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What changed in Q2 Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Q2 Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+515 added−522 removedSource: 10-K (2026-02-11) vs 10-K (2025-02-12)

Top changes in Q2 Holdings, Inc.'s 2025 10-K

515 paragraphs added · 522 removed · 361 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

94 edited+65 added−104 removed48 unchanged
Biggest changeOur solutions must enable our customers to comply with applicable requirements such as the following: • the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank Act; • the Electronic Funds Transfer Act; • Mobile Banking Guidance; • the Electronic Signatures in Global and National Commerce Act; • federal, state and other usury laws; • the Gramm-Leach-Bliley Act, or GLBA; • the Fair Credit Reporting Act; • the Americans with Disabilities Act, or ADA; • the EU General Data Protection Regulation, or GDPR; • laws against unfair, deceptive, or abusive acts or practices; • the Privacy of Consumer Financial Information regulations; • the Bank Secrecy Act and the USA PATRIOT Act of 2001; • the Guidance on Supervision of Technology Services Providers promulgated by the Federal Financial Institutions Examination Council, or FFIEC; • third-party risk management regulations; • the NCUA's Guidelines for Safekeeping of Member Information; • the Guidance on Outsourcing Technology Services promulgated by the FFIEC; and • other federal, state and international laws and regulations. 22 Table of Contents We are subject to periodic examination by regulators under the authority of the FFIEC under its Guidance on the Supervision of Technology Services Providers and the Gramm-Leach-Bliley Act of 1999, and federal, state and other laws that apply to technology service providers as a result of the services we provide to the institutions and entities they regulate.
Biggest changeWe are subject to periodic examination by regulators under the authority of the Federal Financial Institutions Examination Council, or FFIEC, under its Guidance on the Supervision of Technology Services Providers and the Gramm-Leach-Bliley Act of 1999, and federal, state and other laws that apply to technology service providers as a result of the services we provide to the institutions and entities they regulate.
Our Q2 Innovation Studio offerings, which we market to financial institutions and FinTechs, allow our financial institution customers and other partners to integrate financial services to our digital banking platform, allowing financial institutions to quickly and efficiently incorporate the integrated solutions into their offerings and operations.
Our Q2 Innovation Studio offerings, which we market to financial institutions and FinTechs, allow our financial institution customers and other partners to integrate financial services into our digital banking platform, allowing financial institutions to quickly and efficiently incorporate the integrated solutions into their offerings and operations.
Our direct sales organization consists of experienced sales professionals who are organized by geography, account size, type of market and whether a prospect is a new or existing customer. Customers are assigned a dedicated representative to provide ongoing assistance in the execution of the customer's digital strategy to meet the needs of its End Users.
Our direct sales organization consists of experienced sales professionals who are organized by geography, account size, type of market and whether a prospect is a new or existing customer. Customers are typically assigned a dedicated representative to provide ongoing assistance in the execution of the customer's digital strategy to meet the needs of its End Users.
Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 23 Table of Contents
Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 18 Table of Contents
Aging or increasingly complex solutions can create the following challenges for financial services providers: • integrating applications and systems from multiple vendors may increase costs and time-to-market; • managing relationships with multiple vendors can be time consuming and require a greater investment in business development and support resources; • building, maintaining and upgrading regulatory-compliant solutions and infrastructure can be expensive and time-consuming and require special expertise that can be hard to find and retain; • operating, supporting and upgrading systems from multiple vendors can be difficult, costly and less secure and limit the ability to provide a unified End-User experience or comprehensive view of End-User behavior; • partnering between financial institutions and other financial services providers and innovating and delivering new solutions can be difficult and cost-prohibitive when integration with dated legacy infrastructure is required; and • training End Users and internal personnel on the use of different point systems can be challenging, time-consuming and costly.
Aging or increasingly complex solutions can create a multitude of challenges for financial services providers, including the following: • integrating applications and systems from multiple vendors may increase costs and time-to-market; • managing relationships with multiple vendors can be time consuming and require a greater investment in business development and support resources; • building, maintaining and upgrading regulatory-compliant solutions and infrastructure can be expensive and time-consuming and require special expertise that can be hard to find and retain; • operating, supporting and upgrading systems from multiple vendors can be difficult, costly and less secure and limit the ability to provide a unified End-User experience or comprehensive view of End-User behavior; • partnering between financial institutions and other financial services providers and innovating and delivering new solutions can be difficult and cost-prohibitive when integration with dated legacy infrastructure is required; and • training End Users and customer personnel on the use of different point systems can be challenging, time-consuming and costly.
We consider our current relationship with our employees to be good. None of our employees are represented by a labor union nor are a party to a collective bargaining agreement. At Q2, we are as passionate about our people as we are about our mission. For more than 20 years, Q2 has been recognized and defined by our mission-driven culture.
We consider our current relationship with our employees to be good. None of our employees are represented by a labor union nor are a party to a collective bargaining agreement. At Q2, we are as passionate about our people as we are about our mission. For more than 21 years, Q2 has been recognized and defined by our mission-driven culture.
In each of the past 14 years, the Austin American-Statesman recognized us as one of Austin's "Top Places to Work." We believe our mission, combined with our focus on delivering leading-edge digital solutions, enables us to attract and retain top talent.
In each of the past 15 years, the Austin American-Statesman recognized us as one of Austin's "Top Places to Work." We believe our mission, combined with our focus on delivering leading-edge digital solutions, enables us to attract and retain top talent.
Based on our estimate of the number of target customers of digital lending and relationship pricing services and our internal assumptions as to the number of End Users they serve and the prices for our solutions, we believe that the market for our digital lending and relationship pricing solutions, including the borrower portal, origination, underwriting, servicing, collections, actionable insights, coaching, negotiation, relationship pricing and data-driven sales enablement modules, is approximately $4.5 billion.
Based on our estimate of the number of target customers of digital lending and relationship pricing solutions and our internal assumptions as to the number of End Users they serve and the prices for our solutions, we believe that the market for our digital lending and relationship pricing solutions, including the borrower portal, origination, underwriting, servicing, collections, actionable insights, coaching, negotiation, relationship pricing and data-driven sales enablement modules, is approximately $5.0 billion.
We have also acquired or developed new solutions and additional functionality that serve a broader range of needs of financial institutions as well as the needs of FinTechs and Alt-FIs. 7 Table of Contents Our financial institution customers span from RCFIs to global enterprise banks, demonstrating that our portfolio of solutions gives us access to the full spectrum of financial institutions.
We have also acquired or developed new solutions and additional functionality that serve a broader range of needs of financial institutions as well as the needs of FinTechs and Alt-FIs. Our financial institution customers span from RCFIs to global enterprise banks, demonstrating that our portfolio of solutions gives us access to the full spectrum of financial institutions.
The examinations cover a wide variety of subjects, including our management, acquisition and development activities, support and delivery, information technology audits, cybersecurity, as well as our disaster preparedness and business recovery planning. The FFIEC has broad supervisory authority to remedy any shortcomings identified in an examination.
The examinations cover a wide variety of subjects, including our management, acquisition and development activities, support and delivery, information technology 17 Table of Contents audits, cybersecurity, as well as our disaster preparedness and business recovery planning. The FFIEC has broad supervisory authority to remedy any shortcomings identified in an examination.
In certain circumstances, the CFPB also has examination and supervision powers with respect to service providers who provide a material service to a financial institution offering consumer financial products and services.
In certain circumstances, the CFPB also has examination and supervision powers with respect to service providers that provide a material service to a financial institution offering consumer financial products and services.
Based on our estimates of the number of target financial institutions for our digital banking solutions and our internal assumptions as to the number and types of digital accounts they serve, the prices for our solutions and the number of transactions processed, we believe that the market for our digital banking platform, including retail, SMB and commercial banking, regulatory and compliance, as well as account switching, risk and fraud, portfolio management solutions and Q2 Innovation Studio is approximately $13.0 billion.
Based on our estimates of the number of target financial institutions for our digital banking solutions and our internal assumptions as to the number and types of digital accounts they serve, the prices for our solutions and the number of transactions processed, we believe that the market for our digital banking platform, including retail, SMB and commercial banking, regulatory and compliance, as well as account switching, portfolio management solutions and Q2 Innovation Studio is approximately $11.0 billion.
Privacy and Information Safeguard Laws In the ordinary course of our business, we and our customers using our solutions access and transmit certain types of data, which subjects us and our customers to certain privacy and information security laws in the United States and internationally, including, for example, GLBA, CCPA, CPRA and GDPR, and other federal, state, and other international data privacy, security, and protection laws and regulations designed to regulate consumer information and mitigate identity theft.
Privacy and Information Safeguard Laws In the ordinary course of our business, we and our customers using our solutions access, process and transmit certain types of data, which subjects us and our customers to a variety of privacy and information security laws and regulations in the United States and internationally, including, for example, GLBA, CCPA, CPRA and GDPR, and other federal, state and international data privacy, security, and protection laws designed to regulate the use of consumer information and mitigate identity theft.
Through our sponsorship of Q2 Stadium and our partnership with Austin FC, Austin's major league soccer team, we are able to extend Q2's philanthropic footprint through volunteering and fundraising events, and offer meaningful team-building experiences, including: • $150,000 in grants to support three central Texas nonprofits dedicated to underserved communities; • $100,000 in an annual entrepreneurial sponsorship, providing funding to a minority-owned startup; • our 2024 Dodgeball tournament for Breakthrough T1D, held at Q2 Stadium, which raised more than $115,000; • volunteering over 900 employee hours through Q2 Stadium volunteer opportunities, benefiting regional nonprofits; and • providing more than 1,000 Austin FC game-day experiences for our employees and a variety of customers and non-profit partners.
Through our sponsorship of Q2 Stadium and our partnership with Austin FC, Austin's major league soccer team, we are able to extend Q2's philanthropic footprint through volunteering and fundraising events, and offer meaningful team-building experiences, including: • $150,000 in grants to support three central Texas nonprofits dedicated to underserved communities; • $100,000 in an annual entrepreneurial sponsorship, providing funding to a minority-owned startup; • our 2025 Dodgeball tournament for Breakthrough T1D, held at Q2 Stadium, which raised more than $125,000; • volunteering over 1,500 employee hours through Q2 Stadium volunteer opportunities, benefiting regional nonprofits; and • providing approximately 1,500 Austin FC game-day experiences for our employees and a variety of customers and non-profit partners.
Based on our estimates of the number of target financial institutions and FinTechs for our Helix solutions and our internal assumptions as to the number of End Users they serve, the prices for our solutions and the number of transactions processed, we believe the market for our Helix solutions including open platform solutions and BaaS, is approximately $2.5 billion.
Based on our estimates of the number of target financial institutions and FinTechs for our Helix solutions and our internal assumptions as to the number of End Users they serve, the prices for our solutions and the number of transactions processed, we believe the market for our Helix solutions including open platform solutions and BaaS, is approximately $3.0 billion.
Digital financial services are complex and often have limitations The ubiquity of smartphones, tablets and other connected devices and the continued proliferation of digital solutions offered through open development platforms makes it increasingly difficult to provide a consistent, intuitive and personalized End-User experience and requires digital solutions to support new and rapidly changing mobile operating systems and device types.
Digital financial services are complex and benefit from integrated platforms The ubiquity of smartphones, tablets and other connected devices and the continued proliferation of digital solutions offered through open development platforms makes it increasingly difficult to provide a consistent, intuitive and personalized End-User experience and requires digital solutions to support new and rapidly changing mobile operating systems and device types.
The flexible nature of our solutions, along with our proprietary, highly flexible set of integration tools, allows our customers, third parties, and Q2 to build rapid integrations with our customers' internal and third-party systems to support End-User activities and customer processes.
The flexible nature of our solutions, along with our proprietary integration tools, allow our customers, third parties, and Q2 to build rapid integrations with our customers' internal and third-party systems to support End-User activities and customer processes.
Based on information provided by our employees who opted to self-identify, representing the vast majority of our employees, our employee population as of December 31, 2024 reflected the following: Female Underrepresented Racial/Ethnic Group Overall 33.5% 29.6% Director-level roles and above 34.6% 19.7% Learning and Development We recognize the importance of employees developing and progressing in their careers, starting on their first day with our robust new-hire employee orientation and thoughtful onboarding plans, which are designed to give employees a successful beginning of their Q2 career and to accelerate their time to productivity, including deep dives into our culture, products and markets, as well as our Code of Business Conduct and Ethics, our values and our 10 Guiding Principles.
Based on information provided by our employees who opted to self-identify, representing the vast majority of our employees, our employee population as of December 31, 2025 reflected the following: Female Underrepresented Racial/Ethnic Group Overall 33.3% 30.0% Director-level roles and above 31.2% 19.1% Learning and Development We recognize the importance of employees developing and progressing in their careers, starting on their first day with our robust new-hire employee orientation and thoughtful onboarding plans, which are designed to give employees a successful beginning of their Q2 career and to accelerate their time to productivity, including deep dives into our culture, products and markets, as well as our Code of Business Conduct and Ethics, our values and our 10 Guiding Principles.
We provide other meaningful opportunities for recognition that emphasize our commitments to each other and our customers, including our Circle of Awesomeness recognition program which recognizes outstanding team members across our organization, including both sales and non-sales team members. Employees are selected based on peer and customer nominations and are awarded with gifts to celebrate their accomplishments.
We provide other meaningful opportunities for recognition that emphasize our commitments to each other and our customers, including our 15 Table of Contents Changemakers recognition program which recognizes outstanding team members across our organization, including both sales and non-sales team members. Employees are selected based on peer and customer nominations and are awarded with gifts to celebrate their accomplishments.
We serve account holders and borrowers across retail, small to medium businesses, or SMBs, and commercial segments. As of December 31, 2024, we had more than 1,200 financial institution customers using one or more of our solutions, including more than 40% of the top 100 U.S. Banks and more than 40% of the top 100 U.S.
We serve account holders and borrowers across retail, small to medium business, or SMBs and commercial segments. As of December 31, 2025, we had more than 1,200 financial institution customers using one or more of our solutions, including more than 50% of the top 100 U.S. Banks and more than 50% of the top 100 U.S.
As of December 31, 2024, we had nine patent applications pending and 16 patents issued in the U.S. and other countries, with expiration dates ranging from October 2027 to October 2040. Despite substantial investment in research and development activities, we have not focused on patents and patent applications historically.
As of December 31, 2025, we had seven patent applications pending and 17 patents issued in the U.S. and other countries, with expiration dates ranging from October 2027 to October 2040. Despite substantial investment in research and development activities, we have not focused on patents and patent applications historically.
We emphasize individual and team development planning as part of our annual goal-setting process. In 2024, our team members completed over 144,000 hours of training. We believe leading our employees is one of the greatest acts of trust we can show to our managers, and accordingly all managers go through training to enable them to effectively perform as leaders.
We emphasize individual and team development planning as part of our annual goal-setting process. In 2025, employees completed over 152,000 hours of training. We believe developing our employees is one of the greatest acts of trust we can show to our managers, and accordingly all managers go through training to enable them to effectively perform as leaders.
We believe the principal competitive factors for our solutions in the financial services markets we serve include the following: • alignment with the missions of our customers; • ability to provide a single digital banking platform for consumer, SMB and commercial End Users; • ability to provide a comprehensive portfolio of products of integrated end-to-end solutions for both account holders and borrowers; • breadth and depth of product portfolio addressing numerous mission critical applications for our customers; • full-feature functionality across digital channels; • ability to integrate targeted offers for End Users across digital channels; • ability to support financial institutions in acquiring deposits with open API technologies; • provided as SaaS with subscription pricing model; • ability to support both internal and external developers to quickly integrate with third-party applications and systems utilizing an SDK; • design of the End-User experience, including modern, intuitive and touch-centric features; • configurability and branding capabilities for customers; • familiarity of workflows and terminology and feature-on-demand functionality; • integrated multi-layered security and compliance of solutions with regulatory requirements; • quality of implementation, integration and support services; • domain expertise and innovation in financial services technology; • ability to innovate and respond to customer needs rapidly; • breadth of integrations to third-party financial services; • rate of development, deployment and enhancement of solutions; and • ability to collect and utilize data generated by our solutions to deliver insights to our customers. 18 Table of Contents We believe that we compete favorably with respect to these factors within the financial institution and other financial services providers markets we serve, but we expect competition to continue and increase as existing competitors continue to evolve their offerings and as new companies enter our market.
We believe the principal competitive factors for our solutions in the financial services markets we serve include the following: • alignment with the missions of our customers; • ability to provide a single digital banking platform for consumer, SMB and commercial End Users; 13 Table of Contents • ability to provide a comprehensive portfolio of products of integrated end-to-end solutions for both account holders and borrowers; • breadth and depth of product portfolio addressing numerous mission critical applications for our customers; • full-feature functionality across digital channels; • ability to integrate targeted offers for End Users across digital channels; • ability to support financial institutions in acquiring deposits with open API technologies; • provided as SaaS with subscription pricing model; • ability to support both internal and external developers to quickly integrate with third-party applications and systems utilizing an SDK; • design of the End-User experience, including modern, intuitive and touch-centric features; • configurability and branding capabilities for customers; • familiarity of workflows and terminology and feature-on-demand functionality; • integrated multi-layered security and compliance of solutions with regulatory requirements; • quality of implementation, integration and support services; • domain expertise and innovation in financial services technology; • ability to innovate and respond to customer needs rapidly; • breadth of integrations to third-party financial services; • rate of development, deployment and enhancement of solutions; and • ability to collect and utilize data generated by our solutions to deliver insights to our customers.
We primarily market Helix to FinTechs and financial institutions wishing to incorporate banking products and services into their offerings. We also market our Symphonix lending platform, previously referred to as Cloud Lending, or CL, and discrete elements of our digital banking platform to FinTechs and Alt-FIs.
We primarily market Helix to FinTechs and financial institutions wishing to incorporate banking products and services into their offerings. We also market our Symphonix lending platform and discrete elements of our digital banking platform to FinTechs and Alt-FIs.
Due to the highly-regulated and complex nature of the financial services industry, our implementation and customer support teams, including any third-party professional system integrators with which we partner, must be knowledgeable about our solutions and the regulatory environment in which our customers are required to operate. 15 Table of Contents Partner Offerings In addition to our Q2 Innovation Studio offerings, our customers are reliant on an ever-growing ecosystem of third-party digital solutions to complement their financial services offerings, and we provide a broad range of tools to help our customers efficiently bring them to market.
Given the highly regulated and operationally complex nature of the financial services industry, our implementation and customer support teams, including any third-party professional system integrators with which we partner, must be knowledgeable about our solutions and the regulatory environments in which our customers operate. 11 Table of Contents Partner Offerings In addition to our Q2 Innovation Studio offerings, our customers rely on an ever-growing ecosystem of third-party digital solutions to complement their financial services offerings, and we provide a broad range of tools to help our customers efficiently bring those solutions to market.
Implementation Services, Professional Services and Customer Support We seek to deepen and grow our customer relationships by providing consistent, high-quality implementation services, professional services, advisory services and customer support, which we believe drive higher customer retention and incremental sales opportunities within our existing customer base.
Implementation Services, Professional Services and Customer Support We seek to deepen and grow our customer relationships by providing consistent, high-quality implementation services, professional services, advisory services and customer support, which we believe support customer retention, platform adoption, and incremental expansion opportunities within our existing customer base.
