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, 2024, which are included in the Company's Annual Report on Form 10-K ("Form 10-K"), filed with the SEC on February 12, 2025. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other period.

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 fair value of acquired intangibles; 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.

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 and six months ended June 30, 2025 and 2024. No customer accounted for 10% or more of accounts receivable, net as of June 30, 2025 and December 31, 2024.


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Basic net income (loss) per share
Numerator:
Net income (loss)	$	11,764	$	(13,060)	$	16,517	$	(26,903)
Denominator:
Weighted-average common shares outstanding, basic	62,353		60,162		61,790		59,804
Net income (loss) per common share, basic	$	0.19	$	(0.22)	$	0.27	$	(0.45)

Diluted net income (loss) per share
Numerator:
Net income (loss)	$	11,764	$	(13,060)	$	16,517	$	(26,903)
Interest expense, net of tax(1)	845		—		—		—
Adjusted net income (loss) used in diluted computations	$	12,609	$	(13,060)	$	16,517	$	(26,903)
Denominator:
Weighted-average common shares outstanding, basic	62,353		60,162		61,790		59,804
Effect of potentially dilutive shares:
Stock options, restricted stock units, market stock units and performance stock units	2,493		—		3,171		—
Shares issuable pursuant to the ESPP	3		—		2		—
Shares related to convertible notes(2)	4,793		—		—		—
Weighted-average common shares outstanding, diluted	69,642		60,162		64,963		59,804
Net income (loss) per common share, diluted	$	0.18	$	(0.22)	$	0.25	$	(0.45)

(2) The dilutive impact of the convertible senior notes was calculated using the if-converted method. The convertible senior notes were antidilutive for the six months ended June 30, 2025. Convertible debt becomes anti-dilutive when the combined impact of the interest expense, net of tax, per common share obtainable upon conversion exceeds basic earnings per share.

Due to a net loss, basic and diluted income (loss) per share were the same for the three and six months ended June 30, 2024, as the effect of all potentially dilutive securities would have been anti-dilutive. The following table sets forth the anti-dilutive common share equivalents for the periods listed:


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Stock options, restricted stock units, market stock units and performance stock units	616	5,296	449	5,296
Shares issuable pursuant to the ESPP	15	68	7	68
Shares related to convertible notes	—	4,793	4,793	4,793
Anti-dilutive shares excluded from diluted income per common share	631	10,157	5,249	10,157

In December 2023, the Financial Accounting Standards Board, or FASB, issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvement to Income Tax Disclosures" which requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024 on a prospective basis. The Company is currently evaluating the impact that the adoption of this standard will have on its financial statement disclosures.

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.