the

commercial prospect our story the urgently. international prospect deposits. this bank a $XX stage, solution shared a about needed in winning modern On million wire with This

to they've the differentiate solution their and to multiple national one is worked of of just PayRex, this to deals deploy in with QX out the partners head-to-head. one banks one used which deal, time money bank they of secure feeding So with center competing were And the and this Innovation our Studio ecosystem commercial where win.

create never are just their reduce heard financial outcomes able strategy session At And to using noninterest from institutions meaningful to efficiencies speaker saying, Innovation drive business stage, financial these it "We this of Connect, would execute volumes, a operating can examples executive deposits, income. grow without by be concluded drive. QX On their call Studio." the few we and institutions

revenue wins that why This a estimated side, us helping their potential been savings spend over On new and where Innovation offset driver of the almost shared with net as in key main is leveraging their kind our this on consistently the share through XX% of QX XXXX, model. stage, that net it's past they digital the all in by banking Studio they is new one customer quarters. differentiate of several cited cost peers

expect customer usage to in XX% continuing adoption see banking customers the we're Connect digital to platform with accelerate using it. from of we over and growth now further our And stories And adoption. activity and

new solid and activity major This grow strategic brand XXXX The is X customer strategy was in to top in a major in XX the customer accounts an has front, business. great the fund Helix aggressive U.S. On and space, renewal. a and lending and order we a in deposits story. question that growing put quarter a to the brand of renewal by highlighted fintech had net wins forth customer

enter value In as choice the Historically, they've essential grew capabilities, deposits. that phase system their the them of bookings enables their of recommitting platform long-term next component offering the and Helix renewal, they checking relied they benefit relationship, multiyear and their gather the of that Helix to signed of as business record of customer on for extension from a savings this an score to and Helix growth.

their growing to in This strategy so at provides investing its BaaS win tremendous brand example scale. proven of a for operate ability Helix and a effectively doing that's with

With our that, I'll hand discuss it financials. over to David to

David Mehok

Thanks, Jonathan.

now revenue in subscription-based of our we above discuss second generation. increase to our end with continue quarter ARR our sequentially. we and and updated strength free guidance, full which the growth, third for our up a will an is in results results, of reflected flow increase Our quarter and bookings, XXXX. Revenue I high adjusted the see was financial for and in guidance our detail in XX% more year-over-year year X% our conclude and significant million, cash EBITDA $XXX.X delivered

revenue customers which and subscription-based sequential existing The driven by Our growth in new from sequentially. addition primarily year-over-year growth grew primarily was sales was revenues, expansion X% to year-over-year customer with go-lives. total XX% from and revenue

mentioned improved quicker new expansion compared renewals, from financials to As almost net cross-sold wins. on always consist we and to of solutions revenue a contract which time revenue opportunities, have previously, generated

drove our we've customers In of existing the revenue first contribution the year, the revenue half the subscription of from overperformance majority observed.

discretionary We in professional of and on see half year for services growth we our first Based emphasis the we're foreseeable on from decline the a more of which in continue would services our the are predominantly to observing decline in year-over-year higher-margin of opportunities, and other revenues, trends expect to services the targeting revenues, the future. nature. continue our level

$XXX to quarter of second from grew at ARR of up the $XXX.X total XX% year-over-year or end the revenue million, recurring annualized XXXX. Total million

Our year-over-year from ARR to up in subscription $XXX.X the $XXX.X prior million grew year million, XX% period.

primarily driven expansion from wins Our well as with customers. existing as ARR was year-over-year customer growth new net bookings subscription

decline services-based was in a total by revenue. continued negatively growth ARR Our professional impacted

and customers The extending year-over-year $XX earnings X% a million representing contract increases as customers by solutions increased and new net were new record backlog million $X existing approximately year-over-year and sequentially additional as where Our growth. sequential well billion, solutions from strength durations. renewals, generated $XXX are adding sold or continued XX% to of in and primarily

