qtwo-20260331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 001-36350

Q2 Holdings, Inc.

Exact Name of Registrant as Specified in its Charter

Delaware

20-2706637

State or Other Jurisdiction of
Incorporation or Organization

I.R.S. Employer Identification No.

10355 Pecan Park Boulevard

Austin,

Texas

78729

Address of Principal Executive Offices

Zip Code

(833) 444-3469

Registrant's Telephone Number, Including Area Code

Not Applicable

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

QTWO

New York Stock Exchange

Common Stock, $0.0001 par value

QTWO

NYSE Texas

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 62,600,423 shares of Common Stock, $0.0001 par value per share as of April 29, 2026.

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		PAGE
PART I: FINANCIAL INFORMATION

Item 1.	Financial Statements .	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	40

Item 4.	Controls and Procedures.	41

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings.	42

Item 1A.	Risk Factors.	42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	42

Item 3.	Defaults Upon Senior Securities.	42

Item 4.	Mine Safety Disclosures.	42

Item 5.	Other Information.	42

Item 6.	Exhibits.	43

SIGNATURES		45

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Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that are based on our management's beliefs and assumptions and on information currently available to our management. The statements and information contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. You can identify these statements by words such as "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "seeks," "potential," "predicts," "projects," "should," "will," "strategy," "future," "likely," or "would" or the negative of these terms or similar expressions. These statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. All of our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from our expectations. Factors that could cause or contribute to such differences include, but are not limited to, the following:

•the risks associated with cyberattacks, financial transaction fraud, data and privacy breaches and breaches of security measures within our products, systems and infrastructure or the products, systems and infrastructure of third parties upon which we rely and the resultant disruption, costs and liabilities and harm to our business and reputation and our ability to sell our solutions;

•the risks associated with recent advances in artificial intelligence, or AI, including the increasing availability of more capable AI models to the public that may further enhance the ability of threat actors to identify, develop and exploit vulnerabilities, automate certain aspects of cyberattacks and conduct more targeted or scalable social engineering or fraud schemes;

•the impact of and our ability to respond to global economic uncertainties and challenges or changes in the financial services industry and credit markets, including as a result of mergers and acquisitions within the banking sector, inflationary pressures, fluctuating interest rates, instability in the financial services industry, any changes to, or new, financial regulations and their potential impacts on our prospects' and customers' operations, increased acceptance and use of emerging financial products, such as cryptocurrencies or stablecoin, including any impact on the timing of prospect and customer implementations and purchasing decisions, our business sales cycles and on account holder or end user, or End User, usage of our solutions;

•the risks associated with continued market volatility, including in the financial services sector, potential inflationary pressures and the impact of any monetary policy changes that may be implemented as a result, the possibility and potential impact of any U.S. tariffs and global trade measures, including retaliatory tariffs and the impact on the valuation of marketable securities;

•the risk of increased or new competition in our existing markets and as we enter new markets or new segments of existing markets, or as we offer new solutions;

•the risks associated with the development of our solutions, including AI based solutions, our AI and data strategies and solutions, our use of AI tools and solutions and changes to regulation or the market for our solutions compared to our expectations;

•quarterly fluctuations in our operating results relative to our expectations and guidance and the accuracy of our forecasts;

•the risks and increased costs associated with managing growth and global operations, including hiring, training, retaining and motivating employees to support such growth;

•the risks associated with our transactional business which are typically driven by End-User behavior and can be influenced by external drivers outside of our control;

•the risks associated with effectively managing our business and cost structure in an uncertain economic environment, including as a result of challenges in the financial services industry and the effects of seasonality and unexpected trends;

•the risks associated with geopolitical instability, including acts of war or military conflict, uncertainties or discord, including the continuing war in Ukraine, the war in Iran and other conflicts in the Middle East and other parts of the world, heightened risk of state-sponsored cyberattacks or cyber fraud on financial services and other critical infrastructure;

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•the risks associated with accurately forecasting and managing the impacts of any economic downturn or challenges in the financial services industry on our customers and their End Users, including in particular the impacts of any downturn on financial technology companies, or FinTechs, or alternative finance companies, or Alt-FIs, and our arrangements with them, which may include more complex revenue arrangements for us and which may be more vulnerable to an economic downturn than our financial institution customers;

•the challenges and costs associated with selling, implementing and supporting our solutions, particularly for larger customers with more complex requirements and longer implementation processes, including risks related to the timing and predictability of sales of our solutions and the impact that the timing of bookings and go-lives may have on our revenue and financial performance in a period;

•the risk that errors, interruptions or delays in our solutions or Web hosting negatively impacts our business and sales;

•the risks associated with the 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;

