QTWO - Earnings call transcript Q4 2024

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Operator

Good afternoon. My name is Aaron, and I will be your conference operator for today. At this time, I'd like to welcome everyone to the Q2 Holdings Fourth Quarter and Full Year 2024 Financial Results Conference Call. [Operator Instructions]

And with that, I would like to turn our call over to Josh Yankovich, Investor Relations.

Josh Yankovich

operator. you, Thank and fourth everyone, for us joining Good and thank full our quarter call. year for afternoon, you XXXX conference on join us are today the Q&A Price, Kirk the the our for our me call. of Coleman, will Jonathan and our Matt who President, portion CEO; CFO; With Flake, call

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

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

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

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

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

Let now turn me to over Matt. the call

Matthew Flake

I'll from start discuss call results before detail conclude sharing and today's ahead to full more first to hand our and with and and our by the highlights fourth I'll across over Josh. then year guidance quarter the results quarter I for to in call XXXX. Thanks, business. Jonathan a financial full look year provide the

In the quarter, revenue the non-GAAP end up our of XX% generating fourth results year-over-year $XXX million, we X% up delivered above high and guidance, sequentially. of

million, quarter. over revenue, with year We strongest also points approximately the XXX best of fourth We generated posting year bookings EBITDA the execution of the history. and improvement adjusted non-GAAP in bookings out quarter the an $XX.X prior the company closed margin quarter, quarter in the the representing adjusted of of EBITDA sales year basis XX.X% second of outstanding

expansion by a deals was and enterprise in new performance our the Our mix company powered highlighted a bookings of was satisfaction, well In platform and as by strength and Tier the for customers. quarter balanced best the and indicator wins, total strong X history terms particular, as total renewal of view cross-sell in overall of customer net delivering we as differentiation and renewal of X we're the value the bookings. success best

We address across well have of the capitalized our a management, a small sales we fraud and We sales strong and our environment across commercial results X-year business, framework. activity, on Our consistently strong that fourth quarter favorable customers year challenges a us financial and leading towards year pace great opportunities record retail, of delivered to performance wide for demand very range underscored business. a with board. on help renewal

ever as X year X X in it of we well-rounded in are space XX year sales year. performance. total a Tier with in bookings Tier most single we within volume up and signed significant digital After banking, drove well. Overall, we enterprise strong followed a the record 'XX, another And deals and

prior. signed as we nearly year segments fact, deals number twice In the in of digital the in banking these

and XX% compete small growth and ability a market testament achieved functionality cases we a to bookings renewals is demonstrated we've the breadth effectively strategic built the our commercial we their from renewals technology well execution both customers our to environment the in confidence and with have on relationships, for also a across their success as solid Complementing business to challenging XX last of reputation as and in initiatives. year-over-year. in market support of with areas Our up the record-breaking year over use our up reliance and retail, This resilience new years. expanded

reason there's cited as a a key reached be question continued valuable Studio new we that and success. Innovation is Also, XXXX. more year-over-year. Studio in being playing Innovation to net than role bookings wanted our more than Innovation adoption year, partner also XX% a in large leading sales levels, no wins of QX Throughout new differentiator customer our Studio to in double sales, the

signed and ahead. not products are enter relationship, the the Tier non-lending throughout segments price and to expand continue in enterprise And new existing in entire number On to about We've as to environment talked environment a renew relationships. and we meaningful ability for momentum just treasury year to and front, a the purchase with like rate optimistic XXXX of X commercial pricing new relationship products about the loans. modules customers solid price the demand our these services. the was existing year that customers the volatile key We in

to them and commercial to our technology and cycle us risk fraud payments more. of to pressing as virtually authentication our look of most the on Thematically, all is a topics Our account the well. customers. year minds fraud the have of role Because in-app from our plays, customers of the tremendous fraud across one retail vital holder manage and help life to behavior solutions

before. bookings growth attempted XXXX, our than solutions mitigate standpoint, In ever from solutions a fraud our solution fastest-growing the more one helped of our customers are And fraud with sets.

we the healthy in mitigating our placed help beyond. and to great to Given end to rise XXXX being demand a position we're our expect solutions, continue market, to for in believe we customers these in the and priorities see heightened by challenge fraud

of A throughout sales is set, take our of spent commercial years strong was for customers. natural key the that a expansion existing our base, And with building year gives driver opportunity a significant, customer customer performance which XX us the platform, because example. we breadth opportunity our

wires in out XXXX, were we've in as and sophisticated some the years of functionality more user in than of back spent code experience. and And commercial largest result, ACHs successful we While country. delivering and investing financial XX first the our been a in building most institutions our lines supporting and heavily

this to dynamic, Today, Tier customers XX that and to new still success. approximately just that's that digital powered more important our institutions in innovation, net of Tier The commercial we to investment an have significant use X Because the result platform banking, financial and of solutions. our Tier we did volume success record role in dynamic that momentum But reason a means a X This have a banking of year functionality expansion representing we of example. such expansion increasingly today, commercial banking commercial high utilize continue sales addition expect continued single cross-sell do renewal key than XXXX our not XX digital and side. enterprise to we platform one on our opportunity meaningful and digital is X deals. expansion play

our In in delivered year. total our Rule significantly basis expectations of in profitability summary, second we strong of our the and We results year on first revenue the terms in of half goal framework X-year successfully financial outperformed of financial growth XX and the in XXXX. a reached