In months. the bookings addition, new positively our year-over-year by strong XX growth over net was last performance

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

prior margins the from within increase subscription-based Gross The for gross were driven efficiencies up year XX.X% functions. previous an and quarter period and increased second from of year-to-year quarter. higher-margin margin the revenues mix the by in delivery XX.X% in support our was in XX.X% increasing and

expenses Total or decline quarter from of scaling or second came in XX.X% $XX.X operating marketing of quarter. revenue to to relative percent previous were the of revenue. in expenses and revenue of the a of million $XX.X expenses as XXXX or XX% million operating revenue year-over-year The second primarily $XX.X XX.X% improved for and of million quarter in compared the revenue sales

our to as while expenses as improvement through G&A. of able drive a as also ecosystem. revenue a The reduction operating was as saw were in a of We efficiencies within driven expenses and development also by innovation we R&D efficiencies revenue partner sequential well percent as accelerating in percent year-over-year research

As the $XX.X hosted in in period, million. EBITDA Matt client record XX% Total a million $XX.X Connect, up conference, quarter. year the for XX% approximately million, second sales from mentioned and previous expenses by million which in adjusted marketing quarter, quarter from $X.X our the impacted the annual was $XX.X up and prior we

in cash, profitability at cash cash and the by effective from quarter improved $XXX million, $XXX working quarter. and management. generated driven with quarter million, previous We continued second of million of the the up flow ended investments end $XX We capital of equivalents from the operations

dynamics For XXXX a improved at not million free favorable million in $X.X of also EBITDA in of adjusted over cash meaningfully This second were persist by generated year from $XX.X thereafter. XX% XXXX is may of and to be previous we cash flow full timing of quarter. was the expansion target and with profitability quarter, which free percentage a the same which the capital the cash flow some third year-over-year flow in the related level quarter, the and as expect still of We the free driven second up for quarter. of working million $X quarter during of continued the

enhancement we provide to seen additional returns. in over credit financial of our of couple Also, the strategically a afternoon balance the this to revolving long optimize strong experience you in have to may [indiscernible] term of capital past over performance sheet, light the our flexibility opened years, with our including line deploy customer significant shareholder us and

plan drawn time. generation We current remaining have down the remains and retire convert from sheet not in and period on and cash maturing of cash using over balance existing to our revolver debt free flow mid-XXXX, XXXX the our late that

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

we've growth be to and bookings has continue initially this based about demand the the full XXXX. stronger accelerated which seen for optimistic year subscription planned, We than expansion year of revenue environment,

million, X-year believe result, annual more given representing year. $XXX.X revenue we XXXX our subscription growth to $XX.X year's approximately and subscription And growth growth to $XXX.X EBITDA We our approximately of given be XX% non-GAAP deliver year. million in full a on of we revenue to least adjusted our forecast ability average As year anticipate XX%. us adjusted previously growth XX% million for disclosed has for third at million, in the revenue even This EBITDA quarter XX%. outperformance, now our of rate to increased be XXXX subscription subscription of will conviction target the this $XX.X revenue

of In initiatives. the guidance operational financial second revision driving growth revenue full sustained reflects results and our strong for profitable focus quarter summary, upward and improvements year on overarching the our our improved mix,

communicated of EBITDA well to on this margin adjusted growth half XX revenue Rule the of the put basis basis, subscription we target the revenue quarter growth our and XX year. positioned subscription of a remain previously back in total revenue second Our Rule a and achieve on over well for us

encompassing plan flow our expansion revenue value. and targets, longer-term to financial aligned We shareholder growth, continue against conversion strong profitability with improving execute cash to continued subscription

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

Matthew Flake

Thanks, David. great had strong second by In closing, we continued sales financial a success quarter and defined performance.

