View:
United States securities and exchange commission logo
January 8, 2021
Michael Hansen
Chief Executive Officer
Alkami Technology, Inc.
5601 Granite Parkway, Suite 120
Plano, TX 75024
Re: Alkami Technology,
Inc.
Draft Registration
Statement on Form S-1
Submitted December
14, 2020
CIK No. 0001529274
Dear Mr. Hansen:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1
Market and Industry Data, page ii
1. We note your statement
that your market share and market position information is an
approximation based
upon management s knowledge. Please further describe the basis of
management s
knowledge that support your statements in the prospectus summary that
you have outperformed
the market in winning clients among financial institutions that
emphasize retail
banking and that you are one of the fastest-growing digital banking
platforms in the United
States.
Prospectus Summary, page 3
2. Please present
financial and operational metrics for each period presented to provide
Michael Hansen
FirstName LastNameMichael Hansen
Alkami Technology, Inc.
Comapany
January NameAlkami Technology, Inc.
8, 2021
January
Page 2 8, 2021 Page 2
FirstName LastName
sufficient context and balance to the disclosures. In this regard, you
disclose net dollar
revenue retention rate only for nine-months ended September 30, 2020
and the number of
clients for fiscal 2020 but do not provide similar disclosure for
fiscal 2019.
Prospectus Summary
Overview, page 3
3. Please define how you calculate net dollar revenue retention rate.
Our Industry, page 4
4. Please identify the industry source supporting your statement that
there are over 350
million digital bank user accounts in the United States and the retail
analytics firm that
stated foot traffic remained down nearly 25% year-over-year for the
week ended
November 29, 2020.
Our Market Opportunity, page 6
5. Please disclose any material assumptions and limitations associated
with your estimate of
your total addressable market as addressed in the FI Navigator report.
For example, one
material limitation on the expected growth of your total addressable
market would be the
trend of consolidation among financial institutions and that very few
new financial
institutions are being created.
Risk Factors
Risks Relating to Our Business and Industry
The terms of our credit agreement , page 36
6. Please disclose the amount outstanding under your credit agreement.
Anti-takeover provisions contained in our charter documents , page 40
7. Please briefly describe those provisions in your amended and restated
certificate of
incorporation that require a 66 2/3% vote to repeal.
Risks Related to this Offering and Ownership of Our Common Stock
The principal stockholders , page 40
8. Please quantify the beneficial ownership of your executive officers,
directors and principal
stockholders.
General Risk Factors
Natural or man-made disasters and other similar events , page 48
9. Please revise this risk factor to discuss the specific impacts of
COVID-19 on the company
or advise.
Michael Hansen
FirstName LastNameMichael Hansen
Alkami Technology, Inc.
Comapany
January NameAlkami Technology, Inc.
8, 2021
January
Page 3 8, 2021 Page 3
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Reconciliation of GAAP to Non-GAAP Measures, page 76
10. We note your disclosure on page 67 that you believe non-GAAP cost of
subscription
services provides investors and other users of your financial
information consistency and
comparability with your past financial performance and facilitates
period-to-period
comparisons of operations. Please further clarify why this measure
provides useful
information to investors. In this regard, it appears to exclude
significant expenses that are
necessary to generate your subscription revenues. Refer to Item 10 (e)
of Regulation S-K.
11. Clarify why it is appropriate to refer to this measure as non-GAAP
cost of subscription
revenue, which is a similar description to GAAP cost of revenues, and
it excludes
significant implementation services expenses that are necessary to
generate your
subscription revenues. Refer to Item 10(e) of Regulation S-K.
Business
Our Industry, page 88
12. Please disclose the source of the statistical information presented in
this section.
Executive Compensation, page 115
13. Please provide executive compensation disclosure for the year ended
December 31, 2019.
In this regard, we note that executive compensation disclosure for the
year ended
December 31, 2019 is required to be included in your registration
statement as that
information previously was required to be provided in response to a
Commission filing
requirement. Refer to Instruction 1 to Item 402(c) of Regulation S-K.
Certain Relationships and Related Party Transactions
Certain Transactions, page 129
14. Please file the agreement with CU cooperative as an exhibit to your
registration
statement. Refer to Item 601(b)(10)(ii)(A) of Regulation S-K.
Underwriting, page 146
15. Please disclose the exceptions to the lock-up agreements.
Note 2. Summary of Significant Accounting Policies
Revenue Recognition, page F-10
16. You disclose that implementation and integration of the digital
banking platform is
complex, and you have determined that the one-time, upfront services
do not transfer a
promised service to the client. Please further clarify the nature of
your implementation
services and why they are not distinct from your SaaS services. Tell
us how you
considered the factors in ASC 606-10-25-19 through ASC 606-10-25-21 in
making your
Michael Hansen
Alkami Technology, Inc.
January 8, 2021
Page 4
determination.
17. Please clarify when you begin to recognize revenue relating to your
SAAS arrangements.
Clarify if you begin to recognize revenue upon commencement of the