His I addition brings cybersecurity recognize Directors. like this to the invaluable excited Andre Andre and team. add perspective over Newport joins March Before protection like Board the X. in in financial to Andre a experience QX, on Mintz Microsoft to to to of privacy, take Board held moment wealth of a among of will Jonathan, we're in financial Red others. the to to particularly I'd senior technology, to Meta, to officially compliance, roles the having his sector take the services data Board. hand at our and our global be an Ventures opportunity welcome and expertise QX announcement call to Group, I'd and

financial updated hand now provide our I'll the XXXX. call to to results Jonathan cover and in detail outlook for over more an

Jonathan Price

our our and in year which pleased full fourth outperformed results that strong and execution results our positions key for and growth record in Thanks, robust beyond. efficiency strategy. metrics, and ARR revenues, subscription-based across XXXX generation. our Matt. We've we our profitable subscription operational Furthermore, guidance, success of seen our believe several demonstrated delivered quarter noteworthy cash continued to growth We're announce us to flow advances we solid growth improvements continued well and in backlog

solutions With well X-year as the $XXX an framework. revenue year-over-year with XX% let for quarter non-GAAP primarily sequentially. million, existing in as customers. by was to discussing with new providing by an largely go-lives first year and million, and XXXX from of for our prior revenues, start sequential year-over-year revenue financial increase the The the that, conclude and the up more guidance the results of resulting detail was increases XX% were X% and for up financial additional for quarter me fourth year full full update our customer driven the Total Non-GAAP subscription-based $XXX.X and from delivery quarter year.

benefited services in addition, growth our sequential the in In professional onetime from quarter. fourth increase revenue an work

full of XX% expect we revenue the a overall of increasing revenue. revenue to strength was subscription-based as full bookings, year XXXX. the mix on the would growth subscription observed our represented XXXX XX% percentage our year throughout continue we Based revenue total Our in mix for subscription in and of

our declined services other revenues For XX% and year, the full year-over-year. by

to decrease professional As trend be to is our downward in discretionary previously, tend service nature. this we've which in more largely attributable revenues, a mentioned

the services emphasis growth foreseeable opportunities, higher future. similar with XXXX the pattern we've pursuing on segment continue to our throughout trends we coupled expect Given for consistent strategic our margin observed within

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

bookings tough XX% previously quarter to largest in period. XX% ARR growth million from to prior $XXX $XXX fourth subscription In comparison in million, subscription of against of year-over-year grew history, XX% Our up the the communicated the in ARR we year-over-year. anticipation company expectations quarter our of year-over-year year

the we of range quarter. On bookings quarter, in the able the success that exceed the XX% growth annual to fourth back delivered in ARR subscription were and

well Our was by wins growth year-over-year net as bookings as existing customer cross-sold subscription new customers. with driven largely from ARR solutions

discussed. be continued the our professional ARR relative pressured growth based to we ARR in to subscription by decline total previously services Our revenue growth

of million billion cross-sell $XXX backlog and and renewal $XXX XX% across were representing million activity. $X.X ending increased The over or Our year-over-year, bookings record increases driven by by growth. new X% year-over-year sequentially sequential and success

both Our strongest renewal for bookings, best fourth history. quarter in culminating was and ever The year renewals in performance the as the in of strong quarter single for XXXX renewal XXXX. quarter XXXX company marked our fourth year full the

For in year. And increased full quarter XXXX, the the dollars renewed from we from by total renewals added base. prior digital of banking alone, year the our XX% customer entire fourth XX% of the

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

subscription-based reflects up the rate rate revenue discretionary indicated. total offset existing XX-month XXXX. previously customers, by expected from revenue services-based continued trailing revenue in XXX%, in the XXXX for as we decline was Our from net in This retention strength XXX% our

compared rate XXXX. XXX% the our retention at revenue only to net at our subscription-based looking XXX% year approximately ended in When revenues, subscription

XXXX for XXXX. churn was from in revenue Our X.X% improving X.X%,

the expected, churn, renewal a below X% churn record reduction as was year, heading banking As we our into we overall in observed experienced digital well and strength.

were delivery for XX.X% fourth were the revenues in mix higher-margin and prior period our the representing XXX revenue with year, the XX% increasing workforce. increased for was expansion year-over-year in XX.X% within year, driven previous mix, margin point from by efficiencies of subscription-based the were in overall up XX% an driven basis subscription quarter. XX% from margin quarter, the and support from our and prior margins by Gross increase operational and in in our functions. of efficiencies coupled the an increasing Both margins enhanced global gross Gross year from sequential up full improvement. a portion This

in the to for a $XX.X as fourth improvements. all across million of of from quarter. or in expenses $XX.X operating sequential expense percent year-over-year compared revenue $XX.X XX.X% in categories, previous G&A the scaling year-over-year Total or the or operating quarter revenue The million of improvement XX.X% million biggest with fourth the of were revenue increased XXXX showing of XX.X% quarter expenses revenue and was derived operating and

X,XXX million million, X,XXX of basis up year We the streams Total additional and from points employees, continue the XX% ended up record year EBITDA efficiencies with adjusted from resources XX% up up EBITDA majority XXXX, quarter. drive towards the in to $XXX.X Full year, by $XX.X $XX.X in previous from $XX.X adjusted EBITDA at prior the operational prior our XXX total support $XX.X year period approximately million functions. business. higher-margin XX% across a adjusted we as mix with from within revenue of was was margins customer the million onboarded with the total up end the delivery employees and in million, and

and ended of quarter. fourth We the $XXX flow favorable at the up by million, in of cash from driven cash, investments equivalents We quarter million, $XX previous from the improved $XXX quarter cash end of the and seasonality. million profitability operations generated with

free units, previously for as year the and effective which a set For $XX conversion of we focus all percentage increased $XXX million, XX% on the This across cash above attributable our also quarter, of streamlined conversion represents to working This EBITDA is cash of resulting flow well business rate management. was an adjusted free rate and in capital profitability processes operational better-than-expected targets. flow million. generated