In addition to traditional employee benefits, we offer a number of innovative benefits to support the physical, mental and financial health of our employees.
Employee Well-Being We are committed to the health, safety and well-being of our employees. In addition to traditional employee benefits, we offer a number of innovative benefits to support the physical, mental and financial health of our employees.
These integration tools connect with a wide variety of third-party applications, allowing us to seamlessly integrate with our customers' internal and third-party systems such as account services, payments and imaging.
These integration tools connect with a wide variety of third-party applications, allowing us to seamlessly integrate with our customers' internal and third-party systems such as account services, payments, and imaging. Additionally, these integration tools and processes allow us to improve standardization and capabilities across applications and systems.
To remain competitive, we believe we must continue to invest in research and development, sales and marketing, customer support and our business operations generally. People As of December 31, 2024, we had 2,477 employees, of which 2,476 were full time employees, 1,659 of which were employed in the United States, and 817 were employed outside of the United States.
To remain competitive, we believe we must continue to invest in research and development, sales and marketing, customer support and our business operations generally. People As of December 31, 2025, we had 2,549 employees, of which 2,548 were full time employees, 1,664 of which were employed in the United States, and 884 were employed outside of the United States.
We define RCFIs as federally-insured banks and credit unions with less than $100 billion in assets, which according to data compiled by BauerFinancial as of September 30, 2024, consisted of approximately 9,054 financial institutions with combined assets of $9.1 trillion, representing approximately 34% of the aggregate assets held by the 9,088 total federally-insured financial institutions.
We define RCFIs as federally-insured banks and credit unions with less than $100 billion in assets, which according to data compiled by BauerFinancial as of September 30, 2025, consisted of approximately 8,741 financial institutions with combined assets of $9.6 trillion, representing approximately 35% of the aggregate assets held by the 8,772 total federally-insured financial institutions.
Q2 has been recognized by the Austin American-Statesman as a Greater Austin Top Workplace for 14 consecutive years and in 2024, Q2 was also recognized as a Top Workplace USA based on survey responses from employees across the country. 19 Table of Contents Our culture and commitment to inclusion is visible across our organization and highlighted through a host of initiatives, programs and groups including the following: • our portfolio of company-wide events and forums that foster connections to the organization and one another; • our employee volunteer groups focused on culture, wellness, and charitable causes that help create opportunities for employees to support causes to make a difference in the workplace and local communities; • partnerships with industry leaders to bring networking and learning opportunities for our Q2 team members; • adding a new Q2 employee resource group, or ERG, in 2024 - Veterans and Allies; • promoting a work environment that encourages employees to express their ideas and perspectives, and one which gives employees easy access to leaders, including executives; • supporting external organizations committed to underserved communities; • our workspaces and virtual workspace resources that reinforce our mission and guiding principles and promote a collaborative, high-energy work environment that helps facilitate team-based problem solving and cross-departmental learning; and • our new-hire employee orientations that help new employees learn about our business, culture, mission and values and be positioned for successful performance in their new roles.
Our culture and commitment to inclusion is visible across our organization and highlighted through a host of initiatives, programs and groups including the following: • our portfolio of company-wide events and forums that foster connections to the organization and one another; • our employee volunteer groups focused on culture, wellness, and charitable causes that help create opportunities for employees to support causes to make a difference in the workplace and local communities; • partnerships with industry leaders to bring networking and learning opportunities for our Q2 team members; • promoting a work environment that encourages employees to express their ideas and perspectives, and one which gives employees easy access to leaders, including executives; • supporting external organizations committed to underserved communities; • our workspaces and virtual workspace resources that reinforce our mission and guiding principles and promote a collaborative, high-energy work environment that helps facilitate team-based problem solving and cross-departmental learning; and • our new-hire employee orientations that help new employees learn about our business, culture, mission and values and be positioned for successful performance in their new roles.
Our open digital banking platform now spans onboarding, banking and a vast set of integrations to third-party financial services across the retail, SMB and commercial segments, and provides our financial institution customers with the tools, knowledge, and access necessary to: monitor and optimize End-User acquisition, engagement and retention; customize and extend the platform; and, improve operational efficiencies.
Our open digital banking platform spans onboarding, essential banking functionality and a broad set of integrations to third-party financial services across the retail, SMB and commercial segments, providing customers with tools to monitor and optimize End-User acquisition, engagement and retention; customize and extend the platform; and improve operational efficiencies.
Some examples of our wide-ranging benefits include: defined contribution retirement plans, including employer contributions; employee stock purchase plan; medical insurance, prescription drug benefits, dental insurance, vision insurance, accident insurance, critical illness insurance, life insurance, disability insurance, health savings accounts with employer contributions, flexible spending accounts, legal insurance and pet insurance. 21 Table of Contents Employee Well-Being We are committed to the health, safety and well-being of our employees.
Some examples of our wide-ranging benefits include: defined contribution retirement plans, including employer contributions; employee stock purchase plan; medical insurance, prescription drug benefits, dental insurance, vision insurance, accident insurance, critical illness insurance, life insurance, disability insurance, health savings accounts with employer contributions, flexible spending accounts, legal insurance and pet insurance.
Credit Unions, based on total assets. As of December 31, 2024, we had 460 installed digital banking platform customers, and those customers had approximately 24.7 million account holders registered on our digital banking platform. During 2024, End Users logged into our digital banking platform over 4 billion times and executed over $3.3 trillion in financial transactions.
Credit Unions, based on total assets. As of December 31, 2025, we had 457 installed digital banking platform customers, and those customers had approximately 27.3 million account holders registered on our digital banking platform. During 2025, End Users executed over $4.0 trillion in financial transactions on our digital banking platform.
The structure and terms of our Helix arrangements with FinTechs vary but typically involve relatively lower contracted minimum revenues and instead emphasize usage-based revenue, with such revenue recognized as it is incurred.
The structure and terms of our Helix arrangements with FinTechs vary but typically involve relatively lower contracted minimum revenues and instead emphasize usage-based revenue, with such revenue recognized as it is incurred. This combination of subscription-based and usage-based revenue models aligns pricing with customer adoption and platform utilization.
Employees reported over 23,000 hours of service to 367 organizations and, combined with Q2's efforts, donated more than $1.6 million to nonprofits globally. In 2024, we also granted $150,000 through the Q2 Philanthropy Fund to nonprofits in Texas, Nebraska, North Carolina, the UK, and India.
In 2025, employees reported over 16,000 hours of service to 218 organizations and, combined with Q2's efforts, donated approximately $1.6 million to nonprofits globally. In 2025, we also granted $150,000 through the Q2 Philanthropy Fund to nonprofits in Texas, Iowa, Minnesota, Nebraska, North Carolina, Mexico and India.
We believe that the breadth of the comprehensive integrations among our solution offerings and our customers' internal and third-party systems, combined with our deep industry expertise, reputation for consistent, high-quality customer support and the pace at which we bring innovation to market distinguish us from the competition across our cloud-based digital banking, digital lending and relationship pricing, Q2 Innovation Studio and Helix solutions. 17 Table of Contents We currently compete with providers of technology and services in the financial services industry, including point system vendors, core processing vendors and systems internally developed by financial services providers.
We believe that the breadth of the comprehensive integrations among our solution offerings and our customers' internal and third-party systems, combined with our deep industry expertise, reputation for consistent, high-quality customer support and the pace at which we bring innovation to market distinguish us from the competition across our cloud-based digital banking, digital lending and relationship pricing, fraud products, Q2 Innovation Studio and Helix solutions.
In addition, some of our competitors spend more funds on research and development in terms of absolute dollars. Although we compete with point system vendors and core processing vendors, we also partner with some of these vendors for certain data and services utilized in our solutions and receive referrals from them.
Although we compete with point system vendors and core processing vendors, we also partner with some of these vendors for certain data and services utilized in our solutions and receive referrals from them.
These strengths allow us to address the evolving needs and challenges within the financial services industry, as we continually innovate and adapt our offerings to meet the changing demands of our customers and their End Users.
We believe these characteristics position us to support customers as they modernize technology stacks, consolidate vendors and adapt to evolving competitive and regulatory environments. These strengths allow us to address the evolving needs and challenges within the financial services industry, as we continually innovate and adapt our offerings to meet the changing demands of our customers and their End Users.
With a strong history of fostering internal talent and providing growth opportunities for our global workforce, we remain committed to evolving our practices to identify and mitigate bias across our organization. In 2024, we expanded our ERG programs to further support our internal communities.
With a strong history of fostering internal talent and providing growth opportunities for our global workforce, we remain committed to evolving our practices to identify and mitigate bias across our organization. In 2025, we continued strengthening our employee resources groups, or ERGs, to support our internal communities.
Institutions must comply by set dates based on their size starting in 2026. The compliance of our solutions with these requirements depends on a variety of factors, including the functionality and design of our solutions, the classification of our customers, and the way our customers and their End Users utilize our solutions.
The compliance of our solutions with these requirements depends on a variety of factors, including the functionality and design of our solutions, the classification of our customers, and the way our customers and their End Users utilize our solutions.
We generally recognize our revenues over the terms of our customer agreements. The initial term of our digital banking platform agreements averages over five years.
The initial term of our digital banking platform agreements averages over five years.
To ensure our continued success, we endeavor to nurture our mission-driven culture by how we grow our teams, define our goals and reward our employees. Our current programs focus on the following key human capital measures and objectives: Employee Engagement and Culture Since our founding, our culture has been rooted in our mission.
To ensure our continued success, we endeavor to nurture our mission-driven culture by how we grow our teams, define our goals and reward our employees. Our human capital strategy focuses on employee engagement, talent development, inclusion and well-being. Employee Engagement and Culture Since our founding, our culture has been rooted in our mission.
These laws and regulations are constantly evolving and affect the conduct of financial services providers' operations and, as a result, the business of their technology providers.
These laws and regulations are constantly evolving and affect the conduct of our customers' operations and, as a result, our business.
We follow state-of-the-art practices in software development and design, including using modern programming languages, data storage systems and other tools. Our multi-tiered architecture enables us to scale, add and modify features quickly in response to changing market dynamics, customer needs and regulatory requirements. Our platform approach supports rapid development and deployment of new features to address evolving market needs.
Our multi-tiered architecture enables us to scale, add and modify features quickly in response to changing market dynamics, customer needs and regulatory requirements. Our platform approach supports the rapid development and deployment of new features to address evolving market needs.
Our solutions are designed to comply with the stringent security and technical regulations applicable to financial institutions and financial services providers and to safeguard our customers' data and that of their End Users. 5 Table of Contents We believe that financial services providers are best served by a broad portfolio of digital solutions offering rapid, flexible and comprehensive integration with internal and third-party solutions enabling them to deliver modern, intuitive, advanced and regulatory-compliant digital solutions.
We believe that financial services providers are best served by a broad portfolio of digital solutions offering rapid, flexible and comprehensive integration with internal and third-party solutions enabling them to deliver modern, intuitive, advanced and regulatory-compliant digital solutions.
We also enable customers to address their market-specific needs via our extension and integration frameworks, which is a key aspect of our technology strategy. Technology and Operations Due to the highly regulated nature of the financial services industry, our digital banking platform combines both multi-tenant and single instance aspects.
In addition, our extension and integration frameworks allow customers and partners to address market-specific requirements without disrupting core platform functionality, which is a key aspect of our technology strategy. Technology and Operations Due to the highly regulated nature of the financial services industry, our digital banking platform combines multi-tenant and single-instance deployment models.
The initial term of our digital banking platform agreements averages over five years. Our digital banking platform revenues generally increase as our customers buy more solutions from us and increase the number of End Users and companies utilizing our solutions and as those retail users and companies increase their number of transactions on our solutions.
Our digital banking platform revenues generally increase as our customers buy more solutions from us and increase the number of Registered Users, as defined in "Key Operating Measures" below, and companies utilizing our solutions and as those retail users and companies increase their number of transactions on our solutions.
Successfully securing the digital financial services of financial institutions, FinTechs and other financial services providers requires experience, constant vigilance, and continuous investment to stay informed and guard against these ever-changing threats. 6 Table of Contents Digital financial services are highly regulated Financial services providers and their solutions are subject to extensive and complex regulations and oversight by federal, state and other regulatory authorities.
Successfully securing the digital financial services of financial institutions, FinTechs and other financial services providers requires experience, constant vigilance, and continuous investment to stay informed and guard against these ever-changing threats. Digital financial services are highly regulated Regulatory complexity materially shapes the digital financial services market.
Our ability to integrate with these systems enables our customers to offer a comprehensive set of consumer and commercial functionality to their End Users which we believe increases the value of the Q2 platform to our customers.
By enabling interoperability across these systems, our platform allows customers to offer a comprehensive set of consumer and commercial functionality to their End Users, which we believe enhances the value and extensibility of the Q2 platform over time.
Our customers and prospects are subject to extensive and complex regulations and oversight by regulatory authorities. These laws and regulations are constantly evolving and affect the conduct of our customers' operations and, as a result, our business.
Financial services providers and their solutions are subject to extensive and complex regulations and oversight by federal, state and other regulatory authorities. These laws and regulations are constantly evolving and affect the conduct of financial services providers' operations and, as a result, the business of their technology providers.
This integrated approach allows our customers to deliver unified and robust financial experiences across digital channels. Our solutions provide our customers the flexibility to configure their digital services in a manner that is consistent with each customer's specific offerings, workflows, processes and controls.
Our solutions provide our customers the flexibility to configure their digital services in a manner that is consistent with each customer's specific offerings, workflows, processes and controls. Our solutions also allow our customers to personalize the digital experiences they deliver to their End Users by extending their individual services and brand requirements across digital channels.
Intellectual Property We rely on a combination of patent, trademark, trade secrets and copyright laws, as well as confidentiality procedures and contractual restrictions, to establish, maintain and protect our proprietary rights.
In addition, our internal penetration testing team, supported by independent third-party assessors, performs regular penetration and vulnerability assessments of our solutions. Intellectual Property We rely on a combination of patent, trademark, trade secrets and copyright laws, as well as confidentiality procedures and contractual restrictions, to establish, maintain and protect our proprietary rights.
We are also subject to privacy laws of various states. These laws impose obligations with respect to the collection, processing, storage, disposal, use and disclosure of personal information, and require that financial services providers have in place policies regarding information privacy and security.
These laws impose obligations with respect to the collection, processing, storage, disposal, use and disclosure of personal information, and require financial services providers to maintain administrative, technical and physical safeguards and related policies regarding information privacy and security.
Our marketing programs primarily target digital transformation, technology, finance, operations and marketing executives as well as senior business leaders. Research and Development Our focus on innovation has fueled our growth and enables us to provide our customers cloud-based digital solutions that transform the ways in which financial institutions, FinTechs and other financial services providers engage with End Users.
Research and Development Our focus on innovation has fueled our growth and enables us to provide our customers cloud-based digital solutions that transform the ways in which financial institutions and other financial services providers engage with account holders and retail and commercial End Users and reduce fraud.
Over the past several years, in response to the increasing demand for innovative digital banking and other financial services, we have taken steps to expand our addressable market by acquiring and developing solutions that serve the needs of a broader, global set of financial services providers and their End Users.
Over the past several years, we have expanded our addressable market by acquiring and developing solutions that serve a broader set of financial services providers and End Users.
We have continuously invested in expanding and improving our digital banking platform since its introduction in 2005. Over the past several years, we have broadened our offerings through strategic investments and acquisitions to serve a wider range of needs for financial institutions, FinTechs and Alt-FIs.
Over the past several years, we have broadened our offerings through strategic investments and acquisitions to serve a wider range of needs for financial institutions, FinTechs and Alt-FIs. These investments have emphasized platform extensibility, configurability and the ability to integrate data and functionality across digital channels.
We believe our portfolio, which reflects years of strategic development and innovation, affords us a distinct competitive advantage across multiple market segments. As a result of our expanded offerings and market opportunity, we estimate our addressable market for our solutions to be approximately $20.0 billion.
We believe our portfolio, which reflects years of strategic development and innovation, affords us a distinct competitive advantage across multiple market segments.
Our ERGs include Black Q2, Gente de Q2, Q2 Pride, Q2 Women and the newly launched Q2 Veterans and Allies. The Veterans and Allies ERG has already received tremendous support and engagement. Each ERG is championed by executive leadership, guided by a well-defined mission and driven by a dedicated team of passionate volunteers.
Our ERGs include Black Q2, Gente de Q2, Q2 Pride, Q2 Women and Q2 Veterans and Allies. Each ERG is championed by executive leadership, guided by a clear mission and powered by dedicated volunteers.
We intend to continue to make investments in technology innovation and software development to enhance our existing solutions and platforms while expanding our product portfolio. We primarily sell our solutions through our direct sales organization and the related revenues are recognized over the terms of our customer agreements.
We intend to continue to make investments in technology innovation and software development to enhance our existing solutions and platforms while expanding our product portfolio.
Our solutions are designed to meet the diverse needs of financial institutions, FinTechs, and Alt-FIs, enabling them to deliver unified and robust financial experiences across digital channels. We design and develop our solutions with a platform approach intended to provide comprehensive integration between our solution offerings and our customers' and partners' internal and third-party systems.
Our solutions are designed to meet the diverse needs of financial institutions, FinTechs, and Alt-FIs, enabling them to deliver unified and robust financial experiences across digital channels.
We engage with select established customers for more tailored, premium professional services, or Integrated Services, resulting in a deeper and ongoing level of engagement with them. Under certain circumstances for our Symphonix lending solutions, we also partner with third-party professional system integrators to support our customers in the installation and configuration process.
Under certain circumstances for our Symphonix lending solutions, we also partner with third-party professional system integrators to support our customers in the installation and configuration process. Our customer support personnel serve the comprehensive support-related needs of our customers.
In 2024, we hosted employee focus groups to collect qualitative feedback from employees. Our leadership team routinely considers the feedback from our employee engagement surveys, both positive and constructive, and focuses on implementing employee-suggested changes to become an even better place to work.
Additionally, we conduct pulse surveys throughout the year to supplement our annual engagement surveys, which helps us more promptly enhance employee programs and benefits. Our leadership team routinely considers the feedback from our employee engagement surveys, both positive and constructive, and focuses on implementing employee-suggested changes to become an even better place to work.
Our digital banking platform provides our customers with the following benefits: • single-login and multi-layered security across channels and devices; • comprehensive suite of features and functionality catering to the diverse requirements of retail, SMB, and commercial banking; • deep integration with internal and third-party systems; • unified End-User experience with consistent workflows and data; 13 Table of Contents • rapid configurability and development of new features; • comprehensive End-User activity tracking and reporting; and • flexible branding and personalization options.
Selected capabilities of our digital banking platform include single-login and layered security across channels and devices; configurable retail and commercial digital banking functionality; integration with internal and third-party systems; unified End-User workflows and data; activity tracking and reporting; and flexible branding and personalization options.
The methods by which criminals seek to commit fraud are constantly changing, including the increasing use of AI to facilitate attacks, requiring financial services providers and their technology providers to continually modify their security protocols.
However, as the adoption, use, and breadth of digital financial services offerings has increased, fraud and theft in digital channels has grown substantially. The methods by which fraud can be committed are constantly evolving, including the increasing use of AI to facilitate attacks, requiring financial services providers and their technology providers to continually modify their security protocols and architecture.
