Q2 Holdings, Inc.QTWO

Q2 Holdings, Inc. Fair Value Disclosure

10-KFiled Feb 11, 20263 min read
Fair Value Measurements
The carrying values of the Company's financial assets not measured at fair value on a recurring basis, principally accounts receivable, restricted cash and accounts payable, approximated their fair values due to the short period of time to maturity or repayment.
Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The current accounting guidance for fair value measurements defines a three-level valuation hierarchy for disclosures as follows:
•Level I—Unadjusted quoted prices in active markets for identical assets or liabilities;
•Level II—Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and
•Level III—Unobservable inputs that are supported by little or no market activity, which requires the Company to develop its own assumptions.
The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of December 31, 2025:
Fair Value Measurements Using:
AssetsFair ValueQuoted Prices
in Active
Markets for
Identical Assets
(Level I)		Significant Other
Observable Inputs
(Level II)		Significant
Unobservable
Inputs
(Level III)
Cash Equivalents:
Money market funds$94,119 $94,119 $— $— 
Investments:Fair ValueQuoted Prices
in Active
Markets for
Identical Assets
(Level I)		Significant Other
Observable Inputs
(Level II)		Significant
Unobservable
Inputs
(Level III)
Corporate bonds and commercial paper$41,443 $— $41,443 $— 
Certificates of deposit8,839 — 8,839 — 
U.S. government securities14,095 — 14,095 — 
$64,377 $— $64,377 $— 
The following table details the fair value hierarchy of the Company's financial assets measured at fair value on a recurring basis as of December 31, 2024:
Fair Value Measurements Using:
AssetsFair ValueQuoted Prices
in Active
Markets for
Identical Assets
(Level I)		Significant Other
Observable Inputs
(Level II)		Significant
Unobservable
Inputs
(Level III)
Cash Equivalents:
Money market funds$63,945 $63,945 $— $— 
Certificates of deposit245 — 245 — 
$64,190 $63,945 $245 $— 
Investments:Fair ValueQuoted Prices
in Active
Markets for
Identical Assets
(Level I)		Significant Other
Observable Inputs
(Level II)		Significant
Unobservable
Inputs
(Level III)
Corporate bonds and commercial paper$46,702 $— $46,702 $— 
Certificates of deposit14,092 — 14,092 — 
U.S. government securities26,922 — 26,922 — 
$87,716 $— $87,716 $— 
The Company determines the fair value of the vast majority of its debt investment holdings based on pricing from its pricing vendors. The valuation techniques used to measure the fair value of financial instruments having Level II inputs were derived from non-binding consensus prices that are corroborated by observable market data or quoted market prices for similar instruments. Such market prices may be quoted prices in active markets for identical assets (Level I inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level II inputs).

Historical Timeline

Fiscal YearFiled
2025Feb 11, 2026Showing above
2024Feb 12, 2025
2023Feb 21, 2024
2022Feb 21, 2023
2021Feb 16, 2022
2020Feb 19, 2021
2019Feb 21, 2020
2018Feb 19, 2019
2017Feb 16, 2018
2016Feb 21, 2017
2015Feb 12, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

Income TaxesRevenuePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsStock CompensationNew StandardsPay vs Performance