SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 1, 2024
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number)
(Address of Principal Executive Offices) (Zip Code)
(877 ) 725-5264
Registrant’s Telephone Number, Including Area Code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 1, 2024, Alkami Technology, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2024. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.
The information set forth in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Item 2.02, including Exhibit 99.1, shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
On May 1, 2024, the Company posted an investor presentation to its website at www.alkami.com (the “Investor Presentation”). A copy of the Investor Presentation is furnished herewith as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
The information set forth in this Item 7.01, including Exhibit 99.2, is being furnished and shall not be deemed “filed” for purposes of the Exchange Act, or otherwise subject to the liabilities of that Section. The information in this Item 7.01, including Exhibit 99.2, shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. By furnishing the information contained in the Investor Presentation, the Company makes no admission as to the materiality of any information in the Investor Presentation that is required to be disclosed solely by reason of Regulation FD.
Item 9.01. Financial Statements and Exhibits.
| Exhibit Number | Description | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Alkami Technology, Inc. | ||||||||||||||
| Date: | May 1, 2024 | By: | /s/ W. Bryan Hill | |||||||||||
| W. Bryan Hill | ||||||||||||||
| Chief Financial Officer | ||||||||||||||
Exhibit 99.1
Alkami Announces First Quarter 2024 Financial Results
PLANO, Texas, May 1, 2024 (GLOBE NEWSWIRE) -- Alkami Technology, Inc. (Nasdaq: ALKT) (“Alkami”), a leading cloud-based digital banking solutions provider for financial institutions in the U.S., today announced results for its first quarter ending March 31, 2024.
First Quarter 2024 Financial Highlights
•GAAP total revenue of $76.1 million, an increase of 26.9% compared to the year-ago quarter;
•GAAP gross margin of 57.8%, compared to 53.6% in the year-ago quarter;
•Non-GAAP gross margin of 61.7%, compared to 58.1% in the year-ago quarter;
•GAAP net loss of $(11.4) million, compared to $(17.0) million in the year-ago quarter; and
•Adjusted EBITDA of $3.8 million, compared to a loss of $(2.9) million in the year-ago quarter.
Comments on the News
Alex Shootman, Chief Executive Officer, said, “In the first quarter, we delivered another quarter of robust performance. We ended Q1 with 18.1 million live registered users, up 3.0 million compared to the prior-year quarter as we continue to lead the industry in market share gains. In February of 2024, we renewed our largest client, which is a top 10 credit union, more than doubling the original total contract value and extending the relationship for another five years. And we continued our progress on the key initiatives that will position Alkami to be the premier digital banking provider.”
Shootman added, “In April, we hosted our largest-ever user conference, with more than 800 in-person attendees representing 220 financial institutions. Feedback from prospects and existing clients was consistent and unequivocal – there is a pronounced and growing need for modernization among regional and community financial institutions, and Alkami is well positioned to continue delivering market-leading solutions and strong growth.”
Bryan Hill, Chief Financial Officer, said, “We grew digital banking users on the Alkami platform by 20% compared to the prior-year quarter. We exited the quarter with Annual Recurring Revenue of $303 million, up 26.1% compared to the year-ago quarter. Our revenue per user continued to grow, ending the quarter at $16.71, driven by add-on sales and the addition of new clients who tend to onboard at a higher average RPU. We also expanded non-GAAP gross margin to 61.7%, representing an increase of approximately 360 basis points, demonstrating continued progress towards our 2026 non-GAAP gross margin objective of 65%.”
2024 Financial Outlook
Alkami’s financial outlook is based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement Regarding Forward-Looking Statements.”
Alkami is providing guidance for its second quarter ending June 30, 2024 of:
•GAAP total revenue in the range of $80.5 million to $82.0 million;
•Adjusted EBITDA in the range of $2.8 million to $3.8 million.
Alkami is providing guidance for its fiscal year ending December 31, 2024 of:
•GAAP total revenue in the range of $328.5 million to $333.0 million;
•Adjusted EBITDA in the range of $20.5 million to $23.5 million.
