When Can We Expect A Profit From Q2 Holdings, Inc. (NYSE:QTWO)?

We feel now is a pretty good time to analyse Q2 Holdings, Inc.'s (NYSE:QTWO) business as it appears the company may be on the cusp of a considerable accomplishment. Q2 Holdings, Inc. provides cloud-based digital solutions to regional and community financial institutions in the United States. The US$6.3b market-cap company posted a loss in its most recent financial year of US$65m and a latest trailing-twelve-month loss of US$57m shrinking the gap between loss and breakeven. As path to profitability is the topic on Q2 Holdings' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Q2 Holdings

According to the 14 industry analysts covering Q2 Holdings, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$12m in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 90%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Q2 Holdings' upcoming projects, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Q2 Holdings is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Q2 Holdings' case is 99%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Q2 Holdings, so if you are interested in understanding the company at a deeper level, take a look at Q2 Holdings' company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Valuation: What is Q2 Holdings worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Q2 Holdings is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Q2 Holdings’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.