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

In from we last we XX%. the targets average framework approximately our also addition revenue X-year with as annual are are follows: year to we XXXX subscription financial guidance, approximately XX% this through year current growth the updating for XXXX revised lifting set to

As previously we full of subscription anticipate communicated, XXXX at revenue least growth year XX%.

year is average We to And flow throughout midpoint expansion will be XX%. subscription annual the growth to the year, revenue on than to greater for basis points approximately margin XX% dependent for the are XXXX greater XXX increasing while our And early compared outlook from as expectation our adjusted are conversion growth we will finally, the of we be XXXX free cash execution the full EBITDA XX%. Additionally, range. that target increasing XXXX than approximately prior

XX achieving indicated are by objective. subscription As in targets long-term we updated the eventually a framework, on rule focused and revenue of this a exceeding sustainable as

over our when it level on positioning based these visibility. business framework high targets, to targets Furthermore, of our model robust first next coupled provides a growth. ability the this our our further updating against are in execute strong years. belief these for revenue with us And our with us updated strong has pipeline, performance subscription informed year We and X

in seeing in continue are to capitalizing continue our and beyond. our cash We're positioned growth, flow growth delivering In market conclusion, average and the our and on about revenue strong while conversion expansion to framework for we've are results against better-than-expected our to subscription financial EBITDA and believe results the built We've excited XXXX fourth we X-year in adjusted delivered margin strategy. we annual momentum ability free executing demand the profitable updated average quarter. previous we are targets well the confident raise

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

Matthew Flake

Thanks, Jonathan.

great and I As our performance all pricing year we Tiers the solutions, kick another of XXXX, solution Tier and have relationship year off highly the success by in enterprise solid in of a the which continue of future a year for record business. set. to differentiated by powered tremendous confidence a across and board, was X is XXXX highlighted X X bookings

validates transformation. and in trust year as record we renewals and our us a had for strategic road a also map customers' which We partner in reinforces digital believe our their

the of pipeline into good continued first sales visibility all success, momentum, the strong, with booking Even us XXXX. particularly in gives remains and our half

to positive sales demand rates the last the expect success on We well the we environment remain to believe improved with and build to win beyond. in performance shareholders our XXXX our compared value from prior deliver employees in financial year, we're our towards progress X-year to great we're our to customers, continue With framework, years. a and XXXX and strong to several we and position believe in positioned

with questions. it hand over And I'll for you. operator that, to Thank the

Operator

comes Instructions] of first Our [Operator from Securities. Terry the question Tillman for with line today Truist

Terrell Tillman

I in parters. Josh. questions. one strong fourth Fargo on is And the bookings Matt, quarter. think Jonathan, proportion Kirk banking that But pricing? just all Congrats this are digital guarantee of the with business total first won't is press synergies how And I on the meaningful is PL Two relationship deals? potential Wells this and with pricing? you single released, the relationship they're commercial a multiparter the there

Matthew Flake

and did team your want Do of the to about you success Kirk, we it can... talk it.

Kirk Coleman

so that terms on. 'XX. also about that. banks a us a Thanks, the fourth to in deal look year we points to been North a of XX product, of the the under is focused This a building win us. of and are teams. we puts live This X about Yes. we opportunity in largest at It that's the using testament deployability really to on we've a is this both PrecisionLender getting America forward something something exciting This that talked quarter year is had really for And call ago Terry. of in in in

Jonathan Price

It's whole. of question, just the how about second just to thinking clear, your Terry, the relationship terminology pricing part really is business a on And PrecisionLender be Jonathan, we're as the

So say about we're given with the relationship PrecisionLender, the we're when pricing, that solution, historically loans entire the business, we not the based that that fact how have talking about across commercial it color on relationship looking on we've is side. really and that pricing just institutions we're that the

reference the relationship to pricing. hence, So

Matthew Flake

as banking the side digital of far as And the business. commercial

them banking how found for value get of a company, a with agreement crossover of the that, some whether our way we We But for or the from PrecisionLender, to a master having we relationships. customers, we those treat digital customers, haven't respond product a there's lot lot these perspective. that to it's understanding out of intangible

so existing And within we're for there's not two of doors open seeing us, -- it's able and that customers product, lot we've but also and to between the for the been a of them. product opportunities the synergies expansion -- win,

Terrell Tillman

strong just hat Okay. intrigued going the to And be 'XX it's follow-up, you that. simpler. big our characterize It's and on you pipeline, than said on But in 'XX? really would Tier People Tier potentially and velocity a always people different volume are versus hang how happened look X, into potentially Does the X as Tier what you enterprise much seem it large the X? deals. deals by reliance

Matthew Flake

did the as earnings But Tier and call, X believe record biggest the you of we Tier coming Street were more we 'XX a if we deals, still than the history more XX had, said X, in at towards X looking which we and told the top XX in and signed I remember, think, 'XX, did is deals Tier Terry, Yes, which we X of well. 'XX. We skewing Tier in I the probably company. the that of in enterprise off we volume Xs

year you're to billion but those flow billion and to I I back think see to assets well. some the success above have develops, want X 'XX to see at think going a $XX half, in I still of And but run as back still you're and Tier steady with it, the deals $X Xs we'll Xs. as are us front don't If get but these space, in enterprise going ahead, I $XX Tier the the to look probably billion pipe larger

easy it's feels and it's the or there's good execution are -- Tier them done. I've lot pretty get in which These enterprise, success balanced X going So things pipeline out. confidence team But right not now, they're knock to the sales a But year. whether to get full of work not and a that to into done. faith has a and

Operator

comes from the next with Raymond James. Alex line question Our of Sklar

line live. Your is

Alexander Sklar

maybe Jonathan, first for question you.