Conference Call Information
The Company will host a conference call at 5:00 p.m. ET today to discuss its financial results with investors. A live webcast of the event will be available on the Alkami investor relations website at investors.alkami.com. In addition, a live dial-in will be available domestically at 1-800-836-8184 and internationally at 1-646-357-8785 using passcode 64781. A replay will be available in the Investor Relations section of the Alkami website.
About Alkami
Alkami Technology, Inc. is a leading cloud-based digital banking solutions provider for financial institutions in the United States that enables clients to grow confidently, adapt quickly and build thriving digital communities. Alkami helps clients transform through retail and business banking, digital account opening, payment security, and data analytics and marketing solutions. To learn more, visit https://www.alkami.com/.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains “forward-looking” statements relating to Alkami Technology, Inc.’s strategy, goals, future focus areas, and expected, possible or assumed future results, including its future cash flows and its financial outlook. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “expects,” “believes,” “plans,” or similar expressions and the negatives of those terms. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements, expressed or implied by the forward-looking statements. Factors that may materially affect such forward-looking statements include: Our limited operating history and history of operating losses; our ability to manage future growth; our ability to attract new clients and retain and expand existing clients’ use of our solutions; the unpredictable and time-consuming nature of our sales cycles; our ability to maintain, protect and enhance our brand; our ability to accurately predict the long-term rate of client subscription renewals or adoption of our solutions; our reliance on third-party software, content and services; our ability to effectively integrate our solutions with other systems used by our clients; intense competition in our industry; any downturn, consolidation or decrease in technology spend in the financial services industry, including as a result of recent closures of certain financial institutions and liquidity concerns at other financial institutions; our ability and the ability of third parties on which we rely to prevent and identify breaches of security measures (including cybersecurity) and resulting disruptions of our systems or operations and unauthorized access to client customer and other data; our ability to successfully integrate acquired companies or businesses; our ability to comply with regulatory and legal requirements and developments; our ability to attract and retain key employees; the political, economic and competitive conditions in the markets and jurisdictions where we operate; our ability to maintain, develop and protect our intellectual property; our ability to respond to evolving technological requirements to develop or acquire new and enhanced products that achieve market acceptance in a timely manner; our ability to estimate our expenses, future revenues, capital requirements, our needs for additional financing and our ability to obtain additional capital and other factors described in the Company’s filings with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
Explanation of Non-GAAP Financial Measures and Key Business Metrics
The company reports its financial results in accordance with accounting principles generally accepted in the United States of America, or GAAP. However, the company believes that, in order to properly understand its short-term and long-term financial, operational and strategic trends, it may be helpful for investors to exclude certain non-cash or non-recurring items when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in both frequency and impact on continuing operations. The company also uses results of operations excluding such items to evaluate the operating performance of Alkami and compare it against prior periods, make operating decisions, determine executive compensation, and serve as a basis for long-term strategic planning. These non-GAAP financial measures provide the company with additional means to understand and evaluate the operating results and trends in its ongoing business by eliminating certain non-cash expenses and other items that Alkami believes might otherwise make comparisons of its ongoing business with prior periods more difficult, obscure trends in ongoing operations, reduce management’s ability to make useful forecasts, or obscure the ability to evaluate the effectiveness of certain business strategies and management incentive structures. In addition, the company also believes that investors and financial analysts find this information to be helpful in analyzing the company’s financial and operational performance and comparing this performance to the company’s peers and competitors.
The company defines “Non-GAAP Cost of Revenues” as cost of revenues, excluding (1) amortization and (2) stock-based compensation expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.
The company defines “Non-GAAP Gross Margin” as gross profit, plus (1) amortization and (2) stock-based compensation expense, all divided by revenue. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.
The company defines “Non-GAAP Research and Development Expense” as research and development expense, excluding stock-based compensation expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be
useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ongoing expenditures related to product innovation.
The company defines “Non-GAAP Sales and Marketing Expense” as sales and marketing expense, excluding stock-based compensation expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ongoing expenditures related to its sales and marketing strategies.
The company defines “Non-GAAP General and Administrative Expense” as general and administrative expense, excluding stock-based compensation expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s underlying expense structure to support corporate activities and processes.