On together both a range terms put of continue the quarters competitive consecutive sales we see of execution, differentiation solid strong We've demand environment. a demonstrating front, expansion net of new opportunities. in and to activity, our and several

EBIT in at better-than-expected continued (sic) and On ] our the towards targets [ financial the demonstrate adjusted side, progress results flow EBITDA year. the we subscription this beginning of revenue, long-term our cash financial adjusted shared

about and the As in positive we strength the favorably profitability second product, continued enter of us our our base the positions of believe current of profile. our and environment. strength feel good the half year, we economic the environment we customer And the demand growth

thank it operator you, for and questions. that, I'll to hand With the over

Operator

[Operator Instructions] from the Sklar. line of question And Alex your first comes

Alexander Sklar

you. David, with starting

puts year that XX% But quarters a and comments growth still Just of year quarters more the go. you early to that had are couple nice takes in at straight your there level. today? some terms I just about -- this stand things of of at XX% XXXX frame can appreciate for X of kind now growth. [indiscernible] look We've that's of of ARR subscription as why more you next the really subscription shift

David Mehok

Sure, the straight Alex. of set Yes, me Yes. quarters ARR. it. X level And first, on let

quarter growth subscription rate If and the that, that that's X averaging you we're and at QX. last aggregate quarters you this saw the in certainly look XX% about

We're other now ARR the itself based subscription revenue of deals year of time quick a the year. sort We we this. a to strength the of implementation. upon manifest expansion QX of opportunities. of Those seeing lot deals to time is, right some the last large barbell side to see do this in that have And approach of a barbell in had and QX around longer

mid full So get live until that they're subscription year. you of be that, to about going when has growth think our until that next not XXXX. a going impact don't rate, on And the year you

that certainly some seeing subs of that growth of Today, to benefit growth, well. as some we're ARR the going of the that you referenced. So we're ARR see

really but to starts Next it next that you're year, stack of we exit year. as the going benefit and see to up,

that hopefully, gap between an subs the right and what we next you're versus bridge rough for, So standpoint for on now helps what seeing guidance from seeing year. what ARR then we're gave

Alexander Sklar

Yes, I color. know it's a great

it is just more of already now. some one So benefiting for Maybe you. follow-up

terms and activity. good subscription don't you really in split margin, called Just out you always know I of gross margin, expansion gross out the

a called scenes lot You what good get medium over there's of know infrastructure here. really today work renewals are you the kind few as Can blended you side. where behind to term to of out quarters last you margins the or relative underlying gross been subscription positive help number? just think a the could I over the on on frame the report

David Mehok

Yes. And about before. Alex, this we've talked

few support. both implementation talked we of our to in well getting the a hairs, the terms the lot about, well you if think operate still We're XXXX things being to we of that regards over margin the that in within XX of that points as around one put years, cross way terms we in last of target will. doing as gross is I there through out

process, of question through margin this you rolls of mix But efficiencies has revenue is that opportunity bigger that over to have benefiting there gross points go business. the subs sort to around specifically implementation of plans overall up to. gross then we place margin. And the And to years. just the off, about. we certainly the And And as in specifically your to to coming and talked when imagine, The subs what subscription structure that on profile this, continue the a about XX get of to can we're is typically drive driver talked We've cost we renewal improve. the continues more.

where now So from of that's we a sub right indicator standpoint, are good overall. a

we've on to made transactional. and services, we overall we progress obviously, efficiencies. services we've and made the does to on But in put you track that our -- drag forward. good we're pricing the margin blend mix some professional progress of the those feel good around still in feel blend profile. feel and margins the But gross gross on an about like the We That the expand subs for about continuing going implementation

Alexander Sklar

quarter. the on Congrats

Operator

comes line Schmidt. of next Your from Andrew question the

Unknown Analyst

Andrew an seen range towards a And mentioning a either? on Schmidt. Well, some of lately, rates, Have This recently? have banking digital providers FI products this is a Wilczynski rollout lower end exposure impact of there's impact wondering focus you FIs. on you shifting David sizes for smaller with also to if been legacy competing win the has an

