Q2 Holdings (QTWO) risk factors, FY2025 10-K

Risks Related to our Operations, Industry and the Markets We Serve

1. 01Unfavorable conditions or uncertainty in the financial services industry, geopolitical landscape or the global economy could limit our ability to grow our business and negatively affect our operating results
2. 02Defects or errors in our solutions, including failures associated with transaction processing or interest, principal or balance calculations, could harm our reputation, result in significant costs to us, impair our ability to sell our solutions and subject us to substantial liability
3. 03Failures or reduced accessibility of third-party hardware, software or other services on which we rely could impair the delivery of our solutions and adversely affect our business
4. 04We have migrated the computing, storage and processing of our digital banking platform solutions from our third-party data centers to third-party public cloud service providers and any challenges or difficulties with such migration could adversely affect our and our customers' businessNew
5. 05We depend on third-party public cloud service providers and third-party Internet service providers, and any disruption in the operation of these services or access to the Internet have in the past and could in the future adversely affect our business32% rewritten
6. 06Our sales cycle can be unpredictable, time-consuming and costly, which could harm our business and operating results
7. 07If the market for our solutions develops more slowly than we expect or changes in a way that we fail to anticipate, our sales would suffer and our operating results would be harmed
8. 08If we are unable to attract new customers, continue to broaden our existing customers' use of our solutions or renew existing relationships with customers or partners, our business, financial condition and results of operations could be materially and adversely affected
9. 09We may encounter implementation challenges, particularly as the number, size, type and complexity of customers that we serve increases and changes, and we may have to delay revenue recognition for some complex engagements, which would harm our business and operating results38% rewritten
10. 10Our business could be adversely affected if our customers are not satisfied with our solutions, particularly as we introduce new products and solutions, or our systems, infrastructure and resources fail to meet their needs
11. 11Growth of our business depends on a strong brand and any failure to maintain, protect and enhance our brand could hurt our ability to retain or expand our base of customers
12. 12The markets in which we participate are competitive, and pricing pressure, new technologies or other competitive dynamics could adversely affect our business and operating results29% rewritten
13. 13We do not have any control over the availability or performance of salesforce.com's Force.com platform, and if we or our Symphonix lending platform customers encounter problems with it, we may be required to replace Force.com with another platform, which could be difficult and costly
14. 14If we fail to provide effective customer training on our solutions and high-quality customer support, our business and reputation would suffer
15. 15Consequences related to our development and use of AI may result in reputational harm or liability24% rewritten
16. 16If we fail to respond to evolving technology, technological requirements or introduce adequate enhancements, new features or solutions, our solutions could become obsolete or less competitive
17. 17If we fail to effectively maintain or expand our sales and marketing capabilities and teams, as necessary, including through partner relationships, we may not be able to increase our customer base and achieve broader market acceptance of our solutions
18. 18We rely on our management team and other key employees to grow our business, and the loss of one or more key employees or an inability to hire, integrate, train and retain qualified personnel could harm our business
19. 19Because our long-term success depends in part on our ability to operate our business internationally, our business is susceptible to risks associated with international operations

Financial and Accounting-Related Risks

1. 20We may experience quarterly fluctuations in our operating results or key operating measures due to a number of factors, which makes our future results difficult to predict and could cause our operating results or key operating measures to fall below expectations or our guidance
2. 21We have a history of losses and may incur additional losses in the future24% rewritten
3. 22Shifts over time in the number of End Users of our solutions, their use of our solutions and our customers' implementation and customer support needs could negatively affect our profit margins
4. 23The market data and forward-looking trends included in this report and other filings may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, we cannot give assurance that our business will grow at similar rates, or at all
5. 24We may not be able to utilize a significant portion of our net operating loss carryforwards, which could adversely affect our operating results and cash flows20% rewritten
6. 25Our business may be subject to additional obligations to collect and remit sales tax and other taxes, and we may be subject to tax liability for past sales. Any successful action by state, local or other authorities to collect additional or past taxes could adversely harm our business
7. 26Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations42% rewritten
8. 27We may not be able to secure sufficient additional financing on favorable terms, or at all, to meet our future capital needs

Legal and Regulatory Risks

1. 28Increased focus on money movement activities may subject us to additional operational, compliance and reputational risksNew
2. 29We are subject to various global data privacy and security regulations, which could result in additional costs and liabilities to us41% rewritten
3. 30Our failure to comply with laws and regulations related to the Internet or changes in the Internet infrastructure itself could adversely affect our business and results of operations, increase costs and impose constraints on the way we conduct our business
4. 31Legislation relating to consumer privacy may affect our ability to collect data that we use in providing our customers End-User information, which, among other things, could negatively affect our ability to satisfy our customers' needs
5. 32Any use of our solutions by our customers in violation of regulatory requirements could damage our reputation and subject us to additional liability
6. 33Any future litigation against us could be costly and time-consuming to defend
7. 34Lawsuits by third parties against us or our customers for alleged infringement of the third parties' proprietary rights or for other intellectual property related claims could result in significant expenses and harm our operating results and financial condition
8. 35If we are unable to protect our intellectual property, our business could be adversely affected
9. 36We use "open-source" software in our solutions, which may restrict how we use or distribute our solutions, require that we release the source code of certain software subject to open-source licenses or subject us to litigation or other actions that could adversely affect our business
10. 37Our business activities related to ESG matters may involve certain risks and considerations81% rewritten

Risks Related to Ownership of Our Common Stock

1. 38We incur significant expenses and administrative burdens as a public company, which could have a material adverse effect on our operations and financial results
2. 39If securities or industry analysts publish unfavorable or misleading research about our business, or cease coverage of our company, our stock price and trading volume could decline
3. 40Our stock price has been and may continue to be highly volatile
4. 41We currently do not intend to pay dividends on our common stock, and, consequently, the only opportunity to achieve a return on investment is if the price of our common stock appreciates
5. 42Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock
6. 43We may not be able to obtain capital when desired on favorable terms, if at all, and we may not be able to obtain capital or complete acquisitions through the use of equity or without dilution to our stockholders

Risks Related to Our Debt

1. 44We incurred indebtedness by issuing our 2026 Notes in 2019, we may borrow under our Revolving Credit Agreement and our debt repayment obligations may adversely affect our financial condition and cash flows from operations in the future26% rewritten
2. 45Conversion of the convertible notes could dilute the ownership interest of our existing stockholders or may otherwise depress the price of our common stock
3. 46The capped call transactions entered into in connection with the offering of the 2026 Notes may affect the value of our common stock21% rewritten
4. 47We are subject to counterparty risk with respect to the Capped Calls, and they may not operate as planned
5. 48Certain provisions in the indenture governing our convertible notes may delay or prevent an otherwise beneficial takeover attempt of us and may affect the trading price of our common stock
6. 49If any of the conditional conversion features of our convertible notes is triggered, our financial condition and operating results may be adversely affected which could decrease the trading price of our common stock50% rewritten