The company defines “Non-GAAP Net Loss” as net loss, plus (1) provision for income taxes (2) gain on financial instruments, (3) amortization, (4) stock-based compensation expense, and (5) acquisition-related expenses. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.
The company defines “Adjusted EBITDA” as net loss plus (1) provision for income taxes, (2) gain on financial instruments, (3) interest (income) expense, net, (4) depreciation and amortization (5) stock-based compensation expense, and (6) acquisition-related expenses. The company believes adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations.
In addition, the Company also uses the following important operating metrics to evaluate its business:
The company defines “Annual Recurring Revenue (ARR)” by aggregating annualized recurring revenue related to SaaS subscription services recognized in the last month of the reporting period as well as the next 12 months of expected implementation services revenues in the last month of the reporting period. We believe ARR provides important information about our future revenue potential, our ability to acquire new clients, and our ability to maintain and expand our relationship with existing clients.
The company defines “Registered Users” as an individual or business related to an account holder of an FI client on our digital banking platform who has registered to use one or more of our solutions and has current access to use those solutions as of the last day of the reporting period presented. We price our digital banking platform based on the number of registered users, so as the number of registered users of our digital banking platform increases, our ARR grows. We believe growth in the number of registered users provides important information about our ability to expand market adoption of our digital banking platform and its associated software products, and therefore to grow revenues over time.
The company defines “Revenue per Registered User (RPU)” by dividing ARR for the reporting period by the number of registered users as of the last day of the reporting period. We believe RPU provides important information about our ability to grow the number of software products adopted by new clients over time, as well as our ability to expand the number of software products that our existing clients add to their contracts with us over time.
The company does not provide a reconciliation of our adjusted EBITDA outlook to GAAP net loss because certain significant information required for such reconciliation is not available without unreasonable efforts, including provision for income taxes, loss on financial instruments, stock-based compensation expense, and acquisition-related expenses, net, all of which may be significant.
| ALKAMI TECHNOLOGY, INC. | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (In thousands, except share and per share data) | |||||||||||
| (UNAUDITED) | |||||||||||
| March 31, | December 31, | ||||||||||
| 2024 | 2023 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 44,179 | $ | 40,927 | |||||||
| Marketable securities | 43,125 | 51,196 | |||||||||
| Accounts receivable, net | 35,717 | 35,499 | |||||||||
| Deferred costs, current | 11,081 | 10,329 | |||||||||
| Prepaid expenses and other current assets | 11,531 | 10,634 | |||||||||
| Total current assets | 145,633 | 148,585 | |||||||||
| Property and equipment, net | 18,217 | 16,946 | |||||||||
| Right-of-use assets | 15,479 | 15,754 | |||||||||
| Deferred costs, net of current portion | 31,499 | 30,734 | |||||||||
| Intangibles, net | 34,111 | 35,807 | |||||||||
| Goodwill | 148,050 | 148,050 | |||||||||
| Other assets | 4,653 | 3,949 | |||||||||
| Total assets | $ | 397,642 | $ | 399,825 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 6,533 | $ | 7,478 | |||||||
| Accrued liabilities | 16,902 | 19,763 | |||||||||
| Deferred revenues, current portion | 12,497 | 10,984 | |||||||||
| Lease liabilities, current portion | 1,242 | 1,205 | |||||||||
| Total current liabilities | 37,174 | 39,430 | |||||||||
| Deferred revenues, net of current portion | 17,525 | 15,384 | |||||||||
| Deferred income taxes | 1,738 | 1,713 | |||||||||
| Lease liabilities, net of current portion | 18,065 | 18,052 | |||||||||