It You're and behind QX's XX% how drivers looks that the Can taking up couple about the relative to market of years. we takes some you those TAM talk growth And like the TAM just of growth? to next growth over puts levels? about biggest for of billion. kind should think the $XX market

Jonathan Price

Yes.

view areas clearer the I we when that in set we're So set changes, think the Matt when about in and length opportunity couple years the have over our clearly in And of we evolved that fraud are at I opportunity success that about the of call. a some products think of there to last and mentioned have the date really much particular, the now there. talk about our excited

our there, driver institution we of that ability the think the when about the now inside to that. was capturing As with Helix and that fabric opportunity set another landscape we opportunity product bring the financial think really business, about

line entire And in are sort crystallize as perspective Those the we've the had then commercial a products, of business and growth commercial TAM. a commercial of have around just banking on standpoint. areas that that all PrecisionLender change across impact thing that and including the digital the from from catalyst the that final is our everything fastest biggest and market

Alexander Sklar

both. prepared the said one platform of Great banking use commercial. selling don't Okay. about or had you there. or digital think And maybe that of a retail I Matt commentary full with across customers color lot then progress who remarks XX%, the but Kirk, still in for started

still time? Could to takes how you factors? And market So puts XX%, What that to can the going are there you what just for are up and adoption? kind talk those that of one are to gating customers over the get solution? only XX% about using are like

Matthew Flake

them XXX here billion only Yes. The banking customers and XX% have are customers digital comment of are either one retail. that we commercial or is using above $X

so going in, other a drives to sales and success The have product cross-sell them. of we and lot And locked -- teams platform value. the trying the into are single

customer You institution financial play great do likely seen The and that provide with is more experience. a you, to out. business we've

them The forward challenge of big kind well. with of is these set got other to to it provides it But they're be once you've it are get they And those a the else. up got the ability have working the budget. integrations, we got They got convert of in lot to coming and and everything for network years them things and easier as get the because products to one the of projects. prepared think live. you've They've there you've of have it's me have to some deals confidence the live -- they've got as on

huge us, it. a for and it's So opportunity we why that's highlight

Operator

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

Joseph Vruwink

When you end in when how bookings your already strength deregulation, could a time And frame that think think that from benefit about your plays strategies the you technology? to and do above that right up might beyond involving think is about into manifest there observed? customers you've benefiting

Matthew Flake

with ability banks. M&A, their they allow as people up to all transact or follow It if them to an hopefully occurs, the extent, help pick some will operating to to will deregulation fewer have do To it the also efficiency, need when regs.

about for and a be union that community And energy will sit credit as All here optimistic have banking us. tailwind behind they things today. pretty is the they're -- of the we

not. of a deregulation should it for these less less all be if is ability tailwind between less take focus the digital to for you direct on There's go their make the and decisions even positive for but on that there's time fact still distracting and It's regulatory spend out, institution. them. in us. some of things lot, banking, burden the maybe correlation a The financial it us. So But a

on all So positive end. our

Joseph Vruwink

Okay. That's great.

the Just targets. financial on updated average X-year

average fair triangulate the your budgets that getting think estimates I about a consensus you the sub XX% where may margin gets I done wanted just job into embed the And also be on as driving to out-year in happen amount structuring conservatism. to guidance over expansion. an you've thinking that nice a out about these We're up that growth, still think obviously, closer next guess you and could I of the XXXX? rolled there. philosophy number XXXX for XX the performance -- to and that revisit what's estimates months, are upside maybe how embedded calculation.

Jonathan Price

Thanks, I'll take that. Yes. Joe.

our go live third fourth those late into those of we mix on were set years. of of So to about yes, amount in we And affords a fair larger wasn't fair Where 'XX and model targets, deals that X as year it a -- calls. last quarter talked shape the looking going we 'XX. ago, bookings forward business and the even us leading amount visibility of us long to and

a discussion side Happy and couple deals into So anticipated relationship and faster of amount of a earlier gotten on we 'XX. the than we fair other banking We've do of digital couple to the bigger visibility a have live say the the actually with to PrecisionLender deals. or Wells pricing both side.

I more confidence number. think and in given view of So 'XX clear that's us that a

of mix of fair it those and execution 'XX, bookings hitting bookings the shape amount and think the whether or from have the But beyond see that impact today. our then a whether impact here as be there's plan XX it be XXXX months. above in will we we next we about that what

implied upside to thing EBITDA could talked of that XX% the guide about or drive the that performance the that's So kind in we 'XX.

giving And we're think to through at manage levels, modulating between 'XX about couple the we have end that in subs room years. we talking we've at we about what that's sort as really investing that ensure of here these of right balance for our that of totally get with last that as line been revenue growth strategy ourselves profitable to elongate the elevated to the growth day,

So hopefully, that addresses your question.

