Q2 (QTWO) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue reached $216.5 million, up 14–14.1% year-over-year, with record bookings and robust free cash flow of $44.2 million.

• Net income rose to $26.6 million from $4.8 million a year ago, reflecting improved operating leverage and cost controls.

• Achieved strong momentum in digital banking and fraud/risk solutions, including nine Tier 1/Enterprise wins and the largest fraud deal in company history.

• AI innovation advanced with new products and embedded solutions for fraud prevention and workflow efficiency.

• Registered users grew to 27.8 million, up from 26.2 million a year ago, indicating increased platform adoption.

Financial highlights

• Subscription revenue grew 17% year-over-year to $179.9 million, now 83% of total revenue.

• Adjusted EBITDA was $60.0 million (27.7% margin), up 47% year-over-year and 17% sequentially.

• Gross margin improved to 62.1% non-GAAP (up from 57.9% YoY) and 59.1% GAAP (up from 53.2% YoY).

• Total ARR reached $945 million, with subscription ARR at $802.3 million, both up 14% year-over-year.

• Backlog increased to $2.7 billion, up 19% year-over-year.

• Free cash flow for Q1 was $44.2 million, up from $37.8 million a year ago.

• Cash and investments totaled $379 million at quarter-end.

Outlook and guidance

• Q2 2026 revenue guidance: $214–$218 million; full-year 2026: $875–$882 million (10–11% YoY growth).

• Subscription revenue growth expected at least 14% for 2026.

• Q2 adjusted EBITDA: $57.5–$60.5 million (27–28% margin); full-year: $237–$242 million (~27% margin).

• Raised full-year guidance for both revenue and adjusted EBITDA.