| Other non-current liabilities | 233 | 305 | |||||||||
| Total liabilities | 74,735 | 74,884 | |||||||||
| Stockholders’ Equity | |||||||||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized and 0 shares issued and outstanding as of March 31, 2024 and December 31, 2023 | — | — | |||||||||
Common stock, $0.001 par value, 500,000,000 shares authorized; and 97,515,483 and 96,722,098 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | 98 | 97 | |||||||||
| Additional paid-in capital | 769,608 | 760,210 | |||||||||
| Accumulated deficit | (446,799) | (435,366) | |||||||||
| Total stockholders’ equity | 322,907 | 324,941 | |||||||||
| Total liabilities and stockholders' equity | $ | 397,642 | $ | 399,825 | |||||||
| ALKAMI TECHNOLOGY, INC. | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
| (In thousands, except share and per share data) | |||||||||||
| (UNAUDITED) | |||||||||||
Three months ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Revenues | $ | 76,127 | $ | 59,996 | |||||||
Cost of revenues(1) | 32,095 | 27,858 | |||||||||
| Gross profit | 44,032 | 32,138 | |||||||||
| Operating expenses: | |||||||||||
| Research and development | 22,820 | 20,549 | |||||||||
| Sales and marketing | 13,843 | 10,878 | |||||||||
| General and administrative | 19,315 | 17,111 | |||||||||
| Acquisition-related expenses | 60 | 186 | |||||||||
| Amortization of acquired intangibles | 359 | 360 | |||||||||
| Total operating expenses | 56,397 | 49,084 | |||||||||
| Loss from operations | (12,365) | (16,946) | |||||||||
| Non-operating income (expense): | |||||||||||
| Interest income | 1,082 | 1,726 | |||||||||
| Interest expense | (73) | (1,757) | |||||||||
| Gain on financial instruments | 112 | 210 | |||||||||
| Loss before income taxes | (11,244) | (16,767) | |||||||||
| Provision for income taxes | 189 | 196 | |||||||||
| Net loss | $ | (11,433) | $ | (16,963) | |||||||
| Net loss per share attributable to common stockholders: | |||||||||||
| Basic and diluted | $ | (0.12) | $ | (0.18) | |||||||
| Weighted average number of shares of common stock outstanding: | |||||||||||
| Basic and diluted | 96,945,232 | 92,397,341 | |||||||||
(1) Includes amortization of acquired technology of $1.3 million for both the three months ended March 31, 2024 and 2023.
| ALKAMI TECHNOLOGY, INC. | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (In thousands) | |||||||||||
| (UNAUDITED) | |||||||||||
Three months ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (11,433) | $ | (16,963) | |||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization expense | 2,562 | 2,586 | |||||||||
| Accrued interest on marketable securities, net | (294) | (398) | |||||||||
| Stock-based compensation expense | 13,552 | 11,440 | |||||||||
| Amortization of debt issuance costs | 32 | 45 | |||||||||
| Gain on financial instruments | (112) | (210) | |||||||||
| Deferred taxes | 25 | 47 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (218) | (2,183) | |||||||||
| Prepaid expenses and other current assets | (1,633) | (2,654) | |||||||||
| Accounts payable and accrued liabilities | (3,873) | (1,290) | |||||||||
| Deferred costs | (1,311) | (859) | |||||||||
| Deferred revenues | 3,654 | 824 | |||||||||
| Net cash provided by (used in) operating activities | 951 | (9,615) | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of marketable securities | (7,149) | (20,987) | |||||||||
| Proceeds from sales, maturities and redemptions of marketable securities | 15,626 | 38,122 | |||||||||
| Purchases of property and equipment | (306) | (229) | |||||||||
| Capitalized software development costs | (1,363) | (1,141) | |||||||||
| Net cash provided by investing activities | 6,808 | 15,765 | |||||||||
| Cash flows from financing activities: | |||||||||||
| Payments for taxes related to net settlement of equity awards | (5,678) | (1,984) | |||||||||
| Proceeds from stock option exercises | 1,171 | 1,416 | |||||||||
| Net cash used in financing activities | (4,507) | (568) | |||||||||
| Net increase in cash and cash equivalents and restricted cash | 3,252 | 5,582 | |||||||||
| Cash and cash equivalents and restricted cash, beginning of period | 40,927 | 112,337 | |||||||||
| Cash and cash equivalents and restricted cash, end of period | $ | 44,179 | $ | 117,919 | |||||||