Operator

[ comes line and Our of with Sachs. ] Hodgkiss (sic) the Goldman next Alan question from Adam

Adam Hotchkiss

IT just side volumes I a about the talk thinking. start, commercial There's their offensive on guess priorities Matt, in lending banks bank particularly spend of back up, to in picking 'XX. and on little a bit more lot being

how guys, at that you Just you think if curious all? impacts

Matthew Flake

the it of banks Well, important. deposits, competitive use for still around acquiring for their the with center are that's what runs America, the up sake. the at and of Bank I picks a Wells, discipline But commercial the hope is wanting deposits what rollout to platform Chase bank

what of think happened weren't getting operating if were these signing And you accounts. banks lot XXXX, the in XXXX were loans a so about the to

a discipline do going loan. around we're the need to have they operating the I accounts Now and

that is so this. And what's driving

picks do accounts well X think but the banking competitive you that. to a in, look up, commercial we see to rates, X product our get squarely that. volume operating middle loan at or in positioned especially they are commercial win product, So And last have want if to over in success we're more come I the of the you'll -- years, upmarket

and sit banks to product operating going going right competitive to with we accounts, they're I and that's loans well the have with what's a come as the the as others, So now. that's mentioned where are to have

I I to lending tailwind hopeful up. going to a as that the But think environment well. picks So I'm that's think be us

Adam Hotchkiss

much guys financial it's barrier I And to more just that then product a helpful. Really point, obviously, commercial? you complex cross-selling what's institutions. on in Okay. know the for

with So continuing past what FIs gives and able to going what's new in confidence forward? be and to you you the customers on existing worked do that for

Matthew Flake

unions Forbes most XX% XXX platform, of platform. Some of use banks we're XXX of our our about is able to the Fortune top use it profitable credit talk XX% the

so compete. decisions, point can we use that happiness ability when they're look more other that they and product the have the get, the banks have it and that anybody to than the making they they're to banks And these plus to on success the value to when

complicated, fraught it's new come with that And done and the done phones core it's their those era, is the and done in -- call have. moving the through with jewels of than what in smartphones when modern this environment, more certain as risk since as I of since conversion, that system, have challenge us. nobody crown is it's the X it has of which mobile of so out and haven't risk And number the we those we've for business to the much hard, go deals they a done

it lean Do And time. that everybody screens, on but -- the operating an to have you convert around we and so time, the wires, XXs space XXs times have to people in system files, How on invest able done a it? somebody operating have been that this. long also we're many can to of ability people you there's We've have with component We've off at the there to over that can for times an the that, done product, look plus a discipline built And something of in. be the continues almost process it they've to you competitor. then that. as we if

we to on can get to point not going system. that done, when take that most things, we those it's is credit to are the into risk when or and something a the that a have they that a we've a to have move bank they sales union clients So important process

going on the the you couple That's can reputation, as from us process, lean that. continue think to bookings going tell years. we're we're it I So been our in the to sales of and story, And to for our last differentiates do that.

going be just those So to to competitive. rest we're and on continue

Operator

Citigroup. Schmidt of with Our next Andrew question is from the line

Andrew Schmidt

just on wanted contemplated touch out about Is it and there? similar when year kind year investments prudence just of Good are asked the results here. philosophy perspective? the more a to that we talk EBITDA there XXXX. just Maybe it earlier, outlook to when margin I think out through, comes are was EBITDA to an from outlook question longer-term the

Jonathan Price

feature and out able we further But also to to the and we expand bit opportunities to we our business. leaving to Yes. product across are we're we little need a some be ourselves those Thanks, studio, where mentioned overall the both. of whether there investments, It's innovation investments, function investments in see room continue functionality areas year have as especially I definitely before, commercial in see fraud, the planned it's and capabilities Andrew. There make of areas. fabric, play

on planned do as we profitability to Obviously, of we can able to about driving be a those versus shareholders. further targets. looking have again, need but for but also couple we today, as color those, investments to investments there, growth but in modulate 'XX we're between, So I elongate that much years giving to feel achieve as ability we good of our confidence about lot have a think in out curve

Andrew Schmidt

great just drivers see Can lot Absolutely. X, talk just you appreciate That up, Jonathan. of goal, there, makes Is those sense, elaborate you the helpful. on rates, then on that. Tier win Can X the that maybe uptick on step really what's driving more Tier shots it's to combination it factors? that I about be that. would And of there? a

Matthew Flake

Yes, Andrew.

operating It's I not it's your trying are for think you easy not money. loan get where accounts. said an make earlier, these of, it's I a you as function to It's have X%. environment get, banks the a to

operating have that accounts don't legacy each You've on other. a They work got running the technology and get to doesn't talk that you people to phones. mobile are

not You've got to accounts operating the of or separate to who's X the big you're And to trying P&C. with of get going the X systems. legacy somebody move They're devices. tax when

were They're are XX We're for 'XX, can got looking in a us and rates driving most because We've that's slightly Xs us, to commercial these really up 'XX. product most And that's had the I and talked of profitable, Xs products, in they're environment. from 'XX. They've go it I customers to the get years. conversions, it. have walk done of as we're to have. up they so comfortable hundreds for these We've that's these And to earlier. chill And them deposits. with about a and running. very able got on demand the you going demand to they're think the them. for came grow some stickiest, we a Tier which it, continue this Win what's great of And --

Operator

from Our Stephens. next Nabhan the with Charles line comes question of

Charles Nabhan

spend? I product, And to then changes the wanted about of leverage. to if been a investing around on as where still it is to But your CapEx I Congrats secondly, consideration? to on is get your free lot follow-up see that, to and color the operating that wanted expectations wanted capital It's a what's hopefully map? like good there's sounds I guide, product improvements in M&A part the cycle working some quarter. if road attributable to to for increase ask to And any flow. allocation cash capital ask and the the of priorities, specifically, you're

