As of April 4, 2026, Q2 Holdings Inc has a Discounted Cash Flow (DCF) derived fair value of $70.62 per share. With the current market price at $47.74, this represents a potential upside of 47.9%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $43.55 |
| DCF Fair Value (10-year) | $70.62 |
| Potential Upside (5-year) | -8.8% |
| Potential Upside (10-year) | 47.9% |
| Discount Rate (WACC) | 7.0% - 9.5% |
Revenue is projected to grow from $795 million in 12-2025 to $2166 million by 12-2035, representing a compound annual growth rate of approximately 10.5%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2025 | 795 | 14% |
| 12-2026 | 890 | 12% |
| 12-2027 | 976 | 10% |
| 12-2028 | 1083 | 11% |
| 12-2029 | 1210 | 12% |
| 12-2030 | 1366 | 13% |
| 12-2031 | 1489 | 9% |
| 12-2032 | 1691 | 14% |
| 12-2033 | 1843 | 9% |
| 12-2034 | 1973 | 7% |
| 12-2035 | 2166 | 10% |
Net profit margin is expected to improve from 7% in 12-2025 to 18% by 12-2035, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2025 | 52 | 7% |
| 12-2026 | 78 | 9% |
| 12-2027 | 105 | 11% |
| 12-2028 | 138 | 13% |
| 12-2029 | 177 | 15% |
| 12-2030 | 224 | 16% |
| 12-2031 | 250 | 17% |
| 12-2032 | 289 | 17% |
| 12-2033 | 321 | 17% |
| 12-2034 | 350 | 18% |
| 12-2035 | 392 | 18% |
with a 5-year average of $29 million. Projected CapEx is expected to maintain at approximately 5% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2026 | 32 |
| 12-2027 | 35 |
| 12-2028 | 39 |
| 12-2029 | 44 |
| 12-2030 | 51 |
| 12-2031 | 56 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 28 |
| Days Inventory | 0 |
| Days Payables | 17 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 2026 | 97 | 4 | 41 | 10 | 42 |
| 2027 | 127 | 6 | 45 | 5 | 72 |
| 2028 | 164 | 7 | 50 | 6 | 101 |
| 2029 | 208 | 9 | 56 | 9 | 133 |
| 2030 | 261 | 12 | 63 | 10 | 177 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 43.55 | -8.8% |
| 10-Year DCF (Growth) | 70.62 | 47.9% |
| 5-Year DCF (EBITDA) | 70.37 | 47.4% |
| 10-Year DCF (EBITDA) | 101.53 | 112.7% |
Is Q2 Holdings Inc (QTWO) a buy or a sell? Q2 Holdings Inc is definitely a buy. Based on our DCF analysis, Q2 Holdings Inc (QTWO) appears to be significantly undervalued with upside potential of 47.9%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $47.74.