| ALKAMI TECHNOLOGY, INC. | |||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP MEASURES | |||||||||||
| (In thousands, except per share data) | |||||||||||
| (UNAUDITED) | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| GAAP total revenues | $ | 76,127 | 59,996 | ||||||||
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Annual Recurring Revenue (ARR) | $ | 302,659 | $ | 240,050 | |||||||
| Registered Users | 18,113 | 15,119 | |||||||||
| Revenue per Registered User (RPU) | $ | 16.71 | $ | 15.88 | |||||||
| Non-GAAP Cost of Revenues | |||||||||||
| Set forth below is a presentation of the company’s “Non-GAAP Cost of Revenues.” Please reference the “Explanation of Non-GAAP Measures” section. | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| GAAP cost of revenues | $ | 32,095 | $ | 27,858 | |||||||
| Amortization | (1,775) | (1,599) | |||||||||
| Stock-based compensation expense | (1,178) | (1,146) | |||||||||
| Non-GAAP cost of revenues | $ | 29,142 | $ | 25,113 | |||||||
| Non-GAAP Gross Margin | |||||||||||
| Set forth below is a presentation of the company’s “Non-GAAP Gross Margin.” Please reference the “Explanation of Non-GAAP Measures” section. | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| GAAP gross margin | 57.8 | % | 53.6 | % | |||||||
| Amortization | 2.3 | % | 2.6 | % | |||||||
| Stock-based compensation expense | 1.6 | % | 1.9 | % | |||||||
| Non-GAAP gross margin | 61.7 | % | 58.1 | % | |||||||
| Non-GAAP Research and Development Expense | |||||||||||
| Set forth below is a presentation of the company’s “Non-GAAP Research and Development Expense.” Please reference the “Explanation of Non-GAAP Measures” section. | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| GAAP research and development expense | $ | 22,820 | $ | 20,549 | |||||||
| Stock-based compensation expense | (3,998) | (3,775) | |||||||||
| Non-GAAP research and development expense | $ | 18,822 | $ | 16,774 | |||||||
| Non-GAAP Sales and Marketing Expense | |||||||||||
| Set forth below is a presentation of the company’s “Non-GAAP Sales and Marketing Expense.” Please reference the “Explanation of Non-GAAP Measures” section. | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| GAAP sales and marketing expense | $ | 13,843 | $ | 10,878 | |||||||
| Stock-based compensation expense | (2,031) | (1,590) | |||||||||
| Non-GAAP sales and marketing expense | $ | 11,812 | $ | 9,288 | |||||||
| Non-GAAP General and Administrative Expense | |||||||||||
| Set forth below is a presentation of the company’s “Non-GAAP General and Administrative Expense.” Please reference the “Explanation of Non-GAAP Measures” section. | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| GAAP general and administrative expense | $ | 19,315 | $ | 17,111 | |||||||
| Stock-based compensation expense | (6,345) | (4,733) | |||||||||
| Non-GAAP general and administrative expense | $ | 12,970 | $ | 12,378 | |||||||
| Non-GAAP Net Loss | |||||||||||
| Set forth below is a presentation of the company’s “Non-GAAP Net Loss.” Please reference the “Explanation of Non-GAAP Measures” section. | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| GAAP net loss | $ | (11,433) | $ | (16,963) | |||||||
| Provision for income taxes | 189 | 196 | |||||||||
| Gain on financial instruments | (112) | (210) | |||||||||
| Amortization | 2,134 | 1,959 | |||||||||
| Stock-based compensation expense | 13,552 | 11,244 | |||||||||
| Acquisition-related expenses | 60 | 186 | |||||||||
| Non-GAAP net loss | $ | 4,390 | $ | (3,588) | |||||||
| Adjusted EBITDA | |||||||||||
| Set forth below is a presentation of the company’s “Adjusted EBITDA.” Please reference the “Explanation of Non-GAAP Measures” section. | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| GAAP net loss | $ | (11,433) | $ | (16,963) | |||||||
| Provision for income taxes | 189 | 196 | |||||||||
| Gain on financial instruments | (112) | (210) | |||||||||
| Interest (income) expense, net | (1,009) | 31 | |||||||||
| Depreciation and amortization | 2,562 | 2,586 | |||||||||
| Stock-based compensation expense | 13,552 | 11,244 | |||||||||
| Acquisition-related expenses | 60 | 186 | |||||||||
| Adjusted EBITDA | $ | 3,809 | $ | (2,930) | |||||||