•the difficulties and risks associated with developing and selling complex new solutions and enhancements, including those using AI with the technical and regulatory specifications and functionality required by our customers and relevant governmental authorities;

•the risks associated with operating within and selling into a regulated industry, including risks related to evolving regulation of, and litigation with respect to, AI and machine learning, the receipt, collection, storage, processing and transfer of data and increased regulatory scrutiny on financial technology and related services, including specifically on banking-as-a-service, or BaaS, services;

•the risks associated with our sales and marketing capabilities, including partner relationships and the length, cost and unpredictability of our sales cycle;

•the risks inherent in third-party technology and implementation partnerships, including defects, failures, interruptions or disruptions in third-party services or solutions, that could disrupt our services or otherwise cause harm to our business;

•the risk that we will not be able to maintain historical contract terms such as pricing and duration;

•the general risks associated with the complexity of our customer arrangements and our solutions;

•the risks associated with integrating acquired companies and successfully selling and maintaining their solutions;

•the risks and challenges around increased regulatory scrutiny and evolving requirements for money movement services and the resulting potential higher costs, increased complexity and limitations on offerings on our business and financial results;

•litigation related to intellectual property and other matters and any related claims, negotiations and settlements;

•the risks associated with further consolidation in the financial services industry;

•the risks associated with selling our solutions internationally and with the continued expansion of our international operations;

•the risk that our debt repayment obligations may adversely affect our financial condition and that we may not be able to obtain capital when desired or needed on favorable terms; and

•such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission, or the SEC, including the risk factors discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the section titled "Risk Factors," and the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 11, 2026.

Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date of this Quarterly Report on Form 10-Q. You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Q2 HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


	March 31, 2026		December 31, 2025
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	342,332	$	367,631
Restricted cash	2,057		1,672
Investments	36,559		65,064
Accounts receivable, net	74,196		51,716
Contract assets, current portion, net	7,356		8,596
Prepaid expenses and other current assets	21,963		28,234
Deferred solution and other costs, current portion	29,535		22,631
Deferred implementation costs, current portion	10,575		10,508
Total current assets	524,573		556,052
Property and equipment, net	27,933		27,783
Right of use assets	25,768		27,188
Deferred solution and other costs, net of current portion	29,961		27,827
Deferred implementation costs, net of current portion	31,235		28,929
Intangible assets, net	75,781		78,377
Goodwill	512,869		512,869
Contract assets, net of current portion and allowance	15,138		14,103
Other long-term assets	3,089		3,149
Total assets	$	1,246,347	$	1,276,277
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	10,278	$	20,473
Accrued liabilities	25,604		24,572
Accrued compensation	17,534		31,754
Convertible notes, current portion	303,682		303,368
Deferred revenues, current portion	196,762		155,003
Lease liabilities, current portion	8,628		8,915
Total current liabilities	562,488		544,085

Deferred revenues, net of current portion	30,557		26,826
Lease liabilities, net of current portion	31,592		33,832
Other long-term liabilities	10,034		9,723
Total liabilities	634,671		614,466
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock: $0.0001 par value; 5,000 shares authorized, no shares issued or outstanding as of March 31, 2026 and December 31, 2025	—		—
Common stock: $0.0001 par value; 150,000 shares authorized, 62,665 issued and outstanding as of March 31, 2026 and 62,741 shares issued and outstanding as of December 31, 2025	6		6

Additional paid-in capital	1,199,888		1,275,980
Accumulated other comprehensive loss	(2,635)		(1,953)
Accumulated deficit	(585,583)		(612,222)
Total stockholders' equity	611,676		661,811
Total liabilities and stockholders' equity	$	1,246,347	$	1,276,277

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Q2 HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(in thousands, except per share data)


	Three Months Ended March 31,
	2026		2025
Revenues	$	216,506	$	189,735
Cost of revenues	88,592		88,745
Gross profit	127,914		100,990
Operating expenses:
Sales and marketing	25,720		26,527
Research and development	41,880		37,853
General and administrative	32,187		32,322
Transaction-related costs	250		—
Amortization of acquired intangibles	—		93

Lease and other restructuring charges	188		2,006
Total operating expenses	100,225		98,801
Income from operations	27,689		2,189
Other income (expense):
Interest and other income	3,269		4,586
Interest and other expense	(1,205)		(1,535)

Total other income, net	2,064		3,051
Income before income taxes	29,753		5,240
Provision for income taxes	(3,114)		(487)
Net income	$	26,639	$	4,753
Other comprehensive income (loss):
Unrealized loss on available-for-sale investments	(60)		(24)
Foreign currency translation adjustment	(622)		177
Comprehensive income	$	25,957	$	4,906
Net income per common share
Basic	$	0.43	$	0.08
Diluted	$	0.40	$	0.07
Weighted average common shares outstanding
Basic	62,338		61,222
Diluted	67,647		64,820