Jonathan Price

Yes. Thanks, Chuck.

really when to flow whole I when with drive comes comes phenomenal it under to of So firstly, conversion. better team yes, the a cash pleased to cash conversion waterline flow. processes the a it the job mean free did free bunch

And DSO record that's performance, a in top so especially that in today. phenomenal had just business see the we fourth levels, it to and the the big you part obviously, profitability of, on quarter of

a So perspective. is CapEx there no change from

So and still going would forward. continue to a very CapEx-light that expect business

Innovation it's allocation what around that whether adoption line earlier, especially of treasury entire by very side a and build as we relationship support partners fabric and on functionality. apparatus that of Matt ensuring in that operations it's and on areas capital some We're those the Studio, to From that allocation product that's our relationship. entire areas much about about, the well a end talked And as our drive seeing lot investment like think and ecosystem with focused can there. the partner price whether opportunity fraud, we the it's out where customers commercial organic and organically, their just pricing, talked I is users deposit perspective, of the and capital

flow a up from sheet have get seeing set the generation really I we on of quality look comes we optionality. we've lot, comes We're a valuation. to to balance plus of would Nothing get of us strength, clearly, last enamored over pipeline from where by the to perspective that changed or to assets at shared when When there well what it inorganic either I've will has lot think the opportunities, that or the been lot a free opportunities. not it year M&A a cash

be M&A to be in come it line deal. to there, need all to M&A prudent when an and things you for to confident what us bet those of how do and effect around we're an be in the execution your given So has going means deal,

would only strategically in So think financially part it's sort be great we of a acquirer. do if we and and of made sense we're up certainly position it and the strategic there. long-term a picture, everything to lined But

Charles Nabhan

that the underlying services. wanted down thoughts to of like X and/or as Got that on about be bank in it discretionary over a XX% some that looks could consulting deregulation and back or consolidation year I I that result it. the Appreciate will piece expectation in rate about a line color. like similar it wanted a is And professional an And follow-up, to space? down outlook. 'XX. ask get your as that at area of assumptions Is 'XX. the come the the was the sounds It next in potentially

Jonathan Price

is a that behavior maybe on of those. of about where But are seen Is our not some length decisions do we guess of next XXXX, of have those interest first quarter When be moving possible couple indication in as say, I'll rebound see we XXXX. an quick deals not anticipated, that those even around of spending. as here still contracts, discretionary same to Yes. rates sitting seeing over in mean, that. years? not sort we at in pressures the you customers as theoretically pace not the it assumption contracts, here I cases, are a FI careful I perspective our early baked in scope had think a down in trying a of which people lot pickup sort We from from in see the are pushing about of

could all that certainly is we're here or pressures maybe same pick in things QX in not But around those into evidence sitting have though. seeing discretionary. what are yet that there 'XX up that 'XX. That's later could see the we we you see So

Matthew Flake

doing be to how we're grow make demand long-term that sure very in the choose going come to We high-quality, selective terms want that if back, intentions. to back. to add with we we're Probably business does of just

Charles Nabhan

well. there recall that I couple a rationalization of as customer ago it. some years was base Got of

Operator

is of from Stanley. the Infante Michael with question Morgan line next Our

Michael Infante

mix and attach strong. Hopeful of is the the improvement tougher had have cross-sell the historical fact if some color that builds and bookings contract normalization you really know of growth on drivers directional just growth renewal of the form duration extension. some about that But on how had from that sort front incremental on been bookings some of of the price I'm to comps attribution just framework versus trying growth between sort just up of I'm XX%. trends. the if some pricing the or you I get on renewal rough of wondering the which subscription FY 'XX assumption revenue think aside to of obviously have of dynamics, some apply

Jonathan Price

of XXXX around think last Yes. about for expectation the on renewals ended those because the subs year to of where I'll out-of-scope point the I were first part A guide. at performance hit huge you XX% we really important. with economics that strong side towards the the really, coming the XX% growth that's When was of just what renewals really relative was on into original and that cross-sell being think expectations. pull-in our up progression driver

forward think we and and our some in into pricing XXXX, as the thinking there about 'XX cross-sell how to that packaging, strategy rolling we're on and side. and the persistence side is about even renewal here So both

we out and next history we to normal. assuming it and off level this that benchmark way think have a significant good data beyond in coming could every as a for out-of-scope Like of for to lay of. year start But we're our year mean about what year, plans set not renewals

of it data your a we driver. call here year theoretically, that years don't I off upside picture. today So have would that the from just be would full I full X conservatism. would out call working that sitting 'XX I know

changed. these think term and still XX tenure So months. hasn't opportunity We're deals our we of when about really averaging

our then are we're in say on we comes -- of that driver. the does coming I 'XX of in an year wouldn't seeing to the really team in customers hope saw proposition the the that's when be showing we that success economics amount customer renewals a renewals benefit it able from outside value are positioning those It's job incremental coming a are things So and in And seeing renewals we're plan and discipline to that. those we pull great and that, given the in certainly pricing. the to and the of and

But forward. certainly, attain on discipline and we the going of pricing like level to economics side, that maintain hope better

those what provided drivers so be the could would And the for that already have we outlook. above anything 'XX lead to

Michael Infante

a towards think might versus headcount of the model industry, with and that, over you more to asset-based time of minimums, And if shifting sort you consumption attached. consider inflation I the cross-sell That's helpful, you growth at to pricing contractual of away would within pricing But Jonathan. structure far escalators do just obviously just that's contemplated with there. know the the disposal offset have trying know you your levers terminal be do which a beneficiary Maybe banking. M&A. be to think at within you this tend steeper primarily acceleration lot bank on But in to digital the less how is conditions about an model pricing seat-driven obviously through a under think just I'm I we model. seat? both how all?

