Investing in Q2 Holdings, Inc (Q2) Stocks



Q2 Holdings, Inc (Q2) is a provider of cloud-based financial solutions for banks, financial technology companies, and alternative finance and leasing companies. By providing tailored software to meet the needs of digital financial service providers, Q2 Holdings enables its clients with a wide range of product offerings. The software solutions provided by Q2 allow client organizations to expand on their digital strategy, giving them the ability to provide services virtually through a variety of different channels.

What is Q2 Holdings, Inc (Q2)?

Q2 Holdings was established in 2004 by Hank Seale, who saw an opportunity during the early days of the internet era. At the time, financial institutions had just begun attempting to pivot their business model in order to expand the availability of digital offerings. During this period, digital platforms were piecemeal and most companies had several fragmented solutions rather than one seamless end-to-end approach. With almost all financial institutions pivoting focus away from traditional, brick-and-mortar retail offerings towards digital offerings in the following decades, Q2 Holdings saw the opportunity to create solutions to meet the needs of end-users. With an anywhere, anytime and any device approach, Q2 Holdings and its product offerings have allowed many financial institutions to continue innovating and providing an excellent customer experience.

Headquartered, in Austin, Texas, Q2 Holdings has over 1,500 employees across the United States. Nearly 30 percent of the top 100 banks in the United States use the Q2 platform, accounting for a total of one out of every ten digital banking customers in the United States.  Financial institutions and other financial service providers that partner with Q2 Holdings often do so to benefit from the one window approach that is provided. By having a digital platform set up using the Q2 Holdings system, the financial service provider gains access to a secure, end-to-end experience that allows account holders to have a secure way of accessing their accounts anywhere and anytime.

The company prides itself on adapting and creating new technologies to keep up with ever-changing technological and societal developments. For example, during Covid-19, the company developed one of the premier Paycheck Protection Program (PPP) solutions for financial service providers. In under five days after the Covid-19 relief package passed by Congress, Q2 was able to develop a software solution that allowed their clients to offer customers an easy way to apply for relief funding. The 100 percent digital experience simplified the process for both lenders and borrowers, with an application process that took under 90 seconds to complete. This is one of many examples of how Q2 Holdings is able to quickly and efficiently develop custom software to meet the needs of its clients.

Why does Q2 Holdings, Inc (Q2) Matter?

Q2’s platform offers several features that their clients, which range from traditional banks to credit unions to fintech companies, can take advantage of. Most popular are their consumer and commercial lending services, which provide a simple and fast cloud-based process for borrowing money. Complementary to these lending services are their consumer and commercial digital banking solutions. Marketed as a way of providing customers 24/7 access to all their financial information, the digital banking product emphasizes an omnichannel approach, which refers to the integration of several different methods (online, physical store, over the phone, etc.) into one single window. Through this approach, a seamless experience across multiple devices is possible, which allows customers to make informed decisions based on their real-time personal data within the platform. The software offerings created by Q2 Holdings are based on a “tablet first” approach.

Aside from providing lending and digital banking services to traditional institutions, Q2 Holdings also provides banking as a service (BasS) software solutions for fintech companies. The unique product offerings provided by Q2 allow for fintech’s to tap into customized back-end solutions that provide the ability to scale. By providing this, Q2 is aiming to enable a new generation of fintech companies to disrupt traditional areas of the financial sector such as the lending market.

Q2 Holdings, Inc (Q2) Prospects

In addition to the services described above, the company has also been placing focus on expanding its own corporate banking ability. In 2019, Q2 Holdings acquired PrecisionLender for $510 million. PrecisionLender provided financial advisers at institutions with data-driven sales and portfolio management advice. Through their digital enterprise coach software, PrecisionLender uses the latest technology and data to give bankers the right advice at the right time. The service is used by over 13,000 bankers across the United States, who work at 150 different banks that manage portfolios from under 1 billion to over 1 trillion. The acquisition synergizes well with Q2’s service offerings and will further integrate the various functions of financial service providers into one single window.

As a backend software provider, one common issue is that the company may not much name recognition. While everyday customers are used to interacting with banks and credit unions on a day-to-day basis, they are often not aware of who is providing the software to their financial institutions. Having less name recognition can be a problem as it may lead to less interest from investors. The company has been making strategic moves to combat this issue. For example, Q2 Holdings has recently partnered with Austin FC, a Major League Soccer team in Texas. Through this partnership, Q2 has obtained naming rights for the soccer team’s new stadium. While the company currently services many regional credit unions and smaller regional banks, the deal with Austin FC has the potential to raise the company’s profile nationally and internationally as well.

Where to Buy Q2 Holdings, Inc (Q2)?

A broker that we recommend is Firstrade.

Firstrade is a leading online brokerage firm offering a full line of investment products and tools designed to help investors like you take control of your financial future. Since its founding in 1985, Firstrade has been committed to providing high-value and quality services.

Combining proprietary trading technology, a highly intuitive user interface, outstanding customer service and mobile applications, Firstrade offers a comprehensive solution for all of your investing needs.  Firstrade is a member of FINRA/SIPC.

Summary

Q2 Holdings is a lesser-known company that has tons of potential upside.  Despite a lack of name recognition, the company provides services that are integral to many financial service providers. The seamless, end-to-end approach created by Q2 Holdings provides clients with a platform that is easy to use and well-integrated. The company has continued to innovate, and recent acquisitions have left Q2 Holdings well-positioned for future growth.



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