Our digital lending and relationship pricing, Helix and some of our digital banking platform solutions are hosted by third-party public cloud service providers, and we are currently in the process of migrating the computing, storage and processing of our digital banking platform solutions from our third-party data centers to third-party public cloud service providers.
Our digital lending and relationship pricing solutions, along with select digital banking platform components, are hosted natively in third-party public cloud environments. We have completed the migration of our digital banking platform, including the core computing, storage and processing capabilities, from privately operated data centers to public cloud infrastructure.
We have developed a comprehensive suite of offerings to accelerate and optimize this transformation for our customers, ranging from digitizing entire banks to facilitating partnerships between financial institutions, FinTechs, and Alt-FIs. We believe this creates an expanded market opportunity for our business, which we have been thoughtfully evolving for several years.
We believe that lasting value creation in financial services will be achieved by those companies that are capable of supporting and embracing these market dynamics. We have developed a comprehensive suite of offerings to accelerate and optimize this transformation for our customers, ranging from digitizing entire banks to facilitating partnerships between financial institutions, FinTechs and Alt-FIs.
In October 2024, the CFPB issued a rule pursuant to section 1033 of the Dodd-Frank Act that requires banks and other financial institutions to share data securely with consumers and authorized third parties upon consumer request by giving them control over their personal financial data while promoting transparency, data portability, and competition in the financial sector.
In 2024, the CFPB issued a rule pursuant to Section 1033 of the Dodd-Frank Act that would require banks and other financial institutions to share certain customer account data securely with consumers and authorized third parties upon consumer request with compliance dates phased in beginning in 2026 based on institution size.
Our solutions transform the ways in which financial institutions and other financial services providers engage with account holders and end users, or End Users. Our solutions comprise a broad and deep portfolio of digital banking solutions, digital lending and relationship pricing solutions, Q2 Innovation Studio, and Helix.
Our solutions transform the ways in which financial institutions and other financial services providers engage with account holders and retail and commercial End Users.
To accomplish this goal, we are pursuing the following growth strategies: • Further penetrate our large market opportunity: Financial institutions are increasingly adopting cloud-based digital banking solutions.
Our growth strategy is centered on the following priorities: • Further penetrate our large market opportunity: Financial institutions are increasingly adopting cloud-based digital banking solutions to support digital engagement across retail, SMB and commercial segments.
Our culture is demonstrated and shared through our employee traditions and daily engagements among our employees and with our customers. We continue to refine our employee engagement programs to meet the continued and changing needs of our Q2 team members, including to accommodate numerous remote and hybrid employees and hybrid working styles.
We continue to refine our employee engagement programs to meet the continued and changing needs of our business, including to accommodate numerous remote and hybrid employees and hybrid working styles. We offer a range of learning and social opportunities, both virtually and in person, with more of our employee engagements returning to Q2 campuses.
We offer a range of learning and social opportunities, both virtually and remote, with more of our employee engagements returning to Q2 campuses. The role of the campus has evolved to emphasize interaction, which can include formal meetings, informal conversations, brainstorms, social events and other activities that make the most of being together face-to-face.
The role of the campus has evolved to emphasize interaction, which can include formal meetings, informal conversations, brainstorms, social events and other activities that make the most of being together face-to-face, as well as supporting local employees onsite multiple times per week.
We also have online learning experiences to better target digital training resources for employees at any point in their Q2 career journey, from new hire through career development. Talent Acquisition We work diligently to attract great talent from a diverse range of sources to meet the current and future demands of our business.
We also have online learning experiences to better target digital training resources for employees at any point in their Q2 career journey, from new hire through career development. 16 Table of Contents Talent Acquisition Talent Acquisition is designed to support the Company's growth strategy through a scalable, data-driven hiring model that emphasizes efficiency, consistency, and talent quality.
We focus our marketing efforts on sponsorships, highly-targeted tradeshows, publications, digital newsletters, digital advertising, account-based marketing, as well as referral agreements with strategic industry partners. Our marketing team also conducts primary research to support our industry thought leadership and to identify emerging trends in End-User behavior and digital activities.
We focus our marketing efforts on hosted events and experiences, including our annual in-person client conference, highly-targeted tradeshows, digital marketing, account-based marketing, content marketing and media relations. Our marketing team also conducts primary research to support our industry thought leadership and to identify emerging trends in the industry.
Open to all employees, who are actively encouraged to participate, these groups provide opportunities to engage in meaningful events, educational workshops, and volunteer initiatives. Together, we are cultivating a culture of inclusion, belonging, and growth for everyone at Q2. 20 Table of Contents The following tables represent the diversity statistics of our workforce.
Open to all employees, these groups provide opportunities to connect through meaningful events, educational workshops and volunteer initiatives, helping us cultivate a culture of belonging for everyone at Q2. The following tables represent the diversity statistics of our workforce. Gender numbers reflect Q2's global workforce, and race and ethnicity data is for U.S. only. Gender and ethnicity are self-identified.
Our solutions utilize a software-as-a-service, or SaaS, model designed to scale with our customers as they grow their business, add End Users and expand the breadth of digital services and solutions they offer. On average, Q2 digital banking platform customers have historically grown contracted revenue by approximately 45% within 36 months of implementation.
As a result of our expanded offerings and market opportunity, we estimate our addressable market for our solutions to be approximately $23.0 billion. 5 Table of Contents Our solutions utilize a software-as-a-service, or SaaS, model designed to scale with our customers as they grow their business, add End Users and expand the breadth of digital services and solutions they offer.
This structure is designed to meet data security needs, minimize compliance cost and reduce residual risks. Our solutions utilize a multi-tiered architecture that allows for scalability, operational simplicity, security and disaster recovery.
This approach is designed to meet stringent data security and regulatory requirements while minimizing compliance cost and residual risk. Our solutions leverage a modern, multi-cloud architecture that supports scalability, operational efficiency, security and disaster recovery.
End-Users' adoption, retention and satisfaction can also be adversely impacted by the dated End-User interfaces of older legacy systems. The market for digital financial services is significant We have continuously invested in expanding and improving our digital banking platform since we introduced it in 2005.
End Users' adoption, retention and satisfaction can also be adversely impacted by the dated End-User interfaces of older legacy systems.
These implementation teams develop and execute a coordinated implementation plan for our customers centered around five standard phases of IT transformation projects: initiation, configuration, application testing, limited production and production. Our customer support personnel serve the comprehensive support-related needs of our customers.
We structure our implementation teams to effectively collaborate with the management and technology teams of our customers, supporting the timely deployment and effective utilization of our solutions. Our implementation teams develop and execute coordinated implementation plans centered around five standard phases of IT transformation projects: initiation, configuration, application testing, limited production and production.
We believe our passion, dedication and commitment towards this mission is a significant differentiator for our customers and employees. At Q2, employees experience a culture that is collaborative, inclusive, kind and fun, and which is firmly grounded in our guiding principles. We weave inclusion into our business functions, strategy and engagement efforts.
We believe our passion, dedication and commitment towards this mission is a significant differentiator for our customers and employees. At Q2, employees experience a culture that is mission-fueled and built on hustle, adaptability and curiosity.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur principal risks include risks associated with: • security and privacy threats and breaches involving our solutions; • the current economic environment and challenges in the financial services industry, including impacts on our customers' decisions to purchase our products and services and the related demand for our solutions relative to our expectations; • focusing on the financial services industry, and particular customer segments therein, and any geographies where we have general customer concentration and the potential for any economic downturn or consolidation in such industry, segments or geographies to adversely affect our business; • the integration of our solutions with and reliance by our solutions on third-party systems or services; • defects or errors in our solutions, including failures associated with transaction processing or interest, principal or balance calculations; • defects, failures or interruptions in third-party services or solutions, including third-party data centers and third-party public cloud service providers; • our ability to plan for and manage our growth and scale with our new and existing customers effectively; • the length, cost and unpredictability of our sales cycle; • the development of our solutions and changes to the market for our solutions compared to our expectations; • our ability to attract new customers and expand and renew existing customer relationships; • managing challenges and costs associated with the implementation of a higher volume of or more complex configurations of our solutions; • customer acceptance of and satisfaction with our existing and new solutions; • the strength of our brand and reputation; • intense competition in the markets we serve and challenges we face as we enter new markets or new areas of existing markets; • the migration of a significant portion of the computing, storage and processing of our digital banking platform solutions from our third-party data centers to third-party public cloud service providers; • customer training and customer support; • evolving technological requirements, enhancements and additions to our solution offerings, including AI; • our sales and marketing capabilities, including partner relationships; • our dependency on our management team and other key employees and the increased costs associated with recruiting and retaining talent; • our international operations; • mergers, acquisitions, divestitures or strategic investments; • our revenue recognition method and the relative impacts of changes in subscription rates; • quarterly fluctuations in our operating results relative to our expectations and guidance and the reliability and accuracy of our forecasts and the market data we use; • our history of net operating losses and potential limitations on our ability to utilize our net operating loss carryforwards; 24 Table of Contents • our profit margins and the unpredictability of End-User adoption and usage, and customer implementation and support requirements; • changes in financial accounting standards or practices; • our ability to maintain proper and effective internal controls and produce accurate and timely financial statements; • regulations applicable to us, our customers and our solutions, including evolving regulation of AI, machine learning and the receipt, collection, storage, processing and transfer of data, and the impacts of any violation of these regulations; • litigation or threats of litigation; • our ability to protect our intellectual property; • the use of "open-source" software in our solutions; • environmental, social and governance, or ESG, disclosures and evolving ESG disclosure requirements; • the expenses and administrative burdens as a public company; • the dilutive effects of future sales, or anticipation of future sales, of our common stock and the resulting impact on the price of our common stock; • unfavorable or misleading research by industry analysts; • our stock price volatility and historical policy of no dividends; • anti-takeover provisions in our charter documents and Delaware law; • our convertible debt obligations and related capped call transactions and the related accounting treatment and our ability to secure sufficient additional financing when desired or needed on favorable terms; and • our ability to obtain additional financing and potential dilution to our stockholders resulting from raising capital or using equity for acquisitions. 25 Table of Contents Risks Related to our Operations, Industry and the Markets We Serve Our business faces significant risks from diverse and increasingly frequent security threats.
Biggest changeOur principal risks include risks associated with: • security and privacy threats and breaches involving our solutions; • the current economic environment and challenges in the financial services industry, including impacts on our customers' decisions to purchase our products and services and the related demand for our solutions relative to our expectations, including economic impacts resulting from changes to U.S. trade policy, tariff and import/export regulations; • focusing on the financial services industry, and particular customer segments therein, and any geographies where we have general customer concentration and the potential for any economic downturn or consolidation in such industry, segments or geographies to adversely affect our business; • the integration of our solutions with and reliance by our solutions on third-party systems or services; • defects or errors in our solutions, including failures associated with transaction processing or interest, principal or balance calculations; • the recently completed migration of the computing, storage and processing of our digital banking platform solutions from our third-party data centers to third-party public cloud service providers; • defects, failures or interruptions in third-party services or solutions, including third-party public cloud service providers; • our ability to plan for and manage our growth and scale with our new and existing customers effectively; • the length, cost and unpredictability of our sales cycle; • the development of our solutions and changes to the market for our solutions compared to our expectations; • our ability to attract new customers and expand and renew existing customer relationships; • managing challenges and costs associated with the implementation of a higher volume of or more complex configurations of our solutions; • customer acceptance of and satisfaction with our existing and new solutions; • the strength of our brand and reputation; • intense competition in the markets we serve and challenges we face as we enter new markets or new areas of existing markets; • customer training and customer support; • development of our AI strategies and solutions, changes to the market for our solutions and regulatory specifications and functionality required by our customers and relevant governmental authorities; • evolving technological requirements, enhancements and additions to our solution offerings, including AI; • our sales and marketing capabilities, including partner relationships; • our dependency on our management team and other key employees and the increased costs associated with recruiting and retaining talent; • our international operations; • mergers, acquisitions, divestitures or strategic investments; • our revenue recognition method and the relative impacts of changes in subscription rates; 19 Table of Contents • quarterly fluctuations in our operating results relative to our expectations and guidance and the reliability and accuracy of our forecasts and the market data we use; • our history of net operating losses and potential limitations on our ability to utilize our net operating loss carryforwards; • our profit margins and the unpredictability of End-User adoption and usage, and customer implementation and support requirements; • changes in financial accounting standards or practices; • our ability to maintain proper and effective internal controls and produce accurate and timely financial statements; • regulations applicable to us, our customers and our solutions, including evolving regulation of AI, machine learning and the receipt, collection, storage, processing and transfer of data, and the impacts of any violation of these regulations; • global data privacy and security regulations; • increased regulatory scrutiny and evolving requirements for money movement services and the resulting potential higher costs, increased complexity and limitations on offerings; • litigation or threats of litigation; • our ability to protect our intellectual property; • the use of "open-source" software in our solutions; • environmental, social and governance, or ESG, disclosures and evolving ESG disclosure requirements; • the expenses and administrative burdens as a public company; • the dilutive effects of future sales or anticipation of future sales, of our common stock and the resulting impact on the price of our common stock; • unfavorable or misleading research by industry analysts; • our stock price volatility and historical policy of no dividends; • anti-takeover provisions in our charter documents and Delaware law; • our convertible debt obligations and related capped call transactions and the related accounting treatment and our ability to secure sufficient additional financing when desired or needed on favorable terms; and • our ability to obtain additional financing and potential dilution to our stockholders resulting from raising capital or using equity for acquisitions. 20 Table of Contents Risks Related to our Operations, Industry and the Markets We Serve Our business faces significant risks from diverse and increasingly frequent security threats.
These incidents could include explainability risk whereby our potential inability to interpret, articulate, or justify the decision-making processes of AI models, compounded by challenges in achieving replicability of outcomes due to the adaptive nature of AI learning, where identical inputs may not always yield repeatable or consistent outputs, may lead to concerns about trust, regulatory compliance and accountability.
These incidents could include explainability risk whereby our potential inability to interpret, articulate or justify the decision-making processes of AI models, compounded by challenges in achieving replicability of outcomes due to the adaptive nature of AI learning, where identical inputs may not always yield repeatable or consistent outputs, and may lead to concerns about trust, regulatory compliance and accountability.
In addition to the other risks described in this report, factors that may affect our quarterly operating results or key operating measures include the following: • the addition or loss of customers, including through acquisitions, consolidations or failures; • the timing of large subscriptions and customer terminations, renewals or failures to renew; • the amount of use of our solutions in a period and the amount of any associated transactional revenues and expenses; • the amount and timing of professional service engagements and associated revenues and expenses; • budgeting cycles of our customers and changes in spending on solutions by our current or prospective customers; • seasonal variations in sales of our solutions, which may be lower in the first half of the calendar year; • changes in the competitive dynamics of our industry, including consolidation among competitors, changes to pricing or the introduction of new products and services that limit demand for our solutions or cause customers to delay purchasing decisions; • the amount and timing of cash collections from our customers; • long or delayed implementation times for new customers, including larger customers with more complex requirements, or other changes in the levels of customer support we provide; • the timing and predictability of sales of our solutions and the impact that the timing of bookings may have on our revenue and financial performance in a period; • the timing of customer payments and payment defaults by customers, including any buyouts by customers of the remaining term of their contracts with us in a lump sum payment that we would have otherwise recognized over the term of those contracts, and any costs associated with impairments of related contract assets; • changes in actual customer usage or projected customer usage of our solutions; 41 Table of Contents • the amount and timing of our operating costs and capital expenditures; • changes in tax rules or the impact of new accounting pronouncements; • general economic conditions or conditions in the financial services industry that may adversely affect our customers' ability or willingness to purchase solutions, delay a prospective customer's purchasing decision, reduce our revenues from customers or affect renewal rates; • natural disasters or public health emergencies and their effect on the operations of us, our customers, our third-party providers and on the overall economy; • impairment charges related to long-lived assets; • unexpected expenses such as those related to non-recurring corporate transactions, litigation or other disputes, or changes in claim trends on our workers' compensation, unemployment, disability and medical benefit plans may negatively impact our operating costs; • the timing of stock awards to employees and related adverse financial statement impact of having to expense those stock awards over their vesting schedules; and • the amount and timing of costs associated with recruiting, hiring, training and integrating new employees, many of whom we hire in advance of anticipated needs.
In addition to the other risks described in this report, factors that may affect our quarterly operating results or key operating measures include the following: • the addition or loss of customers, including through acquisitions, consolidations or failures; • the timing of large subscriptions and customer terminations, renewals or failures to renew; • the amount of use of our solutions in a period and the amount of any associated transactional revenues and expenses; • the amount and timing of professional service engagements and associated revenues and expenses; • budgeting cycles of our customers and changes in spending on solutions by our current or prospective customers; • seasonal variations in sales of our solutions, which may be lower in the first half of the calendar year; • changes in the competitive dynamics of our industry, including consolidation among competitors, changes to pricing or the introduction of new products and services that limit demand for our solutions or cause customers to delay purchasing decisions; • the amount and timing of cash collections from our customers; 36 Table of Contents • long or delayed implementation times for new customers, including larger customers with more complex requirements, or other changes in the levels of customer support we provide; • the timing and predictability of sales of our solutions and the impact that the timing of bookings may have on our revenue and financial performance in a period; • the timing of customer payments and payment defaults by customers, including any buyouts by customers of the remaining term of their contracts with us in a lump sum payment that we would have otherwise recognized over the term of those contracts, and any costs associated with impairments of related contract assets; • changes in actual customer usage or projected customer usage of our solutions; • the amount and timing of our operating costs and capital expenditures; • changes in tax rules or the impact of new accounting pronouncements; • general economic conditions or conditions in the financial services industry that may adversely affect our customers' ability or willingness to purchase solutions, delay a prospective customer's purchasing decision, reduce our revenues from customers or affect renewal rates; • natural disasters or public health emergencies and their effect on the operations of us, our customers, our third-party providers and on the overall economy; • impairment charges related to long-lived assets; • unexpected expenses such as those related to non-recurring corporate transactions, litigation or other disputes, or changes in claim trends on our workers' compensation, unemployment, disability and medical benefit plans may negatively impact our operating costs; • the timing of stock awards to employees and related adverse financial statement impact of having to expense those stock awards over their vesting schedules; and • the amount and timing of costs associated with recruiting, hiring, training and integrating new employees, many of whom we hire in advance of anticipated needs.
We may not achieve the anticipated benefits from our past acquisitions or any additional businesses we acquire due to a number of factors, including: • our inability to integrate, manage or benefit from acquired operations, technologies or services; • our inability to successfully sell and maintain the solutions of the acquired business; • unanticipated costs or liabilities associated with the acquisition, including the assumption of liabilities or commitments of the acquired business that were not disclosed to us or that exceeded our estimates; • difficulty integrating the technology, accounting systems, operations and personnel of the acquired business; • difficulties and additional expenses associated with supporting and modernizing legacy solutions, security architecture and hosting infrastructure of the acquired business; • uncertainty of entry into markets in which we have limited or no prior experience or in which competitors have stronger market positions; • difficulty converting the customers of the acquired business to our solutions and contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company; • diversion of management's attention to other business concerns; • adverse effects to our existing business relationships with business partners and customers as a result of the acquisition or divestiture; • use of resources that are needed in other parts of our business; • the use of a substantial portion of our cash that we may need to operate our business and which may limit our operational flexibility and ability to pursue additional strategic transactions; • the issuance of additional equity securities that would dilute the ownership interests of our stockholders; • incurrence of debt on terms unfavorable to us or that we are unable to repay; • incurrence of large charges or substantial liabilities; • our inability to apply and maintain internal standards, controls, procedures and policies with respect to the acquired businesses; • difficulties retaining key employees of the acquired company or integrating diverse software codes or business culture; and • becoming subject to adverse tax consequences, substantial depreciation or deferred compensation charges.
