MeritValue

Q2 Holdings, Inc.

QTWOdata completeness 88%14 fiscal years on file
The thesis, from the filings

Q2 Holdings, Inc. earns about -18% on invested capital, below its ~9% cost of capital, but has diluted owners by 15% over 5 years — no moat visible in the numbers. The estimate methods put fair value between $70.26 and $123.85 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$498.7M1$565.7M2$624.6M3$696.5M3$794.8M3
Net income−$112.7M4−$109M5−$65.4M6−$38.5M6$52M6
Operating cash flow$31.1M7$36.6M8$70.3M9$135.8M9$201.5M9
Capital expenditure$19.8M10$11.1M11$5.67M12$6.69M12$6.81M12
Free cash flow (derived)$11.3M7$25.4M8$64.6M9$129.1M9$194.7M9
Total debt—————
Cash & equivalents$322.8M13$199.6M14$229.7M15$358.6M16$367.6M16
Diluted shares56.4M57.3M58.4M60.1M65.1M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$101.63
your share of equity
Profit it earned you last year
$7.99
Free cash flow it threw off
$29.89
Debt you’d be carrying
—

10 shares is a claim on $101.63 of net worth that earned you $7.99 and generated $29.89 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
-18% avg · 5y
FY21 -35%FY22 -38%FY23 -21%FY24 -14%FY25 19%

It earned about -18% on invested capital against a ~9% cost of capital — below the cost of funding. The numbers show no moat.

seeing a moat in the numbers →
Management signal · capital allocation
+15% shares · 5y

Share count is up 15% over 5 years — owners have been diluted. Worth asking what they got for it.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 2 estimate methods that apply put fair value between $70.26 and $123.85 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$123.85
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth20.0%
  • fcfBase$129.1M
DCF · Growth Exit 5Y
$70.26
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth20.0%
  • fcfBase$129.1M
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
$13.53
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years20.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $70.26
The three cases
Bear0.0%$33.96
Base20.0%$70.26
Bull20.0%$70.26

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 20.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001410384-24-000015 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0001410384-25-000010 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001410384-26-000006 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0001410384-24-000015 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001410384-25-000010 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001410384-26-000006 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001410384-24-000015 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001410384-25-000010 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001410384-26-000006 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001410384-24-000015 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0001410384-25-000010 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0001410384-26-000006 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-12-31 · accession 0001410384-23-000015 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2022-12-31 · accession 0001410384-24-000015 (CashAndCashEquivalentsAtCarryingValue)
  15. 10-K · period ending 2023-12-31 · accession 0001410384-25-000010 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2024-12-31 · accession 0001410384-26-000006 (CashAndCashEquivalentsAtCarryingValue)