Should You Continue Holding Q2 Holdings (QTWO)?

Conestoga Capital Advisors, an asset management company, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets continued their momentum that began in early April, reaching new all-time highs in the third quarter. Conestoga Smid Cap Composite underperformed the Russell 2500 Growth Index in the quarter and returned -1.1% net-of-fees vs +10.7% for the index. The narrow and “low quality” leadership in the stock market rally that began in April grew stronger in the third quarter. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.

In its third-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as Q2 Holdings, Inc. (NYSE:QTWO). Q2 Holdings, Inc. (NYSE:QTWO) is a digital solutions provider to financial institutions, financial technology companies, FinTechs, and alternative finance companies. The one-month return of Q2 Holdings, Inc. (NYSE:QTWO) was -23.43%, and its shares lost 27.27% of their value over the last 52 weeks. On October 17, 2025, Q2 Holdings, Inc. (NYSE:QTWO) stock closed at $59.86 per share, with a market capitalization of $3.738 billion.

Conestoga Capital Advisors stated the following regarding Q2 Holdings, Inc. (NYSE:QTWO) in its third quarter 2025 investor letter:

“Q2 Holdings, Inc. (NYSE:QTWO) provides cloud-based digital banking and lending solutions to financial institutions in the U.S. and abroad. QTWO’s shares were pressured by investors’ concerns about information technology spending by regional banks and credit unions and company specific issues. With respect to the company specific issues, the company discussed a slightly elevated customer churn during 2Q25. The elevated churn was due to an unfavorable mix of M&A and some point solution customers not renewing its contracts. The company said that is still comfortable with sub 5% overall churn for 2025. The company is well positioned to achieve its 13% subscription revenue target for 2025 and continues to see improved profitability and cash flow.”

Q2 Holdings, Inc. (QTWO): Among Stocks Insiders Were Selling In Q1 2025

Q2 Holdings, Inc. (NYSE:QTWO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 29 hedge fund portfolios held Q2 Holdings, Inc. (NYSE:QTWO) at the end of the second quarter, compared to 31 at the end of the previous quarter. While we acknowledge the risk and potential of Q2 Holdings, Inc. (NYSE:QTWO) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Q2 Holdings, Inc. (NYSE:QTWO) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Q2 Holdings, Inc. (NYSE:QTWO) and shared the list of best fintech stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.