We may not achieve the anticipated benefits from our past acquisitions or any additional businesses we acquire due to a number of factors, including: • our inability to integrate, manage or benefit from acquired operations, technologies or services; • our inability to successfully sell and maintain the solutions of the acquired business; • unanticipated costs or liabilities associated with the acquisition, including the assumption of liabilities or commitments of the acquired business that were not disclosed to us or that exceeded our estimates; • difficulty integrating the technology, accounting systems, operations and personnel of the acquired business; • difficulties and additional expenses associated with supporting and modernizing legacy solutions, security architecture and hosting infrastructure of the acquired business; • uncertainty of entry into markets in which we have limited or no prior experience or in which competitors have stronger market positions; • difficulty converting the customers of the acquired business to our solutions and contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company; • diversion of management's attention to other business concerns; • adverse effects to our existing business relationships with business partners and customers as a result of the acquisition or divestiture; • use of resources that are needed in other parts of our business; • the use of a substantial portion of our cash that we may need to operate our business and which may limit our operational flexibility and ability to pursue additional strategic transactions; • the issuance of additional equity securities that would dilute the ownership interests of our stockholders; • incurrence of debt on terms unfavorable to us or that we are unable to repay; • incurrence of large charges or substantial liabilities; • our inability to apply and maintain internal standards, controls, procedures and policies with respect to the acquired businesses; 35 Table of Contents • difficulties retaining key employees of the acquired company or integrating diverse software codes or business culture; and • becoming subject to adverse tax consequences, substantial depreciation or deferred compensation charges.
Our certificate of incorporation and bylaws: • authorize the issuance of "blank check" preferred stock that could be issued by our board of directors to help defend against a takeover attempt; • require that directors only be removed from office for cause and only upon a supermajority stockholder vote; • provide that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders; • prevent stockholders from calling special meetings; • include advance notice procedures for stockholders to nominate candidates for election as directors or bring matters before an annual meeting of stockholders; • prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders; and • provide that certain litigation against us can only be brought in Delaware. 52 Table of Contents We may not be able to obtain capital when desired on favorable terms, if at all, and we may not be able to obtain capital or complete acquisitions through the use of equity or without dilution to our stockholders.
Our certificate of incorporation and bylaws: • authorize the issuance of "blank check" preferred stock that could be issued by our board of directors to help defend against a takeover attempt; • require that directors only be removed from office for cause and only upon a supermajority stockholder vote; • provide that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders; • prevent stockholders from calling special meetings; • include advance notice procedures for stockholders to nominate candidates for election as directors or bring matters before an annual meeting of stockholders; • prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders; and • provide that certain litigation against us can only be brought in Delaware. 48 Table of Contents We may not be able to obtain capital when desired on favorable terms, if at all, and we may not be able to obtain capital or complete acquisitions through the use of equity or without dilution to our stockholders.
The counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2026 Notes and 2025 Notes, and are likely to do so during any observation period related to a conversion of the 2026 Notes or 2025 Notes or following any repurchase of 2026 Notes or 2025 Notes by us.
The counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2026 Notes, and are likely to do so during any observation period related to a conversion of the 2026 Notes or following any repurchase of 2026 Notes by us.
In addition, because we increasingly leverage third-party providers, including cloud, software, data center and other critical technology vendors to develop and deliver our solutions to our customers and their End Users, we rely heavily on the data security technology practices and policies adopted by these third-party providers, and we may not be able to identify vulnerabilities in such third-party practices and policies.
In addition, because we increasingly leverage third-party providers, including cloud, software and other critical technology vendors to develop and deliver our solutions to our customers and their End Users, we rely heavily on the data security technology practices and policies adopted by these third-party providers, and we may not be able to identify vulnerabilities in such third-party practices and policies.
Recent economic pressures from elevated and fluctuating interest rates, inflationary pressures, instability in the banking and financial services sectors and slowdowns in the economy, financial markets and credit markets have had and could continue to have an impact on account holders or End Users of our solutions, our customers' prospects and our business sales cycles, and our customers' or prospective customers' spending decisions.
Recent economic pressures from fluctuating interest rates, inflationary pressures, instability in the banking and financial services sectors and slowdowns in the economy, financial markets and credit markets have had and could continue to have an impact on account holders or End Users of our solutions, our customers' prospects and our business sales cycles, and our customers' or prospective customers' spending decisions.
Any of these actions could result in liability, lost business, increased insurance costs, difficulty in collecting our accounts receivable, costly litigation, increased regulatory oversight, fines or penalties, adverse publicity and brand damage. Such errors, defects or other problems could also result in reduced sales or a loss of, or delay in, the market acceptance of our solutions.
Any of these actions could result in liability, loss of business, increased insurance costs, difficulty in collecting our accounts receivable, costly litigation, increased regulatory oversight, fines or penalties, adverse publicity and brand damage. Such errors, defects or other problems could also result in reduced sales or a loss of, or delay in, the market acceptance of our solutions.
The occurrence of an event of default may result in the termination of the Revolving Credit Agreement, an acceleration of repayment obligations with respect to any outstanding principal amounts, an acceleration of repayment obligations with respect to the 2025 Notes and 2026 Notes, or the lenders foreclosing on their security interest, the occurrence of any of which could have an adverse effect on our business, financial condition and results of operations.
The occurrence of an event of default may result in the termination of the Revolving Credit Agreement, an acceleration of repayment obligations with respect to any outstanding principal amounts, an acceleration of repayment obligations with respect to the 2026 Notes, or the lenders foreclosing on their security interest, the occurrence of any of which could have an adverse effect on our business, financial condition and results of operations.
Our continued expansion efforts may involve expanding into less developed countries, which may be subject to political, social or economic instability and have less developed infrastructure and legal systems. The continued international expansion of our operations requires significant management attention and financial resources and involves significant administrative and compliance costs.
Our expansion efforts may involve expanding into less developed countries, which may be subject to political, social or economic instability and have less developed infrastructure and legal systems. The international expansion of our operations requires significant management attention and financial resources and involves significant administrative and compliance costs.
Current or future criminal capabilities, including increased threats and speed of exploitation enabled by the use of AI, discovery of existing or new vulnerabilities, and attempts to exploit those vulnerabilities or other developments, may compromise or breach our systems or solutions, or use them to facilitate financial transaction fraud. 26 Table of Contents In addition, third parties may attempt to fraudulently induce our employees or the employees of our customers or third-party providers into disclosing sensitive information such as usernames, passwords or other information to gain access to our confidential or proprietary information or the data of our customers and their End Users.
Current or future criminal capabilities, including increased threats and speed of exploitation enabled by the use of AI, discovery of existing or new vulnerabilities, and attempts to exploit those vulnerabilities or other developments, may compromise or breach our systems or solutions, or use them to facilitate financial transaction fraud. 21 Table of Contents In addition, third parties may attempt to fraudulently induce our employees or the employees of our customers or third-party providers into disclosing sensitive information such as usernames, passwords or other information to gain access to our confidential or proprietary information or the data of our customers and their End Users.
The Capped Calls are expected to offset the potential dilution and/or offset any cash payments we are required to make in excess of the principal amount of converted 2026 Notes or 2025 Notes, as a result of conversion of the 2026 Notes or 2025 Notes, with such offset subject to a cap.
The Capped Calls are expected to offset the potential dilution and/or offset any cash payments we are required to make in excess of the principal amount of converted 2026 Notes, as a result of conversion of the 2026 Notes, with such offset subject to a cap.
Compliance with rules and regulations applicable to public companies may increase our costs, make some activities more time-consuming, and divert management's attention from operational and other business matters to devote substantial time to these public company requirements. 50 Table of Contents Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently.
Compliance with rules and regulations applicable to public companies may increase our costs, make some activities more time-consuming, and divert management's attention from operational and other business matters to devote substantial time to these public company requirements. 46 Table of Contents Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently.
We strive to conduct our business in a responsible and sustainable manner, considering environmental, social, and governance factors in our decision-making processes. We are committed to sustainable business practices and strive for positive impacts in not just environmental matters, but also social and governance practices.
We strive to conduct our business in a responsible and sustainable manner, considering ESG factors in our decision-making processes. We are committed to sustainable business practices and strive for positive impacts in not just environmental matters, but also social and governance practices.
The successful assertion of one or more claims against us, the inadequacy of or denial of coverage under our insurance policies, litigation to pursue claims under our policies or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, financial condition and results of operations. 27 Table of Contents Unfavorable conditions or uncertainty in the financial services industry, geopolitical landscape or the global economy could limit our ability to grow our business and negatively affect our operating results.
The successful assertion of one or more claims against us, the inadequacy of or denial of coverage under our insurance policies, litigation to pursue claims under our policies or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, financial condition and results of operations. 22 Table of Contents Unfavorable conditions or uncertainty in the financial services industry, geopolitical landscape or the global economy could limit our ability to grow our business and negatively affect our operating results.
Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenues enough to offset our higher operating expenses, thus making it challenging to achieve and maintain profitability.
Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenues enough to offset our higher operating expenses, thus making it challenging to maintain profitability.
If any of the conditional conversion features of any series of convertible notes is triggered, our financial condition and operating results may be adversely affected which could decrease the trading price of our common stock.
If any of the conditional conversion features of our convertible notes is triggered, our financial condition and operating results may be adversely affected which could decrease the trading price of our common stock.
We may continue to incur losses in the future as we continue to focus on adding new customers and solutions, and we cannot predict whether or when we will achieve or sustain profitability.
We may incur losses in the future as we continue to focus on adding new customers and solutions, and we cannot predict whether or when we will sustain profitability.
Financial institutions increasingly face competition from non-depository institutions or other innovative products or emerging technologies, such as cryptocurrencies or stablecoin, which may reduce the number of End Users, or log-ins or transactions using their more traditional financial services. Any of these developments could have an adverse effect on our business, results of operations and financial condition.
Financial institutions increasingly face competition from non-depository institutions or other innovative products or emerging technologies, such as cryptocurrencies, stablecoin or deposit tokenization, which may reduce the number of End Users, or log-ins or transactions using their more traditional financial services. Any of these developments could have an adverse effect on our business, results of operations and financial condition.
We maintain policies, procedures and technological safeguards designed to protect the confidentiality, integrity, availability and privacy confidential information, including PII, our solutions and our information technology systems.
We maintain policies, procedures and technological safeguards designed to protect the confidentiality, integrity, availability and privacy of confidential information, including PII, our solutions and our information technology systems.
These include, but are not limited to: 38 Table of Contents • fluctuations in currency exchange rates; • the complexity of, or changes in, foreign regulatory requirements; • difficulties in managing the staffing of international operations, including compliance with local labor and employment laws and regulations; • complexities implementing and enforcing cross-border information technology and security controls; • potentially adverse tax consequences, including the complexities of foreign value added tax systems, overlapping tax regimes, restrictions on the repatriation of earnings and changes in tax rates; • the cost and complexity of bringing our solutions into compliance with foreign regulatory requirements, and risks of our solutions not being compliant; • dependence on resellers and distributors to increase customer acquisition or drive localization efforts; • the burdens of complying with a wide variety of foreign laws and different legal standards, certain of which may be significantly more burdensome than those in place in the U.S.; • increased financial accounting and reporting burdens and complexities; • longer payment cycles and difficulties in collecting accounts receivable; • longer sales cycles; • political, social and economic instability abroad; • terrorist attacks and security concerns in general; • failure to recruit, onboard, build and retain a talented and engaged global workforce; • integrating personnel with diverse business backgrounds and organizational cultures; • difficulties entering new non-U.S. markets due to, among other things, consumer acceptance and business knowledge of these new markets; • constraints of remote working by employees; • reduced or varied protection for intellectual property rights in some countries; and • the risk of U.S. regulation of foreign operations.
These include, but are not limited to: • fluctuations in currency exchange rates; • the complexity of, or changes in, foreign regulatory requirements; • difficulties in managing the staffing of international operations, including compliance with local labor and employment laws and regulations; • complexities implementing and enforcing cross-border information technology and security controls; • potentially adverse tax consequences, including the complexities of foreign value added tax systems, overlapping tax regimes, restrictions on the repatriation of earnings and changes in tax rates; • the cost and complexity of bringing our solutions into compliance with foreign regulatory requirements, and risks of our solutions not being compliant; • dependence on resellers and distributors to increase customer acquisition or drive localization efforts; • the burdens of complying with a wide variety of foreign laws and different legal standards, certain of which may be significantly more burdensome than those in place in the U.S.; • increased financial accounting and reporting burdens and complexities; • longer payment cycles and difficulties in collecting accounts receivable; • longer sales cycles; • political, social and economic instability abroad; • terrorist attacks and security concerns in general; • failure to recruit, onboard, build and retain a talented and engaged global workforce; • integrating personnel with diverse business backgrounds and organizational cultures; • challenges in obtaining visas and other restrictions on international travel; • difficulties entering new non-U.S. markets due to, among other things, consumer acceptance and business knowledge of these new markets; • constraints of remote working by employees; • reduced or varied protection for intellectual property rights in some countries; and • the risk of U.S. regulation of foreign operations.
We also expect to continue to make other investments to develop and expand our solutions and our business, including continuing to increase our marketing, services and sales operations and continuing our significant investment in research and development and our technical infrastructure, while also managing our business in response to continued challenging economic conditions, challenges in the financial services industry and any anticipated or resulting economic slowdown.
We also expect to continue to make other investments to develop and expand our solutions and our business, including continuing to increase our marketing, services and sales operations and continuing our significant investment in research and development and our technical infrastructure, while also managing our business in response to continued challenging economic conditions, challenges in the financial services industry and any resulting economic slowdown.
We file sales and other tax returns within the U.S. and foreign jurisdictions as required by law and certain customer contracts for a portion of the solutions that we provide. Our tax liabilities with respect to sales and other taxes in various jurisdictions were approximately $1.0 million as of December 31, 2024.
We file sales and other tax returns within the U.S. and foreign jurisdictions as required by law and certain customer contracts for a portion of the solutions that we provide. Our tax liabilities with respect to sales and other taxes in various jurisdictions were approximately $1.0 million as of December 31, 2025.
Any such acceleration could result in our bankruptcy, in which the holders of our convertible notes would have a claim to our assets that is senior to the claims of our equity holders. 53 Table of Contents We entered into a five-year secured revolving credit agreement with Wells Fargo Bank, National Association, Wells Fargo Securities, LLC and Texas Capital Bank on July 29, 2024, the Revolving Credit Agreement, which provides for a $125.0 million revolving line of credit, none of which was drawn as of December 31, 2024.
Any such acceleration could result in our bankruptcy, in which the holders of our convertible notes would have a claim to our assets that is senior to the claims of our equity holders. 49 Table of Contents We entered into a five-year secured revolving credit agreement with Wells Fargo Bank, National Association, Wells Fargo Securities, LLC and Texas Capital Bank on July 29, 2024, the Revolving Credit Agreement, which provides for a $125.0 million revolving line of credit, none of which was drawn as of December 31, 2025.
This would require us to repay the full aggregate principal amount outstanding of the applicable series of our convertible notes, plus accrued and unpaid interest and additional amounts (if any) at maturity in cash in lieu of settling conversions of the convertible notes, and thus extinguishing our indebtedness under such convertible notes with shares of our common stock.
This would require us to repay the full aggregate principal amount outstanding of the convertible notes, plus accrued and unpaid interest and additional amounts, if any, at maturity in cash in lieu of settling conversions of the convertible notes, and thus extinguishing our indebtedness under such convertible notes with shares of our common stock.
Additionally, if governmental agencies or private organizations began to impose taxes, fees or other charges for accessing the Internet or commerce conducted via Internet, characterize the types and quality of services and products, or restrict the exchange of information over the Internet, we may experience reduced growth of our business, a general decline in the use of 46 Table of Contents the Internet by financial services providers, or their End Users, or diminished viability of our solutions and our customers' ability to use our solutions could be significantly restricted.
Additionally, if governmental agencies or private organizations began to impose taxes, fees or other charges for accessing the Internet or commerce conducted via Internet, characterize the types and quality of services and products, or restrict the exchange of information over the Internet, we may experience reduced growth of our business, a general decline in the use of the Internet by financial services providers, or their End Users, or diminished viability of our solutions and our customers' ability to use our solutions could be significantly restricted.
Such use of AI may also result in disclosure of Q2 confidential or proprietary information to the third party providing the AI, or others, and potentially further use or copying by such third parties of Q2's proprietary information. In some cases, litigation may be necessary to enforce our intellectual property rights or to protect our trade secrets.
Such use of AI may also result in disclosure of our confidential or proprietary information to the third party providing the AI, or others, and potentially further use or copying by such third parties of our proprietary information. In some cases, litigation may be necessary to enforce our intellectual property rights or to protect our trade secrets.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock. 54 Table of Contents We are subject to counterparty risk with respect to the Capped Calls, and they may not operate as planned.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock. 50 Table of Contents We are subject to counterparty risk with respect to the Capped Calls, and they may not operate as planned.
Upon conversion of each series of convertible notes, unless we elect to settle such conversion solely through delivery of shares of our common stock to (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the series of notes being converted.
Upon conversion of the convertible notes, unless we elect to settle such conversion solely through delivery of shares of our common stock (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the notes being converted.
Certain provisions in the indentures governing our convertible notes may delay or prevent an otherwise beneficial takeover attempt of us and may affect the trading price of our common stock. Certain provisions in the indentures governing our convertible notes may make it more difficult or expensive for a third party to acquire us.
Certain provisions in the indenture governing our convertible notes may delay or prevent an otherwise beneficial takeover attempt of us and may affect the trading price of our common stock. Certain provisions in the indenture governing our convertible notes may make it more difficult or expensive for a third party to acquire us.
In certain cases, operating our solutions with third-party public cloud service providers requires changes to our solutions to allow for optimal operation of the solution when hosted by the third-party public cloud service provider, and such changes can vary significantly from customer to customer depending up on the particular design and combination of services they use and offer, including integrations to third-party services over which we have little or no control.
In certain cases, operating our solutions with third-party public cloud service providers requires changes to our solutions to allow for optimal operation of the solution when hosted by the third-party public cloud service provider, and such changes can vary significantly from customer to customer depending upon the particular design and combination of services they use and offer, including integrations to third-party services over which we have little or no control.
We continue to hire personnel in countries where technical knowledge and other expertise are offered at lower costs than in the U.S., which increases the efficiency of our global workforce structure and reduces our personnel related expenditures.
We have hired and continue to hire personnel in countries where technical knowledge and other expertise are offered at lower costs than in the U.S., which increases the efficiency of our global workforce structure and reduces our personnel related expenditures.
Risks Related to Our Debt We incurred indebtedness by issuing our 2026 Notes in 2019, and our 2025 Notes in 2020, we may borrow under our Revolving Credit Agreement, and our debt repayment obligations may adversely affect our financial condition and cash flows from operations in the future.
Risks Related to Our Debt We incurred indebtedness by issuing our 2026 Notes in 2019, we may borrow under our Revolving Credit Agreement and our debt repayment obligations may adversely affect our financial condition and cash flows from operations in the future.