Investor Relations Contact
Steve Calk
ir@alkami.com
Media Relations Contacts
Marla Pieton
marla.pieton@alkami.com
Valerie Kerner
alkami@fullyvested.com
Alkami Technology, Inc. Proprietary Information. Alkami Technology
2 © A lk am i T ec h n o lo gy , I n c. This presentation contains “forward-looking” statements relating to Alkami Technology, Inc.’s strategy, goals, future focus areas, and expected, possible or assumed future results, including its future cash flows and its financial outlook. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “expects,” “believes,” “plans,” or similar expressions and the negatives of those terms. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements, expressed or implied by the forward-looking statements. Factors that may materially affect such forward-looking statements include: Our limited operating history and history of operating losses; our ability to manage future growth; our ability to attract new clients and retain and expand existing clients’ use of our solutions; the unpredictable and time-consuming nature of our sales cycles; our ability to maintain, protect and enhance our brand; our ability to accurately predict the long-term rate of client subscription renewals or adoption of our solutions; our reliance on third-party software, content and services; our ability to effectively integrate our solutions with other systems used by our clients; intense competition in our industry; any downturn, consolidation or decrease in technology spend in the financial services industry, including as a result of recent closures of certain financial institutions and liquidity concerns at other financial institutions; our ability and the ability of third parties on which we rely to prevent and identify breaches of security measures (including cybersecurity) and resulting disruptions of our systems or operations and unauthorized access to client customer and other data; our ability to successfully integrate acquired companies or businesses; our ability to comply with regulatory and legal requirements and developments; our ability to attract and retain key employees; the political, economic and competitive conditions in the markets and jurisdictions where we operate; our ability to maintain, develop and protect our intellectual property; our ability to respond to evolving technological requirements to develop or acquire new and enhanced products that achieve market acceptance in a timely manner; our ability to estimate our expenses, future revenues, capital requirements, our needs for additional financing and our ability to obtain additional capital and other factors described in the Company’s filings with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. The company reports its financial results in accordance with accounting principles generally accepted in the United States of America, or GAAP. However, the company believes that, in order to properly understand its short-term and long-term financial, operational and strategic trends, it may be helpful for investors to exclude certain non-cash or non-recurring items when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in both frequency and impact on continuing operations. These non-GAAP financial measures provide the company with additional means to understand and evaluate the operating results and trends in its ongoing business by eliminating certain non-cash expenses and other items that Alkami believes might otherwise make comparisons of its ongoing business with prior periods more difficult, obscure trends in ongoing operations, reduce management’s ability to make useful forecasts, or obscure the ability to evaluate the effectiveness of certain business strategies and management incentive structures. In addition, the company also believes that investors and financial analysts find this information to be helpful in analyzing the company’s financial and operational performance and comparing this performance to the company’s peers and competitors. Cautionary Statement Regarding Forward-Looking Statements