Matthew Flake

time as towards acquisitions, Yes, to win -- for and and well little approach going we as long has your they X this and going banks a this if bank really a way credit Tier size want lot much of the the success bank a quarter, the continue attitude line. because that been, the of view. we better, as are we the X as to Tier ones to that work be the they're want the grow. unions do taking historically a rates up long-term to on in don't technology they're focus But in We not you had the the the where

as So of we a favor ownership a technology team that to use a side certain we wants management asset favor don't really or shield. a group and an more not weapon as in

-- change no no So there. there's

really newer seen but haven't know rates where I our of. historically, the been you a competitors into as to space win any we are I go I like win dogfight they've is well. said, far and deal As Every it, do to that jump competitors, continue other got

problems still lot prepared other solve our broad and set of lot we single coming will for have So players them. a We with of that there of vendors a address. and a in, be can't we'll platform products be new

Unknown Analyst

historical know end the consolidation following typically trends, of case landing And to impact return I historically on from slower benefited to trends? the longer-term continued norms And election? any market consolidation is there in you've targets the the acquiring to

Matthew Flake

have to different acquisitions. hard predict going Each on That's view happen. a probably what's will to administration

just So happens what well. to that. election doing see we're really wait I with the I'll probably think with But obviously

If the you in quarter rates the we're at the and look numbers win having.

And would be the be historical trends so M&A for -- kept tailwind would if us up a if they picked up.

So to -- to and predict position going to a not in pontificate it's who's what's hard really to going be. that. just what on are I'm win results have on to going the

So soon around we'll call. the earnings pretty know next quarter

Operator

Charles Your of next Nabhan. from line comes question the

Charles Nabhan

failure Fed Pretty space from the around increased high scrutiny with comments quarter, some industry. the along profile the this BaaS and overall in

just was you comment those on I So wondering X could if things.

that opportunity Fed does you might around for create then First, failure on Helix? BaaS. the announcement recent secondly, have And any thoughts

Jonathan Price

certainly created of both take about When you I'll noise vendor that mentioning, space. in has Jonathan. first think it the It's Chuck. some these. you're Thanks, Yes. the

is front are a the names that around of that very definitely going small be of not as been at I the of it's been customers and that set have look say that different mentioned it's us opportunity fintechs you brands we fintechs, situation. think and look at some impacted the we're in over the of just I'd have publicly, -- range back to opportunity on But because what and that. the remaining of we prospects disciplined see about that

mentioned and prudent makes one successful Helix. live of off and being really of since that. going be we're year They've earlier type that We those about customer about what very We're thoughtful one us. careful sense conversion platforms. for gone on was been to So this

and the good So sponsor say are our banks of process. the right an have like that traditional actually parties truth do just out abide bank, a about comply can opportunity set the audit the core coming way related and and that being it. space. and differentiator the go you the is position as It a would the the think such vendor source the I playing and big to regulatory a that and be fintech in able by of about And we in feel all sort of both both when regulators

everyone is there when bank big building seeing around space was a the that and through that it. X over because our general differentiator are space. some into so of much around this be And for vast of of view to I in at had their a for kind people us. the on moat wanted to look kind And the ready partners last momentum Helix, now pain So they the business FIs go these as years

And so it's bank our we space. partners a this but vendor that's really as in differentiated, feel like not us are just that experienced

and own closely, been putting really our focus weed BaaS in business pickup, out we like, when about environment around the way regulators without by and and they And banks that of feel around that the how the players this so aware question, second it where to of your the that's in a again, will our to like very of the the a as partners playing space historically of are anything, play this to sort if think evolution where, but and it. as the really bank. environment, rigor we regulatory watching feel down And act play regulatory some and discipline really the building are comes are business

view of do as them a we kind an as like they opportunity vendor. just So for this