We may not have enough available cash on hand or be able to obtain financing at the time we are required to make the repurchases of the series of convertible notes surrendered therefor, or at the time such series of convertible notes is being converted, to settle such repurchase or conversion.
We may not have enough available cash on hand or be able to obtain financing at the time we are required to make the repurchases of the convertible notes surrendered therefor, or at the time the convertible notes are being converted, to settle such repurchase or conversion.
In connection with establishing their initial hedges of the Capped Calls, the counterparties or their respective affiliates purchased shares of our common stock or entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the 2026 Notes and 2025 Notes.
In connection with establishing their initial hedges of the Capped Calls, the counterparties or their respective affiliates purchased shares of our common stock or entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the 2026 Notes.
As a result of using open-source software subject to such licenses, we could be required to release our proprietary source code, pay damages, re-engineer our products, limit or discontinue sales or take other remedial action, any of which could adversely affect our business. 49 Table of Contents Our business activities related to ESG matters may involve certain risks and considerations.
As a result of using open-source software subject to such licenses, we could be required to release our proprietary source code, pay damages, re-engineer our products, limit or discontinue sales or take other remedial action, any of which could adversely affect our business. Our business activities related to ESG matters may involve certain risks and considerations.
We do not control the operation of these third-party data center facilities and third-party public cloud service providers, and such facilities and services are vulnerable to damage or interruption from human error, intentional bad acts, power loss, hardware failures, telecommunications failures, fires, wars, terrorist attacks, floods, earthquakes, hurricanes, tornadoes, pandemics or similar catastrophic events.
We do not control the operation of these third-party public cloud service providers, and such services are vulnerable to damage or interruption from human error, intentional bad acts, power loss, hardware failures, telecommunications failures, fires, wars, terrorist attacks, floods, earthquakes, hurricanes, tornadoes, pandemics or similar catastrophic events.
Ineffective or inadequate AI development or deployment practices by us or others could result in incidents that impair the accuracy and acceptance of AI-based solutions or cause harm to individuals or customers, creating perceived or actual technical, legal, compliance, privacy, security and ethical risks, which could subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm.
Ineffective or inadequate AI development or deployment practices by us or others could result in incidents that impair the accuracy and acceptance of AI-based solutions or cause harm to individuals or customers, creating perceived or actual technical, legal, compliance, privacy, security and ethical risks, which could subject us to competitive harm, regulatory action, legal liability and 31 Table of Contents brand or reputational harm.
With respect to our digital banking platform, we have several point solution competitors, including Candescent, Alkami Technology, Backbase, Apiture and Lumin Digital in the online, consumer and SMB banking space and Finastra and Bottomline Technologies in the commercial banking space.
With respect to our digital banking platform, we have several point solution competitors, including Candescent, Alkami Technology, CSI, Backbase and Lumin Digital in the online, consumer and SMB banking space and Finastra and Bottomline Technologies in the commercial banking space.
Consequences related to our development and use of AI may result in reputational harm or liability. We currently incorporate AI capabilities into certain of our solutions, and we are making investments and anticipate further utilization of AI in our solutions in the future.
Consequences related to our development and use of AI may result in reputational harm or liability. We currently incorporate AI capabilities into select solutions, and we are making investments and anticipate further utilization of AI in our solutions in the future.
Additional factors affecting the trading price of our common stock include, among others: • variations in our operating results or the operating results of similar companies; • announcements of technological innovations, new solutions or enhancements or strategic partnerships or agreements by us or by our competitors; • changes in the estimates of our operating results, our financial guidance or changes in recommendations by any of the securities analysts that follow our common stock; • the gain or loss of customers, particularly our larger customers; • adoption or modification of regulations, policies, procedures or programs applicable to our business and our customers' business; • uncertainties in the financial services industries; • public disclosures or marketing and advertising initiatives by us or our competitors; • concerns related to actual or perceived security breaches, outages or other defects related to our solutions; 51 Table of Contents • threatened or actual litigation; • changes in our senior management or key personnel; and • the occurrence of any adverse events or circumstances described in these risk factors.
Additional factors affecting the trading price of our common stock include, among others: • variations in our operating results or the operating results of similar companies; • announcements of technological innovations, new solutions or enhancements or strategic partnerships or agreements by us or by our competitors; • changes in the estimates of our operating results, our financial guidance or changes in recommendations by any of the securities analysts that follow our common stock; • the gain or loss of customers, particularly our larger customers; • the utilization of our share repurchase program; • adoption or modification of regulations, policies, procedures or programs applicable to our business and our customers' business; • uncertainties in the financial services industries; • public disclosures or marketing and advertising initiatives by us or our competitors; 47 Table of Contents • concerns related to actual or perceived security breaches, outages or other defects related to our solutions; • threatened or actual litigation; • changes in our senior management or key personnel; and • the occurrence of any adverse events or circumstances described in these risk factors.
Our failure to repurchase a series of convertible notes at a time when the repurchase is required by the applicable indenture, or to pay any cash payable on future conversions of such series of convertible notes as required by the applicable indenture, would constitute a default under such indenture.
Our failure to repurchase the convertible notes at a time when the repurchase is required by the indenture, or to pay any cash payable on future conversions of the convertible notes as required by the indenture, would constitute a default under such indenture.
In addition, our ability to repurchase each series of convertible notes or to pay cash upon the conversions of each series of convertible notes may be limited by law, by regulatory authority or by agreements governing our current and future indebtedness.
In addition, our ability to repurchase the convertible notes or to pay cash upon the conversions of the convertible notes may be limited by law, by regulatory authority or by agreements governing our current and future indebtedness.
If we are unable to effectively manage our expansion into additional geographic markets, our financial condition and results of operations could be harmed. In particular, we operate some of our research and development activities internationally and outsource a portion of the coding and testing of our products and product enhancements to contract development vendors.
If we are unable to effectively manage our expansion into additional geographic markets, our financial condition and results of operations could be harmed. 34 Table of Contents In particular, we operate some of our research and development activities internationally and outsource a portion of the coding and testing of our products and product enhancements to contract development vendors.
If the collecting, storing and processing of personal information were to be curtailed, our solutions would be less effective, which may reduce demand for our solutions and adversely affect our business. Any use of our solutions by our customers in violation of regulatory requirements could damage our reputation and subject us to additional liability.
If the collecting, storing and processing of personal information were to be curtailed, our solutions would be less effective, which may reduce demand for our solutions and adversely affect our business. 43 Table of Contents Any use of our solutions by our customers in violation of regulatory requirements could damage our reputation and subject us to additional liability.
Damage to our reputation could also reduce the value and effectiveness of our brand name and could reduce investor confidence in us and materially and adversely affect our business, financial condition and results of operations. 34 Table of Contents The markets in which we participate are competitive, and pricing pressure, new technologies or other competitive dynamics could adversely affect our business and operating results.
Damage to our reputation could also reduce the value and effectiveness of our brand name and could reduce investor confidence in us and materially and adversely affect our business, financial condition and results of operations. The markets in which we participate are competitive, and pricing pressure, new technologies or other competitive dynamics could adversely affect our business and operating results.
The capped call transactions entered into in connection with the offering of the 2026 Notes and 2025 Notes may affect the value of our common stock. In connection with the offering of the 2026 Notes and 2025 Notes, we entered into capped call transactions, or the Capped Calls, with one or more counterparties.
The capped call transactions entered into in connection with the offering of the 2026 Notes may affect the value of our common stock. In connection with the offering of the 2026 Notes, we entered into capped call transactions, or the Capped Calls, with one or more counterparties.
Accordingly, investors and potential investors are urged not to put undue reliance on such forecasts and market data. 43 Table of Contents We may not be able to utilize a significant portion of our net operating loss carryforwards, which could adversely affect our operating results and cash flows.
Accordingly, investors and potential investors are urged not to put undue reliance on such forecasts and market data. We may not be able to utilize a significant portion of our net operating loss carryforwards, which could adversely affect our operating results and cash flows.
If one or more holders elect to convert the 2026 Notes or 2025 Notes, as applicable, we may elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), which would result in dilution to the holders of our common stock.
If one or more holders elect to convert the 2026 Notes, we may elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), which would result in dilution to the holders of our common stock.
For example, the indentures governing our convertible notes will require us to repurchase the convertible notes for cash upon the occurrence of a fundamental change (as defined in the respective indentures) of us and, in certain circumstances, to increase the conversion rate for a holder that converts the convertible notes in connection with a make-whole fundamental change.
For example, the indenture governing our convertible notes will require us to repurchase the convertible notes for cash upon the occurrence of a fundamental change (as defined in the indenture) of us and, in certain circumstances, to increase the conversion rate for a holder that converts the convertible notes in connection with a make-whole fundamental change.
Future ownership changes or future regulatory changes could further limit our ability to utilize our net operating loss carryforwards. To the extent we are not able to offset our future income against our net operating loss carryforwards, this would adversely affect our operating results and cash flows if we attain profitability.
Future ownership changes or future regulatory changes could further limit our ability to utilize our net operating loss carryforwards. To the extent we are not able to offset our future income against our net operating loss carryforwards, this would adversely affect our operating results and cash flows to the extent we are able to sustain our profitability.
The owners and operators of these current and future facilities and third-party public cloud service providers do not guarantee that our customers' access to our solutions will be uninterrupted, error-free or secure. We have experienced, and may in the future experience, website disruptions, outages and other performance problems with these third-party data centers and third-party public cloud service providers.
The owners and operators of these third-party public cloud service providers do not guarantee that our customers' access to our solutions will be uninterrupted, error-free or secure. We have experienced, and may in the future experience, website disruptions, outages and other performance problems with these third-party public cloud service providers.
To support our growth, we must continue to improve our management's resources and operational and financial controls and systems, and these improvements may increase our expenses more than anticipated and result in a more complex business, and our failure to timely and effectively implement these improvements could have an adverse effect on our operations and financial results.
To support our growth, we must continue to improve our management's resources and operational and financial controls and systems, and these improvements may increase our expenses more than anticipated and result in a more complex business, and our failure to timely and 27 Table of Contents effectively implement these improvements could have an adverse effect on our operations and financial results.
Further, if our customers merge with or are acquired by other entities that have in-house developed solutions or that are not our customers or use fewer of our solutions, our customers may 28 Table of Contents discontinue, reduce or change the terms of their use of our solutions.
Further, if our customers merge with or are acquired by other entities that have in-house developed solutions or that are not our customers or use fewer of our solutions, our customers may discontinue, reduce or change the terms of their use of our solutions.
Additionally, regulatory changes aimed at stabilizing the financial system could impose new burdens, further straining the profitability of these institutions and potentially leading to a contraction in economic activities.
Additionally, regulatory changes aimed at stabilizing the financial system 23 Table of Contents could impose new burdens, further straining the profitability of these institutions and potentially leading to a contraction in economic activities.
The Capped Calls cover, subject to customary adjustments, the number of shares of our common stock initially underlying the 2026 Notes and 2025 Notes.
The Capped Calls cover, subject to customary adjustments, the number of shares of our common stock initially underlying the 2026 Notes.
In addition, holders of each series of our convertible notes will have the right to require us to repurchase all or a portion of their notes upon the occurrence of a fundamental change, as defined in the respective indentures, at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest.
In addition, holders of our convertible notes will have the right to require us to repurchase all or a portion of their notes upon the occurrence of a fundamental change, as defined in the indenture, at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest.
In addition, we may be required to license additional intellectual property from third parties to develop and market new solutions, and we cannot give assurance that we could license that intellectual property on commercially reasonable terms or at all. As of December 31, 2024, we had nine patent applications pending and 16 patents issued in the U.S. and other countries.
In addition, we may be required to license additional intellectual property from third parties to develop and market new solutions, and we cannot give assurance that we could license that intellectual property on commercially reasonable terms or at all. As of December 31, 2025, we had seven patent applications pending and 17 patents issued in the U.S. and other countries.
Our ability to deliver our solutions is dependent on our software development lifecycle management processes, including with respect to our change management processes, which impact our ability to effectively develop our solutions and to identify, track, test, manage and implement changes to our solutions.
Our ability to deliver our 25 Table of Contents solutions is dependent on our software development lifecycle management processes, including with respect to our change management processes, which impact our ability to effectively develop our solutions and to identify, track, test, manage and implement changes to our solutions.
Additionally, if our stock trades at a level where the conversion of any series of our convertible notes is not economical for note holders, the conversion of the applicable series of convertible notes is unlikely.
Additionally, if our stock trades at a level where the conversion of our convertible notes is not economical for note holders, the conversion of the convertible notes is unlikely.
Continued widespread geopolitical and global economic conditions such as inflationary pressures, high and shifting interest rates, inflation rates, recession fears or economic slowdown in the United States or internationally, geopolitical uncertainty including conflicts in and around Ukraine, the Middle East and other parts of the world, regulatory changes, or political or regulatory uncertainty or discord, could adversely affect demand for our solutions and make it difficult to accurately forecast our results and plan our future business activities.
Continued widespread geopolitical and global economic conditions such as inflationary pressures, inflation rates, recession fears or economic slowdown in the United States or internationally, geopolitical uncertainty including acts of war, military conflict, uncertainties or conflicts in and around Ukraine, the Middle East and other parts of the world, regulatory changes, or political or regulatory uncertainty or discord, could adversely affect demand for our solutions and make it difficult to accurately forecast our results and plan our future business activities.
In the event any of the conditional conversion features of the 2026 Notes or 2025 Notes is triggered, note holders will be entitled to convert their 2026 Notes or 2025 Notes, as applicable, at any time during specified periods at their option.
In the event any of the conditional conversion features of the 2026 Notes is triggered, note holders will be entitled to convert their 2026 Notes at any time during specified periods at their option.
Persistent elevated interest rates or any fluctuations in interest rates may impact account holder demand for loans and the creditworthiness of existing borrowers, resulting in operational challenges for financial institutions, including higher credit losses and difficulty in assessing risk in their existing loan portfolios and in making new lending decisions.
Changes in interest rates may impact account holder demand for loans and the creditworthiness of existing borrowers, resulting in operational challenges for financial institutions, including higher credit losses and difficulty in assessing risk in their existing loan portfolios and in making new lending decisions.
The stringency of our third-party review is based on criticality criteria. The examination handbook and other guidance issued by the Federal Financial Institutions Examination Council, or FFIEC, govern the examination of our operations and include a review of our systems and data center and technical infrastructure, management, financial condition, development activities and our support and delivery capabilities.
The stringency of our third-party review is based on criticality criteria. The examination handbook and other guidance issued by the FFIEC govern the examination of our operations and include a review of our systems and technical infrastructure, management, financial condition, development activities and our support and delivery capabilities.
A default under one of the indentures governing our convertible notes or a fundamental change itself could also lead to a default under our Revolving Credit Agreement and agreements governing our future indebtedness.
A default under the indenture governing our convertible notes or a fundamental change itself could also lead to a default under our Revolving Credit Agreement and agreements governing our future indebtedness.
Our indebtedness could have important consequences because it may impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and general corporate or other purposes, or otherwise constrain the operation of our business.
Our indebtedness could have important consequences because it may impair our ability to obtain additional financing in the future for working capital, capital expenditures, repurchases of our common stock under our Repurchase Program, acquisitions and general corporate or other purposes, or otherwise constrain the operation of our business.
Our business and reputation may be harmed if any such third-party provider: • changes the features or functionality of, or fails to make updates to its services, applications and platforms in a manner adverse to us; • discontinues or limits our solutions' access to its systems or services; • suffers a security incident or other incident, including one that requires us to discontinue integration with its systems, or services or results in a compromise of our systems or services; • experiences staffing shortages or other operational challenges, including as a result of challenging economic conditions, which interferes with their ability to implement or adequately support an integration with our solutions; • ceases to operate; • terminates or does not allow us to renew or replace our existing contractual relationships on the same or better terms; • modifies its terms of service or other policies, including fees charged to, or other restrictions on, us or our customers; or • establishes more favorable relationships with one or more of our competitors or acquires one or more of our competitors and offers competing services.
Our business and reputation may be harmed if any such third-party provider: • changes the features or functionality of, or fails to make updates to its services, applications and platforms in a manner adverse to us; • discontinues or limits our solutions' access to its systems or services; • suffers a security incident or other incident, including one that requires us to discontinue integration with its systems, or services or results in a compromise of our systems or services; • experiences staffing shortages or other operational challenges, including as a result of challenging economic conditions, which interferes with their ability to implement or adequately support an integration with our solutions; • ceases to operate; • terminates or does not allow us to renew or replace our existing contractual relationships on the same or better terms; • modifies its terms of service or other policies, including fees charged to, or other restrictions on, us or our customers; or • establishes more favorable relationships with one or more of our competitors or acquires one or more of our competitors and offers competing services. 24 Table of Contents Such events or circumstances could delay, limit or prevent us from integrating our solutions with these third-party systems or services, which could impair the functionality of our solutions, prohibit the use of our solutions or limit our ability to sell our solutions to customers, each of which could harm our business.
As of December 31, 2024, we had approximately $438.4 million of U.S. federal net operating loss carryforwards. Utilization of these net operating loss carryforwards depends on many factors, including our future income, which cannot be assured.
As of December 31, 2025, we had approximately $458.8 million of U.S. federal net operating loss carryforwards. Utilization of these net operating loss carryforwards depends on many factors, including our future income, which cannot be assured.
We may need additional financing to execute on our current or future business strategies, including to develop new or enhance existing products and services, acquire businesses and technologies, or otherwise to respond to competitive pressures.
We may need additional financing to execute on our current or future business strategies, including to develop new or enhance existing products and services, acquire businesses and technologies, repurchase shares of our common stock under our Repurchase Program or otherwise to respond to competitive pressures.
This would involve spending substantial amounts to purchase or lease third-party data center capacity and equipment, subscribe to new or additional third-party cloud service services, upgrade our technology and infrastructure or introduce new or enhanced solutions.
This would involve spending substantial amounts to subscribe to new or additional third-party cloud service services, upgrade our technology and infrastructure or introduce new or enhanced solutions.
In recent years, we have expanded our international operations in order to maintain an appropriate cost structure, access a broader talent pool and meet our customers' needs, which has included opening offices in new jurisdictions.
We have international operations in India, Australia, Canada, the United Kingdom and Mex ico. In recent years, we have expanded our international operations in order to maintain an appropriate cost structure, access a broader talent pool and meet our customers' needs, which has included opening offices in new jurisdictions.
It is also possible that the larger financial institutions that result from mergers or consolidations could have greater leverage in negotiating terms with us or could decide to replace some or all of our solutions.
It is also possible that the larger financial institutions that result from mergers or consolidations, including large scale core migrations leading to industry consolidation, could have greater leverage in negotiating terms with us or could decide to replace some or all of our solutions.
Our business depends on our ability to satisfy our customers and meet their business needs. Our customers use a variety of network infrastructure, hardware and software, which typically increases in complexity the larger the customer is, and our solutions must support the specific configuration of our customers' existing systems, including in many cases the solutions of third-party providers.
Our customers use a variety of network infrastructure, hardware and software, which typically increases in complexity the larger the customer is, and our solutions must support the specific configuration of our customers' existing systems, including in many cases the solutions of third-party providers.
We are in the process of migrating a significant portion of the computing, storage and processing of our digital banking platform solutions from our third-party data centers to third-party public cloud service providers and any challenges or difficulties with such migration could adversely affect our and our customers' business.