Jonathan Price

the And banking? question digital just Michael, was clarify, to about

Michael Infante

Yes.

Jonathan Price

Yes.

underlying base, price are driver an so the users. like So user we digital a baseline, from end number on asset of but your remember, banking, is certainly there perspective, tiers

And the able model. digital product. we And in that practice is grow than and a get financial more industry as is model very institutions to our a are this that is for seat-based adoption. that That a different so capitalize

products model. that of don't really seat-based a we So have true a lot on work

Kirk Coleman

more accruing under single a logo. As in basically M&A right, that occurs market, you're customers

base. tailwind part M&A economics lot customer there's That's that's a help. of that a for of our the when in us So

Jonathan Price

Yes.

like after driver of that, transaction. and to would and the we the so that combined negotiate is deal an would user to relative what negotiate to we economics they look count but upside a look would And look existing the be minimums,

Operator

question Our the Stifel. from is Parker Lane next of with line

J. Lane

improvements emphasis or your part most you're deprecate of the own of legacy out there? desire if was capabilities contributing tools, to down called the there just lines success fraud the a that I you the continued of on break the What along Matt, products. success success And seeing market. is greater in sort wondering end the could you of the the of to

Matthew Flake

banking financial drove, I pandemic point commercial when digital mean when the through you account or since end user, weakest of retail. the went holder of it's the products -- roof, the institution, is the the utilization unfortunately,

to don't takeover, then is is right that check to but then fraud happening, has pay, And different alarming. they a accurate. we're so much we authenticating and we the to monitor how get tools to weeds all make as their little there, you then monitor and are pay, have who tools we which gone things have what's well, they too into going on have the much the want behavior, that through the actually ages account the there or have files -- I roof have authentication sure stop tools when these the people, they you pay

for dollar -- it every just it's $X. of costs the institution So fraud, financial

and in tools. got XX-plus and started building for been we've learning started that building we've XXXX have so existence products in And had products 'XX. that years, machine we've We

the products ways. fraud stopping have along way, since then, they're We many we've so built different in

invested so heavily in And we've it.

tremendous confidence a of amount this in doing Our customers in that. have

have platform And of the it products multiple better that all have has a when to. million points, a systems plus and gives system stop, it's around but multiple to We're not places we view. plus fraud all users a you is over The as data the take go have the the lot there, to XX-plus innovation databases, you multiple having just an one advantage tool. -- use that commercial a able platform single different customers value single it, wholesale entry

work So in we with the platform intrinsic is designed our an customers. our and how have we differentiator way

gone of unfortunately, there, through digital kind products. and the just since the pandemic the roof lot utilization has increased fraud, a but of So

J. Lane

you, heard Got Jonathan. If quick -- one quarter. renewed think XX% banking it I the for in was one about And you I it. base correctly digital the about of

Just Is that didn't earlier, of what of about I quantify that something talked that quantify? scope but was renewals? you necessarily you share could out it. know

Jonathan Price

not say just saw the than year-to-year. it's It's year, we the something in is I quantify that though Yes. What see because or externally full both would we and quarter-to-quarter scope in we typical. of consistently quarter something more would not out renewals

That these And obviously was so that the renewal the in again, chunk a base was that is in QX obviously quarter was And top in led And of it and scope of that. of a when was part scope strongest a driver again. out of to quarter take given the good But seasonally, case that, length XX% way quarter. then above you plan. the of is of the tremendous on and obviously, deals normal. one

Matthew Flake

extensions. doesn't the And the about happen that park. of we're it to quarter. knocked we have, 'XX The to and Yes. 'XX in get providing It's they value put these team get of talk fourth products the about work in those out customer in, other success just talk and front customers, the the in

success these just organization, treat member you to continue the their customers your just want lot to it and with arrangements team So sure stuff that the really happen. leadership team, willingness in how a longer-term delivery as every I this the organization, work of make about to the doesn't that support single success of as and talks well sign There's you.

that team 'XX. it work to XXXX and in So the really proud in that, did of look forward

Operator

the next Our Dominick from with is Point. question Compass of line Gabriele

Dominick Gabriele

just for renewals. the and was if could talk new about you I deals curious versus pricing competition

you demand do believe premium a some products, of peers? profitability power that have your for? banks willing your follow-up. success, your are like. it having And you you pricing the product given to have other You're And for And pay I a would the extra some looks versus products consider

Matthew Flake

Yes.

the it. down. slightly In Xs. is look 'XX, think 'XX, did of just ASPs, Xs competitive. for That's Tier more we were at in more because you Everybody deal battling Tier if had. were we and that is they Every mix -- they I

we lot on more get a and lost pricing see on long game. XX out run. we've what just that's buying do and are picked there happens. that the You pressure than years, And people in There's premium for you that products. long business, deals we back are the to do But retail there our them people a up last we play over and of the commercial,

of one somebody, that to people it. with earlier earlier going going going the something have going commercial that. a they're there. said on behind I fully It's ability it as So to to execution to We're They functional be to discipline with is banking we to the are need do operational take build be it here. chance get and questions, and not

that we there's and of the so don't And and realize prospects a because that customers realize it. lot to that the give away value

they efficiency And a features that and talked all and single it's data value as customer. it, relationships, renewal value in. is experience, it's team and that then the success whether better these of get the us team of more we are, to get run. to deals becoming earlier, is to operate just pricing It that all platform all products, does products us. out a sales net and value the data. Single and great they capture people fraud, or dynamic faster and But get a making pricing provides us, understand competitive operating ultimately, when valuable we cross-selling we for about the loans, to creates all for But of roll market a user have sure a a new, that's more job allows platform the whether

done real over a job great several clearly success the and So in the and there's platform quarters the a that with team years. and last have differentiator sales