Charles Nabhan

it. Got

between cash follow-up, how cadence metric and we for comment conversion XX% down a And free year said Okay. on quarter I I know expenses guess or the will year -- quarter you the the half on conference as related were any back this we there with you the could color. Appreciate should nonrecurring consider? the sort the of that, for come in that for conversion? should then quarter. and flow fourth that of transient think And a topic, But third associated the about that the third

David Mehok

first, was $X.X quarter take in the from terms expenses incurred. last million Chuck. Connect, I'll the last of about we Yes, conference one that

flow. cash around was which question, first The

seasonality that, things in we of the that have working normalize QX. So capital somewhat some do

So cash of then QX. flow our from you'll flow in deviate that strongest year. normal cash to a as well regard. the And anticipate dip is free as from typically seasonally a quarter we're QX and going in operations see strong seasonality QX, see and we don't that you'll

Operator

comes of question Terry Tillman. next from line the Your

Robert Dee

most And This Where of you do on and Xs, half building Tier Bobby of generation the see Terry. then Tier Xs, et the cetera, between year? demand is I over Dee back for Tier course follow-up. the one Xs, pipeline have strongly

Matthew Flake

have to strongest. probably and X to looking that had say in strong I'd when have of are big it's particular X probably a the Tier we quarter. just with the to X back and credit should But building Tier fill that it's grow a Xs. compete say in lot in the and it's up. deposits Remember, is deals. we We X Dee. is now. I'd are The back for products But us Tier strong Tier the X, going -- space solid year. half Tier Tier have will think union Xs And Tier breadth retain -- commercial with won banking tough right them. side Bobby the Tier on that -- X finish Yes, us, space for and to of we that strong the But Xs especially X is include the those pretty offerings those Tier and I the a

Robert Dee

is base a product? on demand the as an we'd much how it? more then update And to And the opportunity for follow-up, specifically, to love how PrecisionLender, get for ahead lies back Great.

Matthew Flake

right we PrecisionLender But like it let a of the a treasury 'XX, like time, a an It's to long half a It consistency Kirk had I American been of top didn't that. now. 'XX. us with But year. for chime kind really in see that did things back up deal the -- of the pricing I pick It -- complex with -- customer, you're market and of for seen in 'XX a a in financial customer pricing. premium pipeline, Well, I'll late because the us treasury seeing expansion very opportunity tremendous the on premium there have way XX we and started it's there's looks kind has a you're think. North pricing we institution.

do that, pretty you've anything in... to want Kirk, you been So to add involved

Kirk Coleman

you price are our both commercial profitability, right that product think the customers maximize their sure we're of It that I their and relationships been important addresses to also key the interest to profitability that. treasury but mean, revenue mentioned it's rate, nailed they're relationships fees, deals X really they can banks: in important structuring with I We those correctly, addition release, -- generators All the for and success offering. So make now carefully, the right? premium services. watching banks it, your as seeing retain never an That's well. to pricing these and and really

in at these the bank, customers are right, big most valuable these a operating These companies. accounts commercial

the we going demand we demand premium that's its so feel And and also about on about so the pricing Customers treasury forward. this feel good there. own buy can different year,

Operator

VanVliet. Matt of line the from comes question next The

Matthew VanVliet

the quarter, from a saw second of RPO based you've here of pretty It times one We first had sequential quarter an years. growth first last sort sequential the strong on several increase here. actual to was which in

base? seasonality the customer little is, trends I have or environment in opportunities buying think So a about such outpaced? bookings question the overall something the as annual more being lot more here guess, of a with could the year, sort I changing of you've linear a expansion throughout and Or you or outmaneuvered guess industry the we large that is there

David Mehok

necessarily it's the that's of call our a as of expansion. because call, I we don't on from the think organization teams lot really in execution anything Matt, [indiscernible] across this coming is mentioned I that what behalf solid

as getting with better tremendous doing unit. quarters They're about of value doing And value this little to And cross-sell renewals. quarter job, X of ability from renewals. out as everything includes more get well So both expansion well getting this probably our encompasses is as per straight getting a term, cross economic and better. that incremental sales a as getting bit to every