We have migrated the computing, storage and processing of our digital banking platform solutions from our third-party data centers to third-party public cloud service providers and any challenges or difficulties with such migration could adversely affect our and our customers' business.
Additionally , the price of our common stock might be based on expectations of investors or securities analysts of future performance that are inconsistent with our actual growth opportunities or that we might fail to meet and, if our revenues or operating results fall below expectations, the price of our common stock could decline substantially.
Additionally , the price of our common stock might be based on expectations of investors or securities analysts of future performance that are inconsistent with our actual growth opportunities or that we might fail to meet and, if our revenues or operating results fall below expectations, the price of our common stock could decline substantially. 37 Table of Contents We have a history of losses and may incur additional losses in the future.
The occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or terminate our hosting arrangement or other unanticipated problems could result in lengthy interruptions in the delivery of our solutions, cause system interruptions, prevent our customers' End Users from accessing their accounts or services online, cause reputational harm and loss of critical data, prevent us from supporting our solutions or cause us to incur additional expense in arranging for new facilities, services and support, and we may be required to pay refunds to our customers based on service level agreement (SLA) provisions in their contracts. 31 Table of Contents We also depend on third-party Internet service providers and continuous and uninterrupted access to the Internet through third-party bandwidth providers to operate our business.
The occurrence of a natural disaster or an act of terrorism, a decision to terminate our hosting arrangement or other unanticipated problems could result in lengthy interruptions in the delivery of our solutions, cause system interruptions, prevent our customers' End Users from accessing their accounts or services online, cause reputational harm and loss of critical data, prevent us from supporting our solutions or cause us to incur additional expense in arranging for new facilities, services and support, and we may be required to pay refunds to our customers based on service level agreement (SLA) provisions in their contracts.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the notes or make cash payments upon conversions thereof.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the notes or make cash payments upon conversions thereof. An event of default under the indenture governing our convertible notes may lead to an acceleration of the notes.
Additionally, such migration may not achieve the anticipated cost savings or technical advantages. 35 Table of Contents We do not have any control over the availability or performance of salesforce.com's Force.com platform, and if we or our Symphonix lending platform customers encounter problems with it, we may be required to replace Force.com with another platform, which could be difficult and costly.
We do not have any control over the availability or performance of salesforce.com's Force.com platform, and if we or our Symphonix lending platform customers encounter problems with it, we may be required to replace Force.com with another platform, which could be difficult and costly.
If we elect to or would be required to settle a portion or all of our conversion obligation in cash, it could adversely affect our liquidity, which may negatively impact the trading price of our common stock.
If we elect to or would be required to settle a portion or all of our conversion obligation in cash, it could adversely affect our liquidity, either of which may negatively impact the trading price of our common stock. Item 1B. Unresolved Staff Comments. Not applicable. 51 Table of Contents

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CISO has more than 20 years of experience directing disparate teams across application and product security, cyber defense, risk management, information governance, information technology compliance, information technology training and sales. Our CISO is appointed by the RACC, which also oversees the implementation, monitoring and testing of our information security program.
Biggest changeOur CISO has more th an 20 years of e xperience directing disparate teams across application and product security, cyber defense, risk management, information governance, information technology compliance, information technology training and sales. Our CISO is appointed by the RACC, which also oversees the implementation, monitoring and testing of our information security program.
This program is managed by our Chief Risk Officer, or CRO, appointed by the RACC, and an Enterprise Risk Oversight Committee consisting of a cross-functional representation of senior leaders including our Chief Information Security Officer, or CISO. Our CRO has over nine years of senior risk management experience at large technology organizations, following a 20-year career in the U.S. Army.
This program is managed by our Chief Risk Officer, or CRO, appointed by the RACC, and an Enterprise Risk Oversight Committee consisting of a cross-functional representation of senior leaders including our Chief Information Security Officer, or CISO. Our CRO has over ten years of senior risk management experience at large technology organizations, following a 20-year career in the U.S. Army.
For more information regarding the risks we face from cybersecurity threats, please see "Item 1A. Risk Factors." We have implemented a risk-based approach to identify and assess the cybersecurity threats that have and could affect our business and information systems, which approach is incorporated into our overall enterprise risk management program.
For more information regarding the risks we face from cybersecurity threats, please see "Item 1A. Risk Factors." We have implemented a risk-based approach to identify and assess the cybersecurity threats that have and could affect our business and information systems, and this approach is incorporated into our overall enterprise risk management program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePursuant to the first of which the Company leases approximately 129,000 square feet of office space with an initial term that expires on April 30, 2028, with the option to extend the lease for an additional ten-year term, and pursuant to the second of which the Company leases approximately 129,000 square feet of office space with separate lease terms for different portions of the building of approximately seven and ten years, with the options to extend the separate leases on the second building from five to ten years.
Biggest changePursuant to the second agreement, we lease approximately 129,000 square feet of office space with separate lease terms for different portions of the building of approximately seven and ten years, with the options to extend the separate leases on the second building from five to ten years.
Approximately 105,000 square feet of the first building is being actively marketed for sublease. In addition, we maintain office space in U.S. cities located in Nebraska, Iowa, North Carolina and Minnesota. Internationally we maintain offices in India, Australia, and the United Kingdom. We believe our current facilities are in good condition, suitable and adequate for the conduct of our business.
Approximately 35,000 square feet of the first building is being actively marketed for sublease. In addition, we also lease office spaces in other U.S. cities located in Nebraska, Iowa and North Carolina. Internationally, we lease offices in India and Australia. We believe our current facilities are adequate to meet our current needs.
Item 2. Properties. Our principal executive offices are located in Austin, Texas in two adjacent buildings under separate lease agreements.
Item 2. Properties. Our principal executive offices are located in Austin, Texas in two adjacent buildings under separate lease agreements. Pursuant to the first agreement, we lease approximately 129,000 square feet of office space with an initial term that expires on April 30, 2028, with the option to extend the lease for an additional ten-year term.
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We intend to secure new facilities or expand existing facilities to support future growth and believe suitable additional or alternative space will available on commercially reasonable terms as needed to accommodate operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures. Not applicable. 56 Table of Contents PART II
Biggest changeMine Safety Disclosures. Not applicable. 52 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures. 56 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. 57 Item 6 . [Reserved] 58 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 59 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 79
Biggest changeItem 4. Mine Safety Disclosures. 52 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. 53 Item 6 . [Reserved] 54 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 55 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 74

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Market Information and Holders Our common stock has been listed on the New York Stock Exchange under the symbol "QTWO" since March 20, 2014. As of December 31, 2024, we had 5 holders of record of our common stock.
Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Market Information and Holders Our common stock is traded on the New York Stock Exchange, or NYSE, and the NYSE Texas under the symbol "QTWO." As of December 31, 2025, we had 4 holders of record of our common stock.
This graph assumes the investment of $100 on December 31, 2019 in our common stock, the Russell 2000 Index and the S&P Software & Services Select Index, and the reinvestment of dividends, if any.
This graph assumes the investment of $100 on December 31, 2020 in our common stock, the Russell 2000 Index and the S&P Software & Services Select Index, and the reinvestment of dividends, if any.
We do not anticipate paying cash dividends on our common stock for the foreseeable future. Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2019 and December 31, 2024, with the cumulative total return of (i) the Russell 2000 Index and (ii) the S&P Software & Services Select Index.
We do not anticipate paying cash dividends on our common stock for the foreseeable future. 53 Table of Contents Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2020 and December 31, 2025, with the cumulative total return of (i) the Russell 2000 Index and (ii) the S&P Software & Services Select Index.
The information contained in the Stock Performance Graph shall not be deemed to be soliciting material or to be filed with the SEC nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such filing. 57 Table of Contents Issuer Purchases of Equity Securities None.
The information contained in the Stock Performance Graph shall not be deemed to be soliciting material or to be filed with the SEC nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such filing.
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Issuer Purchases of Equity Securities Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares That May Be Purchased Under the Plans or Programs (in thousands) (1) October 1 - 31, 2025 — $ — — $ — November 1 - 30, 2025 — — — — December 1 - 31, 2025 68,929 72.52 68,929 145,001 Total 68,929 $ 72.52 68,929 $ 145,001 _______________________________________________________________________________ (1) In October 2025, our Board of Directors authorized a share repurchase program, or the Repurchase Program, that authorizes the Company to repurchase up to $150.0 million of our common stock.
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For further information, see Note 14 Stockholders' Equity of the Notes to the Consolidated Financial Statements.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThis increase was primarily attributable to a $9.2 million increase in personnel costs, including an increase in the number of personnel who provide implementation and customer support services and maintain our third-party data centers and other technical infrastructure, an $8.8 million net increase in co-location facility, hardware and software costs, third-party public cloud service provider costs and depreciation of our data center assets resulting from the increased infrastructure necessary to support growing customer activity, a $6.1 million increase from the amortization of capitalized software development and capitalized implementation services, a $3.5 million increase in third-party costs related to intellectual property included in our solutions and transaction processing costs and a $2.0 million increase in overhead costs and other discretionary expenses, partially offset by a $4.8 million decrease as a result of higher capitalized implementation costs, a $3.4 million decrease in services, primarily in pass-through fees and a $1.4 million decrease in amortization of acquired customer technology resulting from assets that became fully amortized.
Biggest changeThis increase was primarily attributable to a $13.4 million net increase in third-party public cloud service provider costs and software costs resulting from the increased infrastructure necessary to support growing customer activity and migration to third-party public cloud service providers, a $6.7 million increase from the amortization of capitalized software development and capitalized implementation services, a $2.1 million net increase in personnel costs, a $2.0 million increase in overhead costs and other discretionary expenses and a $1.2 million net increase in third-party costs related to intellectual property included in our solutions and transaction processing costs, partially offset by a $1.3 million decrease as a result of higher capitalized implementation costs and a $1.0 million decrease in amortization of acquired technology that was fully amortized during the year.
The structure and terms of our digital lending and relationship pricing arrangements vary but generally are also sold on a subscription basis through our direct sales organization, and the related revenues are recognized over the terms of the customer agreements.
The structure and terms of our digital lending and relationship pricing arrangements vary but generally are also sold on a subscription basis through our direct sales organization, and the related revenues are recognized over the terms of the customer agreements.
Cost of revenues also includes the direct costs of bill-pay and other third-party intellectual property included in our solutions, the amortization of deferred solution and services costs, amortization of certain software development costs, co-location facility costs and depreciation of our data center assets, debit card related pass-through fees, third-party public cloud service providers, an allocation of general overhead costs, the amortization of acquired technology intangibles and referral fees.
Cost of revenues also includes third-party public cloud service providers, the direct costs of bill-pay and other third-party intellectual property included in our solutions, third-party public cloud service providers, the amortization of deferred solution and services costs, amortization of certain software development costs, debit card related pass-through fees, an allocation of general overhead costs, the amortization of acquired technology intangibles, referral fees, co-location facility costs and depreciation of our data center assets.
Total Other Income (Expense), Net Total other income (expense), net, consists primarily of interest income and expense, other non-operating income and expense, loss on disposal of long-lived assets, foreign currency translation adjustment and gain on extinguishment of debt. We earn interest income on our cash, cash equivalents and investments.
Total Other Income, Net Total other income, net, consists primarily of interest income and expense, other non-operating income and expense, loss on disposal of long-lived assets, foreign currency translation adjustment and gain on extinguishment of debt. We earn interest income on our cash, cash equivalents and investments.
For these customers, we recognize software license revenue once the customer obtains control of the license, which generally occurs at the start of each license term, and recognize the remaining arrangement consideration for maintenance revenue over time on a ratable basis over the term of the software license.
For these customers, we recognize software license revenue once the customer obtains control of the license, which generally occurs at the start of each license term, and recognize the remaining arrangement consideration for maintenance revenue over time on a ratable basis over the term of the software license.
Impairment of Long-Lived Assets Impairment of long-lived assets such as property and equipment, acquired intangible assets, capitalized software development costs and right of use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Impairment of Long-Lived Assets Long-lived assets such as property and equipment, acquired intangible assets, capitalized software development costs and right of use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Additionally, Q2 Innovation Studio, an API-based and SDK-based open technology platform, allows our financial institution customers and other partners to develop unique extensions of and integrations to our digital banking platform, allowing financial institutions to quickly and easily deploy customized experiences and the latest financial services expected by End Users.
Q2 Innovation Studio, an API and SDK-based open technology platform, allows our financial institution customers and other partners to develop unique extensions of and integrations to our digital banking platform, allowing financial institutions to quickly and easily deploy customized experiences and the latest financial services expected by End Users.
While we anticipate research and development expenses as a percentage of revenue may fluctuate on a near-term basis, we expect such expenses to decline as a percentage of our revenues over the long-term as our revenues grow and we realize cost efficiencies in the business.
While research and development expenses as a percentage of revenue may fluctuate on a near-term basis, we expect such expenses to decline as a percentage of our revenues over the long term as our revenues grow and we realize cost efficiencies in the business.
During the twelve months ended December 31, 2024, there was no impact of purchase accounting on revenue, and our non-GAAP total revenue is now equivalent to our GAAP total revenue.
During the twelve months ended December 31, 2025 and 2024, there was no impact of purchase accounting on revenue, and our non-GAAP total revenue is now equivalent to our GAAP total revenue.
Because of these and other limitations, investors and others should consider adjusted EBITDA together with our GAAP financial measures including cash flow from operations and net loss.
Because of these and other limitations, investors and others should consider adjusted EBITDA together with our GAAP financial measures including cash flow from operations and net income (loss).
Subscription revenues are defined within "Critical Accounting Policies and Significant Judgements and Estimates." We calculate Total ARR as the annualized value of all recurring revenue recognized in the last month of the reporting period, with the exception of variable revenue in excess of contracted amounts for which we instead take the average monthly run rate of the trailing three months within that reporting period.
Subscription revenues are defined within "Critical Accounting Policies and Significant Judgments and Estimates." We calculate Total ARR as the annualized value of all recurring revenue recognized in the last month of the reporting period, with the exception of variable revenue in excess of contracted amounts for which we instead take the average monthly run rate of the trailing three months within that reporting period.
Our net revenue retention rates provide insight into the impact on current year revenues of: the number of new customers implemented on any of our solutions during the prior year; the timing of our implementation of those new customers in the prior year; growth in the number of End Users on such solutions and changes in their usage of such solutions; and sales of new products and services to our existing customers during the current year, excluding any products or services resulting from businesses acquired during such year and customer attrition.
Our net revenue retention rates provide insight into the impact on current year revenues of: the number of new customers implemented on any of our solutions during the prior year; the timing of our implementation of those new customers in the prior year; growth in the number of End Users 58 Table of Contents on such solutions and changes in their usage of such solutions; and sales of new products and services to our existing customers during the current year, excluding any products or services resulting from businesses acquired during such year and customer attrition.
Information regarding our non-cancellable lease and other purchase commitments as of December 31, 2024 can be found in Notes 10 and 11 to our consolidated financial statements included in this Annual Report on Form 10-K.
Information regarding our non-cancellable lease and other purchase commitments as of December 31, 2025 can be found in Notes 10 and 11 to our consolidated financial statements included in this Annual Report on Form 10-K.
Sales and marketing expenses as a percentage of total revenues will change in any given period based on factors including the addition of newly hired sales professionals, the timing of significant marketing events such as our annual in-person client conference, which we typically hold during the second quarter of each year, and the amount of sales commissions expense amortized.
Sales and marketing expenses as a percentage of total revenues may change in any given period based on factors such as the addition of newly hired sales professionals, the timing of significant marketing events such as our annual in-person client conference, which we typically hold during the second quarter of each year, and the amount of sales commissions expense amortized.
A discussion regarding year-to-year comparisons between the year ended December 31, 2023 and December 31, 2022 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
A discussion regarding year-to-year comparisons between the year ended December 31, 2024 and December 31, 2023 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
We believe that the exclusion of stock-based compensation expense provides for a better comparison of 63 Table of Contents our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types.
We believe that the exclusion of stock-based compensation expense provides for a better comparison of our operating results to prior periods and to our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types.
Known and estimable credits and incentives represent a form of variable consideration, which are estimated at contract inception and generally result in reductions to revenues 69 Table of Contents recognized for a particular contract. These estimates are updated at the end of each reporting period as additional information becomes available.
Known and estimable credits and incentives represent a form of variable consideration, which are estimated at contract inception and generally result in reductions to revenues recognized for a particular contract. These estimates are updated at the end of each reporting period as additional information becomes available.
We amortize the costs for an implementation once revenue recognition commences, and we amortize those implementation costs to cost of revenues over the expected period of customer benefit, which has been determined to be the estimated life of the technology. Other costs not directly recoverable from future revenues are expensed in the period incurred.
We amortize the capitalized implementation costs once revenue recognition commences, and we amortize those implementation costs to cost of revenues over the expected period of customer benefit, which has been determined to be the estimated life of the technology. Other costs not directly recoverable from future revenues are expensed in the period incurred.
We recognize revenue for transaction services in the month incurred based on actual or estimated transactions. 68 Table of Contents Services and Other Revenues Implementation services are required for new digital solutions and other standalone contracts, and there is a significant level of integration and configuration for each customer.
We recognize revenue for transaction services in the month incurred based on actual or estimated transactions. Services and Other Revenues Implementation services are required for new digital solutions and other standalone contracts, and there is a significant level of integration and configuration for each customer.
(3) Includes a gain of $19.9 million related to the early extinguishment of a portion of our convertible notes for the year ended December 31, 2023. 72 Table of Contents The following table sets forth our results of operations data as a percentage of revenues for each of the periods indicated: Year Ended December 31, 2024 2023 2022 Revenues (1) 100.0 % 100.0 % 100.0 % Cost of revenues (2) 49.1 % 51.5 % 54.7 % Gross margin 50.9 % 48.5 % 45.3 % Operating expenses: Sales and marketing 15.2 % 17.5 % 19.1 % Research and development 20.6 % 22.0 % 23.0 % General and administrative 17.7 % 17.6 % 15.9 % Transaction-related costs — % — % 0.2 % Amortization of acquired intangibles 2.4 % 3.3 % 3.2 % Lease and other restructuring charges 1.1 % 1.8 % 2.3 % Total operating expenses 57.0 % 62.2 % 63.8 % Loss from operations (6.1) % (13.8) % (18.5) % Total other income (expense), net (3) 1.6 % 3.9 % (0.2) % Loss before income taxes (4.4) % (9.9) % (18.8) % Provision for income taxes (1.1) % (0.6) % (0.5) % Net loss (5.5) % (10.5) % (19.3) % _______________________________________________________________________________ (1) Includes deferred revenue reduction from purchase accounting of 0.0%, 0.1% and 0.1% for the years ended December 31, 2024, 2023 and 2022, respectively.