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Q2 HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(unaudited)

(in thousands)


	Three Months Ended March 31,
	2026		2025
Total stockholders' equity, beginning balances	$	661,811	$	517,796

Common stock and additional paid-in capital:
Beginning balances	1,275,986		1,183,899
Stock-based compensation expense	21,061		22,209
Exercise of stock options	—		547

Repurchase of common shares	(97,153)		—









Ending balances	1,199,894		1,206,655

Accumulated deficit:
Beginning balances	(612,222)		(664,230)

Net income	26,639		4,753
Ending balances	(585,583)		(659,477)

Accumulated other comprehensive loss:
Beginning balances	(1,953)		(1,873)
Other comprehensive income (loss)	(682)		153
Ending balances	(2,635)		(1,720)

Total stockholders' equity, ending balances	$	611,676	$	545,458

Common stock (in shares):
Beginning balances	62,741		60,728

Exercise of stock options	—		12

Repurchase of common shares	(1,765)		—
Shares issued for the vesting of restricted stock awards	1,689		1,564


Ending balances	62,665		62,304

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Q2 HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Three Months Ended March 31,
	2026		2025
Cash flows from operating activities:
Net income	$	26,639	$	4,753
Adjustments to reconcile net income to net cash from operating activities:
Amortization of deferred implementation, solution and other costs	7,748		6,961
Depreciation and amortization	11,743		13,720
Amortization of debt issuance costs	360		543
Amortization of premiums and discounts on investments	(42)		(301)
Stock-based compensation expense	20,265		21,010
Deferred income taxes	343		(2,042)
Lease restructuring and impairments	161		434
Other non-cash items	100		31
Changes in operating assets and liabilities:
Accounts receivable, net	(22,775)		(20,505)
Prepaid expenses and other current assets	6,125		1,787
Deferred solution and other costs	(12,507)		(7,219)
Deferred implementation costs	(6,366)		(4,485)
Contract assets, net	205		(1,461)
Other long-term assets	92		1,488
Accounts payable	(7,880)		5,404
Accrued liabilities	(10,964)		(8,542)
Deferred revenues	45,492		36,093
Deferred rent and other long-term liabilities	(2,418)		(4,138)
Net cash provided by operating activities	56,321		43,531
Cash flows from investing activities:
Purchases of investments	—		(33,980)
Maturities of investments	28,487		20,175
Purchases of property and equipment	(6,597)		(785)
Capitalized software development costs	(5,514)		(4,914)

Net cash provided by (used in) investing activities	16,376		(19,504)
Cash flows from financing activities:


Repurchases of common shares	(97,153)		—







Proceeds from exercise of stock options and ESPP	—		547

Net cash provided by (used in) financing activities	(97,153)		547
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(458)		110
Net increase (decrease) in cash, cash equivalents and restricted cash	(24,914)		24,684
Cash, cash equivalents and restricted cash, beginning of period	369,303		360,793
Cash, cash equivalents and restricted cash, end of period	$	344,389	$	385,477
Supplemental disclosure of non-cash investing and financing activities:

Property and equipment acquired and included in accounts payable and accrued liabilities	$	935	$	98

Stock-based compensation for capitalized software development	$	513	$	634

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Q2 HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands, except per share amounts and unless otherwise indicated)

1. Organization and Description of Business

Q2 Holdings, Inc. and its wholly-owned subsidiaries, collectively the Company or Q2, is a leading provider of digital solutions to financial institutions, financial technology companies, or FinTechs, and alternative finance companies, or Alt-FIs, seeking to incorporate banking into their customer engagement and servicing strategies. The Company's solutions transform the ways in which financial institutions and other financial services providers engage with account holders and retail and commercial end users, or End Users, enabling them to deliver robust suites of digital banking, digital lending and relationship pricing, risk and fraud solutions and banking-as-a-service, or BaaS, services that make it possible for account holders and End Users to transact and engage anytime, anywhere and on any device. The Company delivers its solutions to the substantial majority of its customers using a software-as-a-service, or SaaS, model under which its customers pay subscription fees for the use of the Company's solutions. The Company was incorporated in Delaware in March 2005 and is a holding company that owns 100% of the outstanding capital stock of Q2 Software, Inc. The Company's headquarters are located in Austin, Texas.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

These interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and Securities and Exchange Commission, or SEC, requirements for interim financial statements. The interim unaudited condensed consolidated financial statements include the accounts of Q2 Holdings, Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

In the Company's opinion, the interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation. Certain information and disclosures normally included in the notes to the annual consolidated financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2025, which are included in the Company's Annual Report on Form 10-K, or Form 10-K, filed with the SEC on February 11, 2026. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any other period.

