Also, unless otherwise stated, all financial measures discussed on this call, other than revenue, will be on a non-GAAP basis. I'll then hand it over to Jonathan to walk through our financial performance and guidance. In the third quarter, we delivered strong financial results with revenue and Adjusted EBITDA both above our guidance. We generated revenue of $202 million representing 15% year-over-year growth and Adjusted EBITDA of $49 million or a 24.2% margin.

We also generated free cash flow of $37 million in the quarter. This concentration, combined with a solid mix of new and expansion wins, drove the record third quarter bookings activity. During the quarter we also had two instances where a Q2 bank was acquired by a larger institution and in both cases the acquiring bank selected Q2's platform to serve the combined entity. This win was for our Check and ACH Fraud Solution which continues to see robust demand in the market.

Our Relationship pricing solutions continued to be an important lever for financial institutions seeking to optimize yield, profitability, and growth across both loans and deposits. I want to thank Mike Volanoski, our Chief Revenue Officer, for his contributions during his time at Q2 and he will remain with us through December 12th to ensure a smooth transition. Our third quarter results demonstrate continued strong execution across several key metrics including revenue and Adjusted EBITDA, both of which exceeded the high end of our previously issued guidance. These results highlight the progress we have made towards our profitable growth strategy, reinforced by the strongest third quarter of bookings in our history and sustained margin expansion.

What went well
  • Revenue of $202 million grew 15% year-over-year, with both revenue and adjusted EBITDA finishing above the high end of guidance.
  • Delivered the strongest third-quarter bookings in company history, with seven total Tier 1 and Enterprise wins and contribution from all three major product lines.
  • Won two situations where a Q2 bank was acquired by a larger institution and the acquiring bank selected Q2's platform for the combined entity, plus the strongest relationship-pricing quarter of the year including multi-year renewals with two top-10 U.S. banks.
  • Total ARR grew 12% year-over-year to $888 million and subscription ARR grew 14% to $745 million, with subscription revenue reaching 82% of total revenue and backlog up 24% year-over-year to roughly $2.5 billion.
  • Raised full-year 2025 adjusted EBITDA guidance to $182.5-$185.5 million (about 23% of revenue) and lifted the 2024-2026 three-year annualized adjusted EBITDA margin expansion target to 450 basis points from 360 basis points.
What went wrong
  • Services and other (non-subscription) revenues remained under pressure as the business continued its shift toward higher-margin subscription revenue.
  • The quarter included a material cash payment that drove a slight sequential decline in cash flow, with cash flow from operations of $46 million.

More on Q2 Holdings, Inc.

Reported 2025-11-05 · figures from the Q2 Holdings, Inc. Q3 2025 earnings call.

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