(3) Includes a gain of $19.9 million related to the early extinguishment of a portion of our convertible notes for the year ended December 31, 2023. 68 Table of Contents The following table sets forth our results of operations data as a percentage of revenues for each of the periods indicated: Year Ended December 31, 2025 2024 2023 Revenues (1) 100.0 % 100.0 % 100.0 % Cost of revenues (2) 45.9 % 49.1 % 51.5 % Gross margin 54.1 % 50.9 % 48.5 % Operating expenses: Sales and marketing 13.3 % 15.2 % 17.5 % Research and development 19.4 % 20.6 % 22.0 % General and administrative 15.8 % 17.7 % 17.6 % Transaction-related costs — % — % — % Amortization of acquired intangibles — % 2.4 % 3.3 % Lease and other restructuring charges 0.5 % 1.1 % 1.8 % Total operating expenses 49.0 % 57.0 % 62.2 % Income (loss) from operations 5.0 % (6.1) % (13.8) % Total other income, net (3) 1.9 % 1.6 % 3.9 % Income (loss) before income taxes 6.9 % (4.4) % (9.9) % Provision for income taxes (0.3) % (1.1) % (0.6) % Net income (loss) 6.5 % (5.5) % (10.5) % _______________________________________________________________________________ (1) Includes deferred revenue reduction from purchase accounting of 0.0%, 0.0% and 0.1% for the years ended December 31, 2025, 2024 and 2023, respectively.
The number of TSR PSUs and MSUs that vest is based on actual TSR relative to the TSR benchmark as set forth in the award agreement. The minimum percentage that can vest is 0%, with a maximum percentage of 200%. TSR PSUs and MSUs will vest over two-year and three-year performance periods.
The number of TSR PSUs and MSUs that vest is based on actual TSR relative to the TSR benchmark as set forth in the award agreement. The minimum percentage that can vest is 0%, with a maximum percentage of 200%. TSR PSUs will vest over a three-year performance period.
Cancellations refer to customers that have either stopped using our services 62 Table of Contents completely or remained a customer but terminated a particular service. Downgrades are a result of customers taking less of a particular service or renewing their contract for identical services at a lower price.
Cancellations refer to customers that have either stopped using our services completely or remained a customer but terminated a particular service. Downgrades are a result of customers taking less of a particular service or renewing their contract for identical services at a lower price.
Under certain circumstances, we have determined that these implementation services qualify as a separate performance obligation in certain markets and geographies, and the implementation services for these agreements are recognized over time as services are performed. Professional services revenues consist primarily of Integrated Services.
Under certain circumstances, we have determined that these implementation services qualify as a separate performance obligation in certain markets and geographies, and the implementation services for these agreements are recognized over time as services are performed. 65 Table of Contents Professional services revenues consist primarily of Integrated Services.
Based upon our current levels of operations, we believe that our cash flow from operations along with our other sources of liquidity, including our ability to access capital markets and available borrowings under our $125.0 million Revolving Credit Agreement, are adequate to meet our cash requirements for the next twelve months.
Based upon our current levels of operations, we believe that our cash flow from operations along with our other sources of liquidity, including our ability to access capital markets and available borrowings under our $125.0 million Revolving Credit Agreement, are adequate to meet our cash requirements for the next twelve months, including the repayment of our 2026 Notes upon maturity.
Over the long term, we intend to continue to invest in additional sales representatives to identify and address opportunities in the financial institution, FinTech and Alt-FI markets across the U.S. and internationally and to increase our number of sales support and marketing personnel, as well as our investment in marketing initiatives designed to increase awareness of our solutions and generate new customer opportunities.
Over the long term, we intend to continue to invest in additional sales representatives to identify and address opportunities in the financial institution, FinTech and Alt-FI markets and to increase our number of sales support and marketing personnel, as well as our investment in marketing initiatives designed to increase awareness of our solutions and generate new customer opportunities.
Accordingly, we analyze the performance of our operations in each period, both with and without such expenses. • Stock-based compensation . We provide non-GAAP information that excludes expenses related to stock-based compensation.
Accordingly, we analyze the performance of our operations in each period, both with and without such expenses. 60 Table of Contents • Stock-based compensation . We provide non-GAAP information that excludes expenses related to stock-based compensation.
We recognize revenue for debit card and bill-pay related transaction services when End Users utilize debit card services integrated within our Helix and other payment-service solutions 65 Table of Contents in the month incurred based on actual or estimated transactions.
We recognize revenue for debit card and bill-pay related transaction services when End Users utilize debit card services integrated within our Helix and other payment-service solutions in the month incurred based on actual or estimated transactions.
Recent Accounting Pronouncements See Note 2 - Summary of Significant Accounting Policies contained in the Notes to Consolidated Financial Statements included in this report, regarding the impact of certain recent accounting pronouncements. 78 Table of Contents
Recent Accounting Pronouncements See Note 2 - Summary of Significant Accounting Policies contained in the Notes to Consolidated Financial Statements included in this report, regarding the impact of certain recent accounting pronouncements.
Cash Flows from Financing Activities Our recent financing activities have consisted primarily of activity related to our convertible notes as well as net proceeds from exercises of stock options, contributions to our ESPP to purchase our common stock and payments for debt issuance costs related to the Revolving Credit Agreement.
Cash Flows from Financing Activities Our recent financing activities have consisted primarily of activity related to our convertible notes, share repurchases under the Repurchase Program, as well as net proceeds from exercises of stock options, contributions to our ESPP to purchase our common stock and payments for debt issuance costs related to the Revolving Credit Agreement.
Other companies in our industry may calculate Subscription ARR and Total ARR differently, which reduces their usefulness as comparative measures. Our Subscription ARR was $681.9 million, $593.9 million and $500.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Other companies in our industry may calculate Subscription ARR and Total ARR differently, which reduces their usefulness as comparative measures. Our Subscription ARR was $780.1 million, $681.9 million and $593.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Our Total ARR was $824.2 million, $734.8 million and $655.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Revenue Churn We utilize revenue churn to monitor the satisfaction of our customers and evaluate the effectiveness of our business solutions and strategies.
Our Total ARR was $921.4 million, $824.2 million and $734.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. Revenue Churn We utilize revenue churn to monitor the satisfaction of our customers and evaluate the effectiveness of our business solutions and strategies.
Our obligations under our convertible senior notes and Revolving Credit Agreement are described in Note 12 to our consolidated financial statements included in this Annual Report on Form 10-K.
Our obligations under the 2026 Notes and Revolving Credit Agreement are described in Note 12 to our consolidated financial statements included in this Annual Report on Form 10-K.
Due to rounding, totals may not equal the sum of the line items in the tables above. 73 Table of Contents Comparison of the Years Ended December 31, 2024 and 2023 A discussion regarding year-to-year comparisons between the year ended December 31, 2024 and December 31, 2023 is presented below.
Due to rounding, totals may not equal the sum of the line items in the tables above. Comparison of the Years Ended December 31, 2025 and 2024 A discussion regarding year-to-year comparisons between the year ended December 31, 2025 and December 31, 2024 is presented below.
We believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results for the following reasons: • adjusted EBITDA is widely used by investors and securities analysts to measure a company's operating performance with and without regard to items that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired; • our management uses adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, in the preparation of our annual operating budget, as a measure of our operating performance, to assess the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance; • adjusted EBITDA provides more consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our operations and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and • our investor and analyst presentations include adjusted EBITDA as a supplemental measure of our overall operating performance. 64 Table of Contents Adjusted EBITDA should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP.
We believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results for the following reasons: • adjusted EBITDA is widely used by investors and securities analysts to measure a company's operating performance with and without regard to items that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired; • our management uses adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, in the preparation of our annual operating budget, as a measure of our operating performance, to assess the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance; • adjusted EBITDA provides more consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our operations and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and • our investor and analyst presentations include adjusted EBITDA as a supplemental measure of our overall operating performance.
(2) Includes amortization of acquired technology of 3.2%, 3.7% and 4.0% for the years ended December 31, 2024, 2023 and 2022, respectively. (3) Includes a gain of 3.2% related to the early extinguishment of a portion of our convertible notes for the year ended December 31, 2023.
(2) Includes amortization of acquired technology of 2.6%, 3.2% and 3.7% for the years ended December 31, 2025, 2024 and 2023, respectively. (3) Includes a gain of 3.2% related to the early extinguishment of a portion of our convertible notes for the year ended December 31, 2023.
Our net revenue retention rate was 109%, 108% and 110% for the years ended December 31, 2024, 2023 and 2022, respectively, and our subscription net revenue retention rate was 114%, 112% and 115% for the years ended December 31, 2024, 2023 and 2022, respectively.
Our net revenue retention rate was 113%, 109% and 108% for the years ended December 31, 2025, 2024 and 2023, respectively, and our subscription net revenue retention rate was 115%, 114% and 112% for the years ended December 31, 2025, 2024 and 2023, respectively.
Items such as the deferred revenue reduction from purchase accounting, stock-based compensation, transaction-related costs, amortization of acquired technology, amortization of acquired intangible assets and lease and other restructuring charges can have a material impact on our GAAP financial results. Non-GAAP Revenue We define non-GAAP revenue as total revenue excluding the impact of purchase accounting.
Items such as the deferred revenue reduction from purchase accounting, stock-based compensation, transaction-related costs, amortization of acquired technology, amortization of acquired intangible assets, lease and other restructuring charges and non-recurring legal settlements can have a material impact on our GAAP financial results.
General economic conditions may continue to impact our business and our customers' spending patterns and budget cycles, and these conditions may continue to disrupt any seasonality trends that may otherwise typically be inherent in our historical operating results.
General economic conditions and other global events may impact our business and our customers' spending patterns and budget cycles, and these conditions may disrupt any seasonality trends that may otherwise typically be inherent in our historical operating results.
Significant resources, personnel and expertise are required to effectively deliver and manage advanced digital solutions in the complex and heavily regulated financial services industry. We provide digital solutions that are designed to be highly configurable, scalable and adaptable to the specific needs of our customers.
Delivering advanced digital solutions in the complex and heavily regulated financial services industry requires significant resources, personnel and expertise. We provide digital solutions that are designed to be highly configurable, scalable and adaptable to the specific needs of our customers.
(2) Includes amortization of acquired technology of $22.0 million, $23.4 million and $22.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.
(2) Includes amortization of acquired technology of $21.0 million, $22.0 million and $23.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Our Total ARR also includes the contracted minimums associated with all contracts in place at the end of the quarter for which revenue recognition has not yet commenced, and revenue generated from Integrated Services, which we previously referred to as Premier Services.
Our Total ARR also includes the contracted minimums associated with all contracts in place at the end of the quarter for which revenue recognition has not yet commenced, and revenue generated from Integrated Services.
We primarily sell our solutions through our direct sales organization. While the financial institutions market is well-defined due to the regulatory classifications of those financial institutions, markets for FinTechs and Alt-FIs are broader and more difficult to define due to the changing number of providers in each market.
We primarily sell our solutions through our direct sales organization. While the financial institution market is well-defined due to the regulatory classification of financial institutions, the markets for FinTechs and other financial services providers are broader and more difficult to define due to the changing number of providers in each market.
As a result, our revenues from digital banking platform customers grow as our customers buy more solutions from us and increase the number of End Users utilizing our solutions and as those users increase their number of transactions on our solutions.
As a result, digital banking platform revenues generally increase as our customers buy more solutions from us and increase the number of Registered Users and companies utilizing our solutions and as those retail users and companies increase their number of transactions on our solutions.
Our control is evidenced by our involvement in the integration of the good or service on our platform before it is transferred to our customers and is further supported by us being primarily responsible to our customers and having a level of discretion in establishing pricing. Revenues provided from agreements in which we are an agent are insignificant.
Our control is evidenced by our involvement in the integration of the good or service on our platform before it is transferred to our customers and is further supported by us being primarily responsible to our customers and having a level of discretion in establishing pricing.
For the year ended December 31, 2024, net cash used in investing activities was $21.1 million, consisting of $95.8 million for the purchase of investments, $22.3 million in capitalized software development costs and $6.7 million for the purchase of property and equipment, partially offset by $103.7 million received from the maturities of investments.
For the year ended December 31, 2025, net cash used in investing activities was $4.0 million, consisting of $94.1 million for the purchase of investments, $21.3 million in capitalized software development costs and $6.8 million for the purchase of property and equipment, partially offset by $118.2 million received from the maturities of investments.
We derive the majority of our revenues from subscription fees for the use of our solutions hosted in either our third-party data centers or with third-party public cloud service providers, transactional revenue from bill-pay solutions and remote deposit products, revenues for professional services and implementation services related to our solutions and certain third-party related pass-through fees.
We derive the majority of our revenues from subscription fees for the use of our hosted solutions, transactional revenue from bill-pay solutions and remote deposit products, revenues for professional services and implementation services related to our solutions and certain third-party related pass-through fees.
We derive the majority of our revenues from subscription fees for the use of our solutions hosted in either our third-party data centers or with third-party public cloud service providers, transactional revenue from bill-pay solutions and remote deposit products, revenues for professional services and implementation services related to our solutions and certain third-party related pass-through fees.
We derive the majority of our revenues from subscription fees for the use of our hosted solutions, transactional revenue from bill-pay solutions and remote deposit products, revenues for professional services and implementation services related to our solutions and certain third-party related pass-through fees.
We anticipate that sales and marketing expenses will increase in absolute dollars over the long-term as we continue to support our revenue growth and increase marketing spend to attract new customers, retain and grow existing customers, build brand awareness, and as we continue to hold various experiences for our current and prospective customers, including our annual client conference typically held during the second quarter.
We anticipate that sales and marketing expenses will increase in absolute dollars in the long term as we continue to support our revenue growth and increase marketing spend to attract new customers, retain and grow business with existing customers, build brand awareness, and as we continue to hold various experiences for our current and prospective customers.
The structure and terms of our Helix arrangements with FinTechs vary but typically involve relatively lower contracted minimum revenues and instead emphasize usage-based revenue, with such revenue recognized as it is incurred.
The structure and terms of our Helix arrangements with FinTechs vary but typically involve relatively lower contracted minimum revenues and instead emphasize usage-based revenue, with such revenue recognized as it is incurred. This combination of subscription-based and usage-based revenue models aligns pricing with customer adoption and platform utilization.
Lease and Other Restructuring Charges Year Ended December 31, Change 2024 2023 $ (%) Lease and other restructuring charges $ 7,628 $ 10,975 $ (3,347) (30.5) % Percentage of revenues 1.1 % 1.8 % Lease and other restructuring charges decreased by $3.3 million, or 30.5%, from $11.0 million for the year ended December 31, 2023 to $7.6 million for the year ended December 31, 2024.
Lease and Other Restructuring Charges Year Ended December 31, Change 2025 2024 $ (%) Lease and other restructuring charges $ 3,826 $ 7,628 $ (3,802) (49.8) % Percentage of revenues 0.5 % 1.1 % Lease and other restructuring charges decreased by $3.8 million, or 49.8%, from $7.6 million for the year ended December 31, 2024 to $3.8 million for the year ended December 31, 2025.
These charges are inconsistent in amount and are significantly impacted by the timing and nature of these events. Therefore, although we may incur these types of expenses in the future, we believe that eliminating these charges for purposes of calculating the non-GAAP financial measures facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance.
Therefore, although we may incur these types of expenses in the future, we believe that eliminating these charges for purposes of calculating the non-GAAP financial measures facilitates a more meaningful evaluation of our operating performance and comparisons to our past operating performance. • Non-recurring legal settlements.
General and Administrative General and administrative expenses consist primarily of salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, of our administrative, finance and accounting, information systems, compliance and security, legal, human resources employees and certain members of our executive team. General and administrative expenses also include consulting and professional fees, travel and other corporate expenses.
General and Administrative General and administrative expenses consist primarily of salaries and other personnel-related costs, including employee benefits, bonuses and stock-based compensation, of our administrative, finance and accounting, information systems, compliance and security, legal, human resources employees and the majority of our executive team.
The following table presents a reconciliation of net loss to adjusted EBITDA for each of the periods indicated (in thousands): Year Ended December 31, 2024 2023 2022 Reconciliation of net loss to adjusted EBITDA: Net loss $ (38,536) $ (65,384) $ (108,983) Deferred revenue reduction from purchase accounting — 344 644 Stock-based compensation 89,215 79,188 65,157 Transaction-related costs — 24 1,194 Depreciation and amortization 68,809 71,707 61,659 Lease and other restructuring charges 9,517 12,092 13,225 Provision for income taxes 7,676 3,562 2,908 Gain on extinguishment of debt — (19,869) — Interest and other (income) expense, net (11,343) (4,724) 1,087 Adjusted EBITDA $ 125,338 $ 76,940 $ 36,891 Components of Operating Results Revenues Revenue-generating activities directly relate to the sale, implementation and support of our solutions within a single operating segment.
The following table presents a reconciliation of net income (loss) to adjusted EBITDA for each of the periods indicated (in thousands): Year Ended December 31, 2025 2024 2023 Reconciliation of net income (loss) to adjusted EBITDA: Net income (loss) $ 52,008 $ (38,536) $ (65,384) Deferred revenue reduction from purchase accounting — — 344 Stock-based compensation 86,949 89,215 79,188 Transaction-related costs 166 — 24 Depreciation and amortization 53,424 68,809 71,707 Lease and other restructuring charges 4,478 9,517 12,092 Non-recurring legal settlements 1,750 — — Provision for income taxes 2,717 7,676 3,562 Gain on extinguishment of debt — — (19,869) Interest and other income, net (14,978) (11,343) (4,724) Adjusted EBITDA $ 186,514 $ 125,338 $ 76,940 62 Table of Contents Components of Operating Results Revenues Revenue-generating activities directly relate to the sale, implementation and support of our solutions within a single operating segment.
General and Administrative Year Ended December 31, Change 2024 2023 $ (%) General and administrative $ 122,942 $ 110,186 $ 12,756 11.6 % Percentage of revenues 17.7 % 17.6 % General and administrative expenses increased by $12.8 million, or 11.6%, from $110.2 million for the year ended December 31, 2023 to $122.9 million for the year ended December 31, 2024.
General and Administrative Year Ended December 31, Change 2025 2024 $ (%) General and administrative $ 125,513 $ 122,942 $ 2,571 2.1 % Percentage of revenues 15.8 % 17.7 % General and administrative expenses increased by $2.6 million, or 2.1%, from $122.9 million for the year ended December 31, 2024 to $125.5 million for the year ended December 31, 2025.
Over the long term, we expect cost of revenues to continue to grow in absolute dollars as we grow our business but to fluctuate as a percentage of revenues based principally on cost efficiencies realized in the business, the level and timing of implementation support activities, timing of capitalized software development costs, debit card related pass-through fees, and other related costs.
As a result, we expect third-party public cloud service provider costs and other similar investments over the long term to increase cost of revenues in absolute dollars as we grow our business, and we expect such expenses to decline as a percentage of revenue, based on cost efficiencies realized in the business, the level and timing of implementation support activities, timing of capitalized software development costs, debit card related pass-through fees and other related costs.
Key Operating Measures In addition to the U.S. generally accepted accounting principles, or GAAP, measures described below in "Components of Operating Results," we monitor the following operating measures to evaluate growth trends, plan investments and measure the effectiveness of our sales and marketing efforts.
The Repurchase Program may be modified, suspended or terminated by our Board of Directors at any time. 57 Table of Contents Key Operating Measures In addition to the U.S. generally accepted accounting principles, or GAAP, measures described below in "Components of Operating Results," we monitor the following operating measures to evaluate growth trends, plan investments and measure the effectiveness of our sales and marketing efforts.
This increase was primarily attributable to a $2.4 million increase from lower capitalization of software development costs, a $2.3 million increase in personnel costs as a result of the growth in our research and development organization to support continued enhancements to our solutions and a $1.0 million increase in travel-related and other discretionary expenses.