Use of Estimates

The preparation of the interim unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the interim unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include: revenue recognition; estimate of credit losses; fair value of certain stock awards issued; the carrying value of goodwill; the useful lives of property and equipment and long-lived intangible assets; the impairment assessment of long-lived assets; and income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, restricted cash, investments, accounts receivable and contract assets. The Company's cash and cash equivalents, restricted cash and investments are placed with high credit quality financial institutions and issuers, and at times may exceed federally insured limits. The Company has not experienced any loss relating to cash and cash equivalents or restricted cash in these accounts. The Company provides credit, in the normal course of business, to a majority of its customers. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. No individual customer accounted for 10% or more of revenues for the three months ended March 31, 2026 and 2025. No customer accounted for 10% or more of accounts receivable, net as of March 31, 2026 and December 31, 2025.

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Q2 HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands, except per share amounts and unless otherwise indicated)

Summary of Significant Accounting Policies

There were no material changes to our significant accounting policies during the three months ended March 31, 2026 compared to the significant accounting policies described in our Form 10-K.

Basic and Diluted Net Income per Common Share

The following table sets forth the computations of net income per share for the periods listed:


	Three Months Ended March 31,
	2026		2025
Basic net income per share
Numerator:
Net income	$	26,639	$	4,753
Denominator:
Weighted-average common shares outstanding, basic	62,338		61,222
Net income per common share, basic	$	0.43	$	0.08

Diluted net income per share
Numerator:
Net income	$	26,639	$	4,753
Interest expense, net of tax(1)	663		—
Adjusted net income used in diluted computations	$	27,302	$	4,753
Denominator:
Weighted-average common shares outstanding, basic	62,338		61,222
Effect of potentially dilutive shares:
Stock options, restricted stock units, market stock units and performance stock units	1,863		3,593
Shares issuable pursuant to the ESPP	15		5
Shares related to convertible notes(2)	3,431		—
Weighted-average common shares outstanding, diluted	67,647		64,820
Net income per common share, diluted	$	0.40	$	0.07

(1) Interest expense has been tax effected using the combined federal and blended state rate of 24.9% for the three months ended March 31, 2026.

(2) The dilutive impact of the 2026 convertible senior notes was calculated using the if-converted method. When considering the interest expense, tax effected using the combined federal and blended state rate of 24.9%, conversion of the 2026 convertible senior notes would have resulted in earnings per share that were higher than basic earnings per share, and therefore the 2026 convertible senior notes were antidilutive for the three months ended March 31, 2025 and are excluded above.

The following table sets forth the anti-dilutive common share equivalents for the periods listed:


	Three Months Ended March 31,
	2026	2025
Stock options, restricted stock units, market stock units and performance stock units	722	273

Shares related to convertible notes	—	4,793
Anti-dilutive shares excluded from diluted income per common share	722	5,066

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Q2 HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands, except per share amounts and unless otherwise indicated)

Recent Accounting Pronouncements

In September 2025, the Financial Accounting Standards Board, or FASB, issued ASU No. 2025-06, "Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software." The amendments are intended to reduce diversity in practice and provide clearer criteria for determining which implementation and development costs should be capitalized versus expensed. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Entities may apply a prospective transition approach, a modified transition approach, or a retrospective transition approach. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU No. 2025-05, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets" which provides targeted improvements to the guidance for measuring expected credit losses. The amendments are intended to enhance consistency in application and clarify the treatment of certain financial assets within the scope of Topic 326. The ASU is effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods, on a prospective basis. The Company adopted the new guidance effective January 1, 2026 on a prospective basis and elected the practical expedient to estimate expected credit losses based on actual uncollected amounts. There was no material impact to the Company's consolidated financial statements as of the adoption date.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" which requires public companies to disclose additional information about certain costs and expenses in the financial statements. The ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its financial statement disclosures.

3. Revenues

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services over the term of the agreement, generally when the Company's solutions are implemented and made available to its customers. The promised consideration may include fixed amounts, variable amounts or both. Revenues are recognized net of sales credits and allowances.

Disaggregation of Revenue

Revenue-generating activities are directly related to the sale, implementation and support of the Company's solutions within a single operating segment. The Company derives the majority of its revenues from subscription fees for the use of its hosted solutions, transactional revenue from bill-pay solutions and remote deposit products, revenues for professional services and implementation services related to its solutions and certain third-party related pass-through fees.

The following table disaggregates the Company's revenue by major source:


	Three Months Ended March 31,
	2026		2025
Subscription	$	179,886	$	154,289
Transactional	17,808		18,617
Services and Other

SEC Form 10-Q filed by Q2 Holdings Inc.