3 © A lk am i T ec h n o lo gy , I n c. Who We Are • Cloud-based digital banking platform serving U.S. financial institutions What We Do • Empower FIs to grow, drive user engagement and improve operational efficiency • Leverage broad product set enabling retail and commercial banking How We Do It • Powerful, scalable technology stack • Modern architecture, multi-tenant • Continuous integration, delivery and deployment Who We Serve • Community, regional and super-regional FIs Alkami Technology, Inc. We enable FIs to effectively compete with larger, more technologically advanced and well-resourced competitors Financial Institutions Digital Banking Consumer and Commercial Users FinTech Partners
4 © A lk am i T ec h n o lo gy , I n c. U.S. Digital Banking User Distribution Users in millions by asset range, including megabanks Source: FI Navigator
5 © A lk am i T ec h n o lo gy , I n c. Alkami’s Addressable Market: User Characteristics 250M+ digital users, excluding megabanks Total market digital users growing 5-8% historically, driven by: ● Increasing number of accounts per customer ● Ease of new account opening via digital tools ● Demographics, including post-COVID shift to ex-urban areas, decline in unbanked and underbanked customers Digital user growth historically uncorrelated with contraction in branches or number of FIs Addressable Market = FIs with assets from $100M to $450B, representing 250M digital users Legacy Providers include Fiserv, FIS, JKHY, DI and other small or point solutions Sources: Industry data including NCUA, and FDIC, FI Navigator, Cornerstone Advisors and Alkami internal research Legacy Providers: 210M+ User Growth: 5-8% QTWO: ~22M User Growth: 4% Alkami: 18.1M User Growth: 20%
6 © A lk am i T ec h n o lo gy , I n c. Go-To-Market Cadence We focus on the top 2,500 FIs excluding the megabanks Industry average contract length is 5 years, translating to approximately 500 contracts up for renewal annually 500 Annual Renewals 2,500 Target Clients v 9,000+ FIs Over 9,000 FIs in the United States• Sales team drives outbound lead generation, cross selling and account management • Client success team supports retention and deepens the relationships with our clients Very targeted renewal class each year allows us to focus sales resources
7 © A lk am i T ec h n o lo gy , I n c. Alkami’s Addressable Market Growing healthy $14 billion TAM Total Addressable Market • 250M digital users x $58 ARPU • Digital users growing 5% to 8% annually • 30+ products today vs. 9 in 2015 Core Platform • 250M digital users x $35 ARPU • Existing client digital penetration of <80% expected to converge to near 100% DOA/LOS • Acquired Q3 2021 - Digital Account Opening and Unsecured Loan Origination ACH Alert • Acquired Q4 2020 - Fraud Prevention Segmint • Acquired Q2 2022 - Managed Marketing & AI 250M users represents FIs with assets between $100M and $450B Sources: Industry data including NCUA, and FDIC, FI Navigator, Cornerstone Advisors and Alkami internal research
8 © A lk am i T ec h n o lo gy , I n c. Multiple Levers Driving Growth ● Clients driven by new logo wins, historically among credit unions, with a growing presence among banks ● Registered users grow as we add new logos and as clients add users ● RPU driven by product penetration at initial sale and by add on sales, and is offset by volume discounts as existing clients add users Note: RPU and ARR include subscription and recurring implementation services revenue
9 © A lk am i T ec h n o lo gy , I n c. Alkami’s Digital Sales & Service Platform Onboard Engage Grow Guard Sales Service Digital Account Opening Marketing Data Insights Card Experience Customer Service Commercial Services Financial Wellness Security & Fraud Protection Money Movement Extensibility Comprehensive digital banking to help RCFIs manage costs and remain competitive
10 © A lk am i T ec h n o lo gy , I n c. Product Strategy ● Lead with UX ● Deepen integrations with cores & third party systems ● Hyperfocus on Commercial Banking & DAO ● Data Integrity ● Integrating Flux, Segmint and Digital Banking further ● Monetizing data ● Streamlined, trackable and performant APIs ● Enhanced SDK to enable easier customization ● Developer Portal MVP Data Services Platform ServicesDigital Banking The Three Product Pillars
11 © A lk am i T ec h n o lo gy , I n c. How We Achieve Our Long-term Objectives Market Leadership Maintain Strong Credit Union Position Grow Bank Mindshare and Capabilities Drive Add-On Sales Scale and Continued Cost Discipline Continuous Product and Platform Improvement