When that's QX. as And add a is that, backlog you going during you do you the if can saw those renewal, significant you calculated, that backlog. know, things to way in

and $XXX we've You've year-over-year the record, few a quarters. seen XX% time. over a is highest growth seen the I is that million it mean a consistently in rate long last of

up. from executing them and customer and we're value And standpoint. unusual It's sequentially, on making that even to your they're sure we're existing it's our appropriately. value base to anything And point just not a understanding that seasonal the selling

Matthew VanVliet

then from And look it as new contribution on X versus it's existing the basis? go that been customers pipeline if of that you've customers? half last of you 'XX, look so net expansion the -- XX terms today there much balance a difference second much maybe a towards whether that or you do out in side you How as at where how is on or quarters to into versus

David Mehok

the the we've early changes wins seeing of quarters. don't late side that had only year, anticipate really wins some opportunities that we're long-standing do with a year, the last expansion, things, opportunities mix have but much that customers, we're expansion now. to we've them on with to mean, of this last I net last year too fully but year couple we in these with our great with had some of going some and and Yes. the what of we're from we early I not from seen continuing well think new

this is So more I of getting is this think to the than I seeing the why expansion we're remain anticipated. similar. from that you're subs we growth and this think that do that the year. incremental half the that's amount year, said somewhat call, mix the I And first on going

floor if entering we said see this growth. a XX% We're XX%, you that take in next XXX again, up year, that's look going were we And at year, to to basis obviously. aggregate, increase, a of compared year now point this to subs

we're had look X anticipated to and you we we this the better entered when in than And years growth, be of we when year. would at executing aggregate, subs driving able we thought terms in

component is good would forward. So asked right going the first say, about, about I where look we going half what stand we're you that that we now. mix really And to feel a good like of indicator

Operator

from comes the question Lane. next Parker of Your line

J. Lane

that talked with common you main I it outcomes industry in X being Matt, pleased any stage earlier wondering this net transformation was with the there performance. the particular in, you play digital new of about is X a new net variety wins there? out to the is seeing there? you're there of you're Or achieve different themes to looking pain Are points? at

Matthew Flake

we've of products before, Yes, wasn't features, build weren't to those difficult drove in updated a so of the the think much products. on this stay the there Parker, I It's for just -- but And R&D. covered didn't pandemic, you investment lot that more after utilization it's them products.

and And demand you of competitive solution that stickiest environment deposits have. those that's having profitable and deposits, most banking importance plus can the driving grow that's the your retain a commercial they

had you're forward. continue I and as see we've theme move think the that we to to So continues, going

We them. culture day a product people we And from in We're for of care our years, of travels are product, call put pretty the That the our corporates. with customers differentiators so where getting stories there's too over have our news customers, us. our up take being banking But marketplace, innovation help in XX hearing deeper our last product, a and away the win. for last Bank earnings the larger functionality XX to product Wells Fargo, over particular, good many better products, the in but things that the that we've of they're on and every list lot commercial into the Chase taking we fast. America want customers wake CEO getting

I So we've if for continue pipeline things, as to that at to do those the combination, see the And we us. as is I continue working long had. think, we success think look I

J. Lane

any that for And to of a bottom the sort Is or one out faced relative in challenges David, an area clearly headwinds. you the facing you're for there potential you. XX to it. or is Got some months so? Services quick normalize that last time line

David Mehok

used to Parker, I the contracts, the we we XX% based first them These in that for foreseeable about of annual you a term I today, reason. future expect what on are that them, Yes, mean, decline in of half saw X/X rate nature. know of continue.

certain the net of mean the case months. new the net good visibility we've if I work customers on course back on a considerably that's up were there's you the we've of amount we some that's So seen the the over executing that and no And they're pretty pulled have is new XX dried year, fairly existing up X dry of years, go every -- longer got X or back doing. what next

an One need call of things. we'll They have right? our about the what the nature. particular to is couple website, vanity that not happening. reduced. example, are things of Those as Think as They're do projects, logo. help discretionary kinds think in rebranding in about a gotten you If that really those

another M&A, one.