This increase was primarily attributable to a $5.6 million increase in personnel costs as a result of the growth in our research and development organization to support continued enhancements to our solutions, a $3.1 million increase in travel-related and other discretionary expenses, a $2.0 million increase from lower capitalization of software development and implementation services costs and a $0.4 million increase due to an impairment loss related to capitalized software development costs from certain software assets that are no longer expected to be recoverable.
Revenues The following table presents our revenues for each of the periods indicated (dollars in thousands): Year Ended December 31, Change 2024 2023 $ (%) Revenues $ 696,464 $ 624,624 $ 71,840 11.5 % Revenues increased by $71.8 million, or 11.5%, from $624.6 million for the year ended December 31, 2023 to $696.5 million for the year ended December 31, 2024.
Revenues The following table presents our revenues for each of the periods indicated (dollars in thousands): Year Ended December 31, Change 2025 2024 $ (%) Revenues $ 794,809 $ 696,464 $ 98,345 14.1 % Revenues increased by $98.3 million, or 14.1%, from $696.5 million for the year ended December 31, 2024 to $794.8 million for the year ended December 31, 2025.
Contractual Obligations and Commitments Our principal commitments consist of the 2026 Notes, 2025 Notes, non-cancelable operating leases primarily related to our facilities, minimum purchase commitments for sponsorship obligations, third-party products, co-location fees and other product costs.
Contractual Obligations and Commitments Our principal commitments consist of the 2026 Notes, non-cancelable operating leases primarily related to our facilities, minimum purchase commitments for third-party products, stadium sponsorship costs, commitment fees associated with our Revolving Credit agreement, third-party public cloud service provider fees and other product costs.
Amounts allocated to the acquired intangible assets are amortized on a straight-line basis over the estimated useful lives. We periodically review the estimated useful lives and fair 70 Table of Contents values of our identifiable intangible assets, taking into consideration any events or circumstances which might result in a diminished fair value or revised useful life.
We periodically review the estimated useful lives and fair values of our identifiable intangible assets, taking into consideration any events or circumstances which might result in a diminished fair value or revised useful life. 67 Table of Contents The excess purchase price over the fair value of assets acquired is recorded as goodwill.
We intend to continue to make investments in technology innovation and software development to enhance our existing solutions and platforms while expanding our product portfolio. 60 Table of Contents As our business grows, we intend to continue to invest in and grow our services and delivery organization to support our customers' needs, help them through their digital transformation, deliver our solutions in a timely and effective manner and maintain our strong reputation.
As our business grows, we intend to continue to invest in and grow our services and delivery organization to support our customers' needs, help them through their digital transformation, deliver our solutions in a timely and effective manner and maintain our strong reputation.
Software development costs are amortized to cost of revenues when products and enhancements are released or made available over the products' estimated economic lives.
Software development costs are amortized to cost of revenues when products and enhancements are released or made available over the products' estimated economic lives. 63 Table of Contents Operating Expenses Operating expenses primarily consist of sales and marketing, research and development and general and administrative expenses.
We had annual revenue churn of 4.4%, 6.1% and 6.3% for the years ended December 31, 2024, 2023 and 2022, respectively. Our use of revenue churn has limitations as an analytical tool, and investors should not consider it in isolation. Other companies in our industry may calculate revenue churn differently, which reduces its usefulness as a comparative measure.
We had annual revenue churn of 5.2%, 4.4% and 6.1% for the years ended December 31, 2025, 2024 and 2023, respectively. Our use of revenue churn has limitations as an analytical tool, and investors should not consider it in isolation.
We also generate a portion of our transactional revenues from third-party fees related to End Users utilizing remote deposit products and from fees generated when End Users utilize debit cards integrated with our Helix products.
Transactional Revenues We generate a majority of our transactional revenues based on the number of bill-pay transactions that End Users initiate on our digital banking platform, from third-party fees related to End Users utilizing remote deposit products and from fees generated when End Users utilize debit cards integrated with our Helix products.
We believe that financial services providers are best served by a broad portfolio of digital solutions offering rapid, flexible and comprehensive integration with internal and third-party solutions enabling them to deliver modern, intuitive, advanced and regulatory-compliant digital solutions.
We believe our portfolio, which reflects years of strategic development and innovation, affords us a distinct competitive advantage across multiple market segments. 56 Table of Contents We believe that financial services providers are best served by a broad portfolio of digital solutions offering rapid, flexible and comprehensive integration with internal and third-party solutions enabling them to deliver modern, intuitive, advanced and regulatory-compliant digital solutions.
Year Ended December 31, 2024 2023 2022 Revenue: GAAP revenue $ 696,464 $ 624,624 $ 565,673 Deferred revenue reduction from purchase accounting — 344 644 Total Non-GAAP revenue $ 696,464 $ 624,968 $ 566,317 Non-GAAP Operating Income We provide non-GAAP operating income that excludes such items as deferred revenue reduction from purchase accounting, stock-based compensation, transaction-related costs, amortization of acquired technology, amortization of acquired intangible assets and lease and other restructuring charges.
The following table presents a reconciliation of GAAP revenue to non-GAAP revenue for each of the periods indicated (in thousands): Year Ended December 31, 2025 2024 2023 Revenue: GAAP revenue $ 794,809 $ 696,464 $ 624,624 Deferred revenue reduction from purchase accounting — — 344 Total Non-GAAP revenue $ 794,809 $ 696,464 $ 624,968 Non-GAAP Operating Income We provide non-GAAP operating income that excludes such items as deferred revenue reduction from purchase accounting, stock-based compensation, transaction-related costs, amortization of acquired technology, amortization of acquired intangible assets, lease and other restructuring charges and non-recurring legal settlements.
Commissions are generally capitalized and then amortized over the expected period of customer benefit. Research and Development We believe that continuing to improve and enhance our solutions is essential to maintaining our reputation for innovation and growing our customer base and revenues.
Research and Development We believe that continuing to improve and enhance our solutions is essential to maintaining our reputation for innovation and growing our customer base and revenues.
Operating Expenses Operating expenses primarily consist of sales and marketing, research and development and general and administrative expenses. They also include costs related to our acquisitions and the resulting amortization of acquired intangible assets from those acquisitions.
They also include costs related to our acquisitions and the resulting amortization of acquired intangible assets from those acquisitions.
Year Ended December 31, 2024 2023 2022 GAAP operating loss $ (42,263) $ (86,057) $ (104,761) Deferred revenue reduction from purchase accounting — 344 644 Stock-based compensation 89,215 79,188 65,157 Transaction-related costs — 24 1,194 Amortization of acquired technology 22,016 23,402 22,690 Amortization of acquired intangibles 16,979 20,667 18,248 Lease and other restructuring charges 9,517 12,092 13,225 Non-GAAP operating income $ 95,464 $ 49,660 $ 16,397 Adjusted EBITDA We define adjusted EBITDA as net loss before deferred revenue reduction from purchase accounting, stock-based compensation, transaction-related costs, depreciation, amortization, lease and other restructuring charges, provision for income taxes, gain on extinguishment of debt and interest and other (income) expense, net.
The following table presents a reconciliation of GAAP operating income (loss) to non-GAAP operating income for each of the periods indicated (in thousands): Year Ended December 31, 2025 2024 2023 GAAP operating income (loss) $ 39,897 $ (42,263) $ (86,057) Deferred revenue reduction from purchase accounting — — 344 Stock-based compensation 86,949 89,215 79,188 Transaction-related costs 166 — 24 Amortization of acquired technology 21,049 22,016 23,402 Amortization of acquired intangibles 93 16,979 20,667 Lease and other restructuring charges 4,478 9,517 12,092 Non-recurring legal settlements 1,750 — — Non-GAAP operating income $ 154,382 $ 95,464 $ 49,660 61 Table of Contents Adjusted EBITDA We define adjusted EBITDA as net income (loss) before deferred revenue reduction from purchase accounting, stock-based compensation, transaction-related costs, depreciation, amortization, lease and other restructuring charges, non-recurring legal settlements, provision for income taxes, gain on extinguishment of debt and interest and other (income) expense, net.
Other Considerations We evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis) with respect to the vendor reseller agreements pursuant to which we resell certain third-party solutions along with our solutions.
We believe that there will not be significant changes to our estimates of variable consideration as of December 31, 2025. 66 Table of Contents Other Considerations We evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis) with respect to the vendor reseller agreements pursuant to which we resell certain third-party solutions along with our solutions.
Provision for Income Taxes Year Ended December 31, Change 2024 2023 $ (%) Provision for income taxes $ (7,676) $ (3,562) $ (4,114) 115.5 % Percentage of revenues (1.1) % (0.6) % Total provision for income taxes increa sed by $4.1 million fr om $3.6 million for the year ended December 31, 2023 to $7.7 million for the year ended December 31, 2024.
Provision for Income Taxes Year Ended December 31, Change 2025 2024 $ (%) Provision for income taxes $ (2,717) $ (7,676) $ 4,959 (64.6) % Percentage of revenues (0.3) % (1.1) % Total provision for income taxes decreased by $5.0 million from $7.7 million for the year ended December 31, 2024 to $2.7 million for the year ended December 31, 2025.
Our digital banking platform customers have numerous End Users, and those End Users can represent one or more account holders registered to use one or more of our solutions on our digital banking platform.
We offer our solutions to most of our customers using a SaaS model under which our customers pay subscription fees for the use of our solutions. Our digital banking platform customers have numerous End Users, and those End Users can represent one or more account holders registered to use one or more of our solutions on our digital banking platform.
However, if we determine the need for additional short-term liquidity, there is no assurance that such financing, if pursued, would be adequate or available on terms acceptable to us. 77 Table of Contents Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands): Year Ended December 31, 2024 2023 2022 Net cash provided by (used in): Operating activities $ 135,751 $ 70,292 $ 36,556 Investing activities (21,080) 113,268 (165,555) Financing activities 13,317 (152,012) 5,882 Effect of exchange rate changes on cash, cash equivalents and restricted cash (827) 182 (802) Net increase (decrease) in cash, cash equivalents and restricted cash $ 127,161 $ 31,730 $ (123,919) Cash Flows from Operating Activities Our cash flows from operating activities are primarily influenced by net loss less non-cash items, the amount and timing of customer receipts and vendor payments and by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business and customer base.
Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands): Year Ended December 31, 2025 2024 2023 Net cash provided by (used in): Operating activities $ 201,461 $ 135,751 $ 70,292 Investing activities (4,028) (21,080) 113,268 Financing activities (188,972) 13,317 (152,012) Effect of exchange rate changes on cash, cash equivalents and restricted cash 49 (827) 182 Net increase (decrease) in cash, cash equivalents and restricted cash $ 8,510 $ 127,161 $ 31,730 Cash Flows from Operating Activities Our cash flows from operating activities are primarily influenced by net income (loss) less non-cash items, the amount and timing of customer receipts and vendor payments and by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business and customer base.
Because we operate as a single reporting unit, the impairment test is performed at the consolidated entity level by comparing our estimated fair value to our carrying value.
We test goodwill for impairment annually in October, or whenever events or changes in circumstances indicate an impairment may have occurred. Because we operate as a single reporting unit, the impairment test is performed at the consolidated entity level by comparing our estimated fair value to our carrying value.
If the carrying value is not recoverable, an impairment is recognized to the extent that the carrying value of the asset group exceeds its fair value. 71 Table of Contents Results of Operations The following table sets forth our results of operations data for each of the periods indicated (in thousands): Year Ended December 31, 2024 2023 2022 Revenues (1) $ 696,464 $ 624,624 $ 565,673 Cost of revenues (2) 341,983 321,973 309,328 Gross profit 354,481 302,651 256,345 Operating expenses: Sales and marketing 105,951 109,522 108,214 Research and development 143,244 137,334 130,103 General and administrative 122,942 110,186 90,163 Transaction-related costs — 24 1,176 Amortization of acquired intangibles 16,979 20,667 18,248 Lease and other restructuring charges 7,628 10,975 13,202 Total operating expenses 396,744 388,708 361,106 Loss from operations (42,263) (86,057) (104,761) Total other income (expense), net (3) 11,403 24,235 (1,314) Loss before income taxes (30,860) (61,822) (106,075) Provision for income taxes (7,676) (3,562) (2,908) Net loss $ (38,536) $ (65,384) $ (108,983) ______________________________________________________________________________ (1) Includes deferred revenue reduction from purchase accounting of zero, $0.3 million and $0.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Results of Operations The following table sets forth our results of operations data for each of the periods indicated (in thousands): Year Ended December 31, 2025 2024 2023 Revenues (1) $ 794,809 $ 696,464 $ 624,624 Cost of revenues (2) 365,126 341,983 321,973 Gross profit 429,683 354,481 302,651 Operating expenses: Sales and marketing 105,858 105,951 109,522 Research and development 154,330 143,244 137,334 General and administrative 125,513 122,942 110,186 Transaction-related costs 166 — 24 Amortization of acquired intangibles 93 16,979 20,667 Lease and other restructuring charges 3,826 7,628 10,975 Total operating expenses 389,786 396,744 388,708 Income (loss) from operations 39,897 (42,263) (86,057) Total other income, net (3) 14,828 11,403 24,235 Income (loss) before income taxes 54,725 (30,860) (61,822) Provision for income taxes (2,717) (7,676) (3,562) Net income (loss) $ 52,008 $ (38,536) $ (65,384) ______________________________________________________________________________ (1) Includes deferred revenue reduction from purchase accounting of zero, zero and $0.3 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Our quarterly results of operations may vary significantly in the future and period-to-period comparisons of our operating results may not be meaningful and should not be relied upon as an indication of future results.
Our quarterly results of operations may vary significantly in the future and period-to-period comparisons of our operating results may not be meaningful and should not be relied upon as an indication of future results. Liquidity and Capital Resources Sources of Liquidity As of December 31, 2025, our principal sources of liquidity were cash, cash equivalents and investments of $432.7 million.
For the year ended December 31, 2024, our net cash provided by operating activities was $135.8 million, which consisted of non-cash adjustments of $189.1 million, partially offset by a net loss of $38.5 million and cash outflows from changes in operating assets and liabilities of $14.8 million.
For the year ended December 31, 2025, our net cash provided by operating activities was $201.5 million, which consisted of non-cash adjustments of $173.4 million and net income of $52.0 million, partially offset by cash outflows from changes in operating assets and liabilities of $23.9 million.
We believe excluding these items is useful for the following reasons: • Deferred revenue reduction from purchase accounting. We provide non-GAAP information that excludes the deferred revenue reduction from purchase accounting.
There was no deferred revenue reduction from purchase accounting in either of twelve months ended December 31, 2025 or 2024. We believe excluding these items is useful for the following reasons: • Deferred revenue reduction from purchase accounting. We provide non-GAAP information that excludes the deferred revenue reduction from purchase accounting.
We evaluate the recoverability of our long-lived assets by comparing the carrying amount of the asset group to the estimated undiscounted future cash flows.
We evaluate the recoverability of our long-lived assets by comparing the carrying amount of the asset group to the estimated undiscounted future cash flows. If the carrying value is not recoverable, an impairment is recognized to the extent that the carrying value of the asset group exceeds its fair value.
The primary drivers of cash outflows in operating assets and liabilities were a $31.9 million increase in deferred solution costs primarily from annual commission payments and deferred implementation costs from both new customers and existing customer expansions and a $12.0 million increase in prepaid and other current assets related to timing of various prepaid expenses, most notably a payroll date occurring at the very end of the quarter, partially offset by a $28.9 million increase in deferred revenue due to the timing of annual billings and deposits received from customers prior to the recognition of revenue from those related payments.
The primary drivers of cash outflows in operating assets and liabilities were a $27.9 million cash outflow resulting from a gross increase in deferred solution costs primarily from annual commission payments and deferred implementation costs from both new customers and existing customer expansions and a $9.9 million increase in accounts receivable due to the timing of annual billings, partially offset by a $16.8 million cash inflow resulting from an increase in deferred revenue due to the timing of annual billings and deposits received from customers prior to the recognition of revenue from those related payments.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+2 added−2 removed4 unchanged
Biggest changeAs of December 31, 2024, we had an outstanding principal amount of $304.0 million of 2026 Notes, with a fixed annual interest rate of 0.75% and an outstanding principal amount of $191.0 million of 2025 Notes with a fixed annual interest rate of 0.125%. Borrowings under our Revolving Credit Agreement bear interest at rates that are variable.
Biggest changeWe do not believe that an increase or decrease in interest rates of 100-basis points would have a material effect on our interest income or the market value of our marketable securities. As of December 31, 2025, we had an outstanding principal amount of $304.0 million of 2026 Notes with a fixed annual interest rate of 0.75%.
To the extent that we draw amounts under the Revolving Credit Agreement, we would be exposed to increased market risk from changes in the underlying index rates, which would affect our interest expense. As of December 31, 2024, there were no amounts drawn on the Revolving Credit Agreement.
Borrowings under our Revolving Credit Agreement bear interest at rates that are variable. To the extent that we draw amounts under the Revolving Credit Agreement, we would be exposed to increased market risk from changes in the underlying index rates, which would affect our interest expense.
The information required by this item is incorporated by reference to the consolidated financial statements and accompanying notes set forth on pages F-1 through F-36 of this Annual Report on Form 10-K.
Our inability or failure to do so could harm our business, financial condition and results of operations. Item 8. Financial Statements and Supplementary Data. The information required by this item is incorporated by reference to the consolidated financial statements and accompanying notes set forth on pages F-1 through F-40 of this Annual Report on Form 10-K. Item 9.
Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations. Item 8. Financial Statements and Supplementary Data.
Inflation Risk We do not believe that inflation has had a direct material effect on our business, financial condition or results of operations. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.
Due to the relatively low volume of payments made by us through these foreign subsidiaries, we do not believe we have significant exposure to foreign currency exchange risks. However, fluctuations in currency exchange rates could harm our results of operations in the future. We currently do not use derivative financial instruments to mitigate foreign currency exchange risks.
However, fluctuations in currency exchange rates could harm our results of operations in the future. We currently do not use derivative financial instruments to mitigate foreign currency exchange risks. We will continue to review this matter and may consider hedging certain foreign exchange risks in future years.
Foreign Currency Risk As of December 31, 2024, our most significant currency exposures were the Indian rupee, Mexican peso, Canadian dollar, Australian dollar and British pound. As of December 31, 2024, we had operating subsidiaries in India, Mexico, Canada, Australia and the United Kingdom.
As of December 31, 2025, there were no amounts drawn on the Revolving Credit Agreement. 74 Table of Contents Foreign Currency Risk As of December 31, 2025, our most significant currency exposures were the Indian rupee, Mexican peso, Canadian dollar, Australian dollar and British pound.
Removed
If overall interest rates changed by 100-basis points in 2024 or 2023, our interest income and the market value of our marketable securities would not have been materially affected.
Added
As of December 31, 2025, we had operating subsidiaries in India, Mexico, Canada, Australia and the United Kingdom. Due to the relatively low volume of payments made by us through these foreign subsidiaries, we do not believe we have significant exposure to foreign currency exchange risks.
Removed
We will continue to review this matter and may consider hedging certain foreign exchange risks in future years. Inflation Risk We do not believe that inflation has had a direct material effect on our business, financial condition or results of operations.
Added
Change in and Disagreements With Accountants on Accounting and Financial Disclosure. None.

Other QTWO 10-K year-over-year comparisons