Also, unless otherwise stated, all financial measures discussed on this call other than revenue will be on a non-GAAP basis. I'll start by walking through our fourth quarter results and highlights, then step back and recap full year 2025 performance before sharing the key themes that define our strategy as we enter 2026. I'll then hand the call over to Jonathan, who will cover our financial performance, provide guidance for 2026, and share our new financial framework. Starting with the fourth quarter, we delivered a strong finish to the year with performance that reflects solid execution across bookings, revenue, and profitability.

In the fourth quarter, we generated strong year-over-year subscription revenue growth of 16%, expanded our Adjusted EBITDA margins by over 400 basis points year-over-year, and produced meaningful free cash flow of $56.6 million. The fourth quarter was our second-largest bookings quarter in company history and came directly on the heels of a record third quarter. This performance underscores both the strength of demand and our ability to execute, particularly in larger, more complex deals. Stepping back to the full year, 2025 was our strongest year as a company across bookings, revenue, and profitability.

On the sales front, we executed well in a strong demand environment. We believe our experience in effectively executing post-acquisition technology conversions is a competitive advantage for us and one that helps our customers de-risk their transactions and realize value in their M&A deals. Looking beyond sales and product success, 2025 was also a year which we successfully executed against our profitable growth strategy. Today, we'll unveil a new financial outlook, which Jonathan will share shortly.

What went well
  • Fourth-quarter and full-year results outperformed the high end of guidance, with full-year 2025 revenue up 14% to $794.8 million, the highest annual growth rate since 2021, and full-year subscription revenue growth of 17%.
  • Record fourth-quarter adjusted EBITDA of $51.2 million rose 36% year-over-year; full-year adjusted EBITDA of $186.5 million was up 49% with margins expanding roughly 550 basis points, and gross margin reached 58% for the year (up about 200 basis points).
  • The fourth quarter was the second-largest bookings quarter in company history with eight Tier 1 and enterprise deals, split evenly between expansion and new logos, on the heels of a record third quarter.
  • Generated $57 million of free cash flow in the quarter and $173 million for the year (a 93% conversion rate), while trailing-twelve-month total net revenue retention improved to 113% from 109% and the company processed over $4 trillion in transaction volume, up 21%.
  • Raised full-year 2026 subscription revenue growth outlook to at least 14% and introduced longer-term 2030 targets of at least 65% non-GAAP gross margin and at least 35% adjusted EBITDA margin.
What went wrong
  • Revenue churn increased to 5.2% in 2025 from 4.4% in 2024, reflecting higher M&A activity across the customer base.
  • Total ARR growth continued to trail subscription ARR growth because of ongoing declines in non-subscription-based revenue, and operating expenses rose modestly sequentially on higher research-and-development investment.

More on Q2 Holdings, Inc.

Reported 2026-02-11 · figures from the Q2 Holdings, Inc. Q4 2025 earnings call.

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