Q2 (NYSE:QTWO) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Q2 Holdings, Inc. (NYSE:QTWO) is scheduled to report Q3 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of $0.06/share on revenue of $102.9 million. The consensus earnings per share (EPS) of $0.06/share is based on a poll of 16 analysts and represents a growth in eps of 11.7% over the same quarter last year, when the company reported earnings of $0.05/share.

The revenue forecast of $102.9 million based on a poll of 15 analysts implies a year-over-year (YoY) growth in revenue of 29.1%. Last year the company reported $79.702 million in revenue for the quarter.

Expected to report EPS growth of 11.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $102.92 $79.70 29.1%
EPS $0.06 $0.05 11.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Q2 Holdings, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.02 $0.07 393.9% Beat
Q1, 2020 -$0.12 -$0.09 24.3% Beat
Q4, 2019 $0.10 $0.38 295.5% Beat
Q3, 2019 $0.03 $0.05 45.6% Beat
Q2, 2019 -$0.02 $0.01 148.6% Beat
Q1, 2019 -$0.04 -$0.05 -25.0% Missed
Q4, 2018 -$0.02 $0.08 600.0% Beat
Q3, 2018 $0.01 $0.09 586.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 5.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $97.41 $102.54 5.3% Increase
May 6, 2020 $79.74 $84.43 5.9% Increase
February 19, 2020 $87.29 $89.12 2.1% Increase
November 6, 2019 $69.36 $68.78 −0.8% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −1.93, the model suggests that the company is a possible earnings manipulator. A value of −1.93 implies a 2.6% chance of earnings manipulation.

Fundamentals And Technical Analysis

Q2 Holdings, Inc. is currently trading at $91.78/share, down −2.4% for the day. The company is trading at approximately 86.4% of its 52-week high of $106.44/share. The company’s stock price is down −10.5% since the last earnings report and down −3.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 51.04 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:QTWO Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −45.77 and a forward P/E multiple of 930.97.

Q2 Holdings, Inc.’s current share price also implies a price-to-book (P/B) multiple of 7.59. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $91.78
P/E Ratio −45.8x
P/E Ratio (Fwd) 931.0x
PEG Ratio 0.7
Total Debt / Total Capital 8.7%
Levered Free Cash Flow -$25.739 million
EV / EBITDA −108.1x

Finbox

Q2 Holdings, Inc. is a mid-cap stock with a market capitalization of $5.028 billion and a total enterprise value of $5.119 billion. The company operates in the Information Technology sector and the Software industry.

Q2 Holdings, Inc. provides cloud-based digital banking solutions to regional and community financial institutions (RCFIs) in the United States. The company offers Q2 Digital Banking and Transactions, a browser-based digital banking solution that delivers RCFI-branded digital banking capabilities; Q2mobility App, a mobile and tablet digital banking solution; Q2mobile Remote Deposit Capture, a partnered solution that allows remote check deposit capture; and Q2 Person-to-Person Payments, a partnered integrated person-to-person payments solution. It also provides Q2 Business Solutions, a digital banking solutions to commercial end users; Q2 Sentinel, a security analytics solution; Q2 Patrol, an event-driven validation product; Q2 SMART, a targeting and messaging platform; and Q2 CardSwap that allows account holders receiving newly issued cards to automatically change their payment information with existing subscription and digital point-of-sale services. In addition, the company offers Q2 Gro, a digital account opening, and digital sales and marketing platform; Q2 Biller Direct, a bill payment solution; Centrix Dispute Tracking System, an electronic transaction dispute management solution; Centrix Payments I.Q. System, an ACH file monitoring and risk reporting solution; Centrix Exact/Transaction Management System, a fraud prevention tool; and Q2 Caliper Software Development Kit. Futher, it provides Q2 Contextual PFM, which allows end users to add external accounts and view them together with internal accounts on digital banking home page; and Q2 Goals that enables end users to establish and save towards specific savings goals. The company was formerly known as CBG Holdings, Inc. and changed its name to Q2 Holdings, Inc. in March 2013. Q2 Holdings, Inc. was founded in 2004 and is headquartered in Austin, Texas.

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