Alkami Technology, Inc. Proprietary Information. Financial Overview
13 © A lk am i T ec h n o lo gy , I n c. Q1 2024 Financial Performance $M ● Q1’24 revenue growth of 27% driven by new clients, existing client user growth and ARPU growth ● GM expansion consistent with our plan to increase GM 200-300 bps per year through 2026 ● Adj EBITDA expansion driven by continued scale and efficiencies in Research & Development, Sales & Marketing and General & Administrative Note: Gross margin % on a non-GAAP basis
14 © A lk am i T ec h n o lo gy , I n c. First Quarter 2024 Highlights 3/31/24 $303M ARR Subscription Revenue Mix as of 3/31/24 96% Subscription Revenue 12/31/23 115% Net Dollar Retention Remaining Performance Obligations as of 3/31/24 $1.2B RPO Digital Banking Clients 244 Q1 2024 206 Q1 2023 Registered Users 18.1M15.1M Q1 2024Q1 2023 ● Signed 6 new digital banking platform clients in Q1 ● Implemented 8 clients in Q1, bringing digital platform client count to 244 ● 42 new clients in implementation backlog, representing 1.3M digital users ● Exited Q1 with 18.1M registered users, up 3.0M or 20%. Drivers: (i) FIs implemented in last twelve months represent 1.5M registered users and (ii) existing clients increased their registered users by 1.5M ● Increased ARR 26% to $303M ● Remaining purchase obligation reached $1.2B representing almost 4 times live ARR and was 32% higher than a year ago ● LTM churn of 0% vs long-term expected churn of 2-3%
15 © A lk am i T ec h n o lo gy , I n c. Client Base Expansion 2020 151 177 199 236 37 57 67 89 2021 2022 2023 ARR growth driven by larger new logos and increased product penetration 244 91 Q1’24 Total Digital Banking Platform Clients Clients with ARR > $1M
16 © A lk am i T ec h n o lo gy , I n c. Strong Historical Revenue Growth $M
17 © A lk am i T ec h n o lo gy , I n c. Gross Margin Expansion Driven by Scale and Efficiency $M
18 © A lk am i T ec h n o lo gy , I n c. Best-in-Class GTM Efficiency ● Long-term contract structure reduces annual GTM motion ● Alkami average client retention of 97% - 98% ● 2026E reflects continued growth in S&M spend related to bank market expansion and increased product depth ● Historical high sales team productivity and GTM efficiency; LTM increase in ARR to S&M expense is 1.4x, among the best in SaaS ● Continued GTM efficiency driven by cross-sale success and upsell opportunities from user growth among our existing client base
19 © A lk am i T ec h n o lo gy , I n c. Clear Path to Manage Equity Dilution
20 © A lk am i T ec h n o lo gy , I n c. 2024 Financial Guidance $M 2024E reflects midpoint of management guidance provided May 1, 2024 ● Second quarter 2024 revenue guidance of $80.5 million to $82 million, and adjusted EBITDA guidance of $2.8 million to $3.8 million ● Full year 2024 revenue guidance of $328.5 million to $333 million representing 24% to 26% growth and Adj EBITDA guidance of $20.5 million to $23.5 million ● Revenue growth driven by continued new client expansion, existing user growth and ARPU expansion ● Adj EBITDA growth driven by continued scale and efficiencies in operating costs ● Second quarter expected to be modestly lower than the first quarter of the year, consistent with seasonality of second-quarter expenses
21 © A lk am i T ec h n o lo gy , I n c. Attractive Long-Term Profile Expect substantial margin improvement through scale, product mix and operational efficiency
22 © A lk am i T ec h n o lo gy , I n c. Selected Historical Data 2020 2021 2022 2023 Q1’24 Digital banking platform clients 151 177 199 236 244 Growth % 17% 12% 19% 18% Digital banking platform users (M) 9.7 12.4 14.5 17.5 18.1 Growth % 28% 18% 20% 20% Live ARR ($M) $ 128.0 $ 169.0 $ 226.1 $ 291.0 302.7 Growth % 32% 34% 29% 26% RPU $ 13.22 $ 13.68 $ 15.55 $ 16.63 16.71 Growth % 3% 14% 7% 5% RPO ($M) $ 510 $ 652 $ 893 $ 1,140 1,195 Growth % 28% 37% 28% 32% Note: Segmint acquisition completed second quarter 2022
23 © A lk am i T ec h n o lo gy , I n c. Non-GAAP Reconciliations ($000s)
24 © A lk am i T ec h n o lo gy , I n c. Non-GAAP Reconciliations ($000s)
25 © A lk am i T ec h n o lo gy , I n c. Non-GAAP Reconciliations ($000s)