Dominick Gabriele

these seems in show numbers. it to some up certainly Yes, of

costs wondering is to versus it -- you creates there down product kind sort of if of you improvement I points. basis versus could of break could mix? And the much the total be just Any for X/X, is X/X, -- that the and the How there like guide, outsized break those is margin due would long-term excellent. of that an then X/X? scale one company? on XXX any help So Or benefit year-over-year was

Jonathan Price

specifically, way think break even the ongoing it about leverage beneficiary subscription overall The if you gross is to would characterize was -- say the there. the and margin is 'XX, mix I would But expense is, way revenue both down towards margins I in shift roughly, guide to it 'XX want it an Yes. see the clearly, you EBITDA and really OpEx, roughly you gross you a as margin XX-XX still where to opposed from OpEx move the bit see a the lesser as XXXX, contributor, sales. of cost And sort leverage to on the of on then line that from back flip cloud cost the extent. dynamic driven leverage quite you side more migration into of to but a get versus

from initiatives of focus clearly on different to independently. got each margin every overall and and obviously, at it's of we're totality, the expense scaling. then So mix gross in kind overall driving in is sort certain and shift of year, look OpEx degrees But you benefiting profitability year

Operator

is William Our of Marc the next line Blair. from Feldman with question

Mark Feldman

or here guess making Chris about a going Under to embedded you XXXX, embedded going finance in regulators. new as massive for any just think for today. service your the thinking customers finance there's demand On products in I from a target for be Helix, the upside administration, forward? was do

Jonathan Price

all folks to and days work financial market really different that's middleware with a on this way a getting will than are to nuts. are it's BaaS going because the about it concentrated a of program over run this likely most be bank shifted that spreading the to soup time, to BaaS banks and to have out and to I services that the providers market now. XX, it to program of where top The are required side, has I all know run would institution around all have to XX really the that the scale think how business more that fintech going think the that enter through have committed to run is

program landscape, the think other financial core BaaS a about is start context I of that the it's opportunity, they to programs. their institution that looking as From entire run for thinking Helix see controlling interesting in appetite alternatives those to

of our So find partnered have while historically, that Helix go do market, now sponsor to the bank to a they one doing that with. it record might need of we customers just go all, with and core a in the go institution is

the would sitting administration that sets are now change a the early the regulatory I I headwinds how changes to or really wouldn't characterize think compared alleviated I or say well dynamic as 'XX. change that the in saw it and maybe dynamics. people those And us that But differentiated that's So in product here XXXX space. up maybe

Kirk Coleman

We people that a challenge for highlighted the run. in And the focused of that. related, all us our good nature. in operational very a be just they're 'XX it strengths. Ironically, think of will those are strengths, they're lot long lot is regulatory on Yes. although saw banks in And

Mark Feldman

I new there? the Innovation driver. that's I to Is to is solutions Or adding? XXXX on bookings Got about, -- Innovation that just Good a new of know customers on thinking it second is Is Studio. it growing way one cited taking break wins XX% it and partners guess But new solutions for just year-over-year. Studio And doubling helpful. see it. and as in partner -- there No, super any a down?

Jonathan Price

Yes.

the it. quantified just of answer ago tried we treatment. the customers revenue question, financial that impacting form that We are is some adopters. in Obviously, to of your early adoption this stream X we have share our about net And like how growing. the the new by of revenue this the think because that our years customers, significantly. GA, We is last we We is went about When magnitude institutions of all doubling. above. over XXX talked talked using It win it it banking when had fashion high-margin or to today. live we as about about XXX today, XX And digital haven't is a year-over-year

other that going really we're the are opportunity, starting seeing what forward. revenue a still products we're that's about and are and we're to but marketplace X-sided customers each be of in early the and our bookings these and utilized, innings So finding excited driving

Operator

the And of question RBC. we have with Perlin from final today the Dan line

Daniel Perlin

a kind kind level I just here. in dollar of of of we're that seeing question had absolute the the backlog on increases

I last $XX I think up $XXX it million, increased from sequentially quarter. million that's think

just spending greater demand kind there your bigger I in think, I just clients getting current of the there a kind result and of have now lumpy. portfolio? know of to is environment? is the for could of the -- it deal question, that appetite size So Or just in are as But are incremental be sizes the a

Jonathan Price

When of look given that at is at fourth like have you contribution Yes. to X you like, you term quarter, renewals quarter, those million example, the the backlog look just any renewals Dan, got and referenced, for our the at the the size quarter, it to and seasonally $XXX largest the really strongest deals.

matters. of of So the potentially driver. certainly, period out-of-scope renewals sizes -- the upward earlier. quarter. But done about the bigger the deal But one net number in and of driver of in scope that one be the get that any renewals number But that side out magnitude that renewals talked on biggest clearly as pressure size then really news on going quarter, driver will renewal too. in I the There's really the that to that any is nature increase, just overall is the be

Operator

you you and Fourth the will year attending. a great We'll Holdings Thank ladies afternoon. Thank you next Financial Call. Quarter QX conclude gentlemen, And that and time. call. for Results Conference XXXX for see with Full Have your that,

Q2 (QTWO) 12 Feb 252024 Q4 Earnings call transcript