If yet. some the seen there to level that You've isn't heard not effect, in out industry pick you've we're would point from that see there, at as was could and seeing it picks M&A there up we lag start out up at a it an thereafter, standpoint, services then could be ago. X but same years time,

don't majority final that to about we've a acquired. component is, And know, the continues as as that of with we very acquiring and revenue a as large working to a then change. It's over gradually have standpoint time. as foreseeable customer which big talked us. vast So we that from experience was a possible as happening make of but that We're the while trying bleed anticipate, entity, I seamless be them, for was this we're it, ones for continues to said, for we sure well that that off. services for the you headwind And the make future, services that

Operator

from Hotchkiss. comes question next the line of Your Adam

Adam Hotchkiss

AI Andi hearing you how like space? team. a And more their the adopt think desire of using dig Matt, do bit partners on GenAI, I versus just internal to about your some AI in from QX around What what you of AI your efforts risk Studio. of and Copilot been little [indiscernible] how historically Innovation financial are then institutions, are wanted has our to a sort fintech and

Just would any incremental color be useful. that around

Matthew Flake

Kirk, Yes. don't you why [indiscernible].

Kirk Coleman

Sure.

of approach stance to very they with have So they're about in interest that in internal know as We to there's risk Connect think a lens how they regulators But responsible, to customers very other about we've a how and in measured terms a AI, say their risk-averse. to taking but through solutions. it. you of doing -- think being they I they they're look like they would their mentioned, when and lot and it that meetings of practical answer at and ethical new because understand committees we want had

black giving might We're efficient focusing So and how with right can what Copilot, make right not advice efficiencies that the already on the context we time. bankers in really new boxes. is be they that them doing we're we and and assistance using. by more Andi on not products focusing at means then embed how do And that

And situation be with to so an a if the a lot of for be but trying case right it's a this example, GenAI do bank might might the that not because use right great tool, the appropriate of also has we use as AI single for getting every [indiscernible]. type that

banks trust they're our as they with partner. So -- what they're we've found us interested, accepting, that is a

having very difference. We which have also a big an a huge from data amount makes of advantage

is people that of from application which the -- on, reads documents have commercial kind categorize beta categorize focuses data everything able the really using the a the paid all workload, some which loan like really we're and of that financials, of commercial technology Copilot, from in is reducing that Andi really that way for useful both that highest handwritten bank, complex up also bankers, proprietary the to and we're in bankers. from kind with documents, In what to product it make the we

assess uptake they and they the there. from the continue their be getting of that like of customers. risk we there. collaboration we're terms We measured kind you But mentioned, how -- So like in interest we the our as to have the

Matthew Flake

us ways that terms efficiencies own on we're across front in and production kind but I'll experimenting using have The is helping we, using different our we're course, mention of all drive that. of that well last in teams, this and that it as with things are our the of thing teams, with internally that

possibilities. So it's a of of range kind

as I for think evolves. a that we'll while about be this talking

kinds our a Innovation our of Studio, fintech Innovation wonderful great really terms Studio, and well. And XXX as story opportunity a innovation another just capabilities there extension. of It's of our partners giving we of in customers than lot a lot more across partners is just different see in

Adam Hotchkiss

within And earlier incredibly take through David, this the we Got seen growth to I appreciate subscription some That's on an useful. just it. we've to of a context wanted should question. how really think outcomes subscription that But the up then, time the mentioned? about XX% likely color X-year some how I ARR follow the be high-teens as model. floor more the Or the flow point? range think and revenue recently? of of you CAGR at about that into I your the of we you've Should longer-term guess, viewing visibility given how strength do

David Mehok

in right? specifically of year as drivers year, sort we're that feel terms the this good we very well. which mean level, And the growth maintaining some incremental that seeing. feel strength, about of subscription the XX% we obviously I talked of about about next revenue good Yes. We

make point that at X-year heading course over sort of particularly a fully not to We're 'XX. the going get of demand time. sure to the of lot things into want FY guide we that assessing into the just of There's we're and this couple quarters in next

from target we when want then the it's but 'XX previously. revisit that and that appropriate, So that we'll yet don't on to speculate provided changing numbers

Operator

Your next comes Dan Perlin. of the question from line

Daniel Perlin

this of growth being important it revisit like clearly than to forward. part motion to is expected. expansion-based the It sounds wanted you just kind subscription surprised going stronger I an and So incredibly

like thing guess the you like this this direction? clients in to that like guys it is first market kind pivoted had is you the that of the is Or in -- internal direction? seems to a pulling push just I team in surprise it function demand end the So and of are

it's that tilted growth. exactly direction? the be because probably driving make and there may future in sounds product leave call understanding be is you Were for I'm a trying to I it guys with just while for going like to the this what's incremental sure launches that important

David Mehok

Yes.

little I of the a Dan. it's think bit above, all

is go the few few through The to gave. so which extract one, better than the more They first ago. the on had is incented you they that years economics. able touch were and the are which renewal years one, did first ago. so To a teams a example they more a process be I'll available, than So execution tools

risk Yes, And top another we're to of good incremental lot of sure process, the do for that to in are features can particularly of And existing reflected quite footprint. And and fraud contract, is solution. frankly, financial from their and product it's mind as that asked in customers. great Centrix part about you quick institution value better And products as adding lot example revenue, nothing industry-based aligning a an and seeing a a we're products well. that, you risk articulating a incremental in products, value renewal over and pricing. Then of imagine, we're having to traction. is teams is value of fraud very our standpoint, driving. it of our that as they're market-driven expanding of time a customers Centrix that's making When we a a the through job obviously, showing lot that the go X-year the

do market executing. we feel product them. very like upon executing continue right combination focused the It's a to job the are the based great set it's ability on So -- the all above. of team It's is of have having going. the of And doing a the teams is we and where

Daniel Perlin

awesome. That's

kind question is what it XX% in bit very you just growth think looks similar trajectory, stepped looks other little around the obviously, terms midpoint. the number XQ, the like just XQ down guidance. to I numbers of If did But a The at I the right, posted. of it

conservatism? so is fall of a it that in difficult Is harder. just Are Is comp? services that -- And commentary the little a there? you just seeing kind something professional maybe bit I'm off wondering it on

anything that around So would be helpful.

Matthew Flake

walk that to then through a from if we will I'll year-over-year Dave. bridge Yes, it help sort sure, sequential still you of can desire. standpoint, maybe that obviously,

plus to sort sequentially, QX it for at look guide X%. represents X% you if of the But

why quarter-over-quarter. very reason roughly So do is tax business. The in business of have it's Helix the flat of Helix is season terms peaks. roughly we focused seasonality The revenue flat on

So seasonal obviously, QX normally season to is we've exited a QX decline. tax

are one, professional those second services. The

services broadly we seeing in we're sort So speaking, just FRB. going be about And of next customer business. what's rolling months. talked the to specifically, one over we about, pressure talked know also X We've off that

to embedded what's sequential for minus in that's So X% plus X% QX. the

then guide X%. And the X% embedded QX, is to there up

actually baseline. into momentum QX from the and QX good So

that we guide. into of And see of based QX. So like in in feel a is then the to do you ramp that it QX, And and right now, giving we're seasonality the it. we we pressured some does good line what have seasonality see year sight a rest for upon

Operator

today's will Ladies you and session. all for that That joining. be gentlemen, Thank concludes for our Q&A call. all

now may disconnect. You

Q2 (QTWO) 31 Jul 242024 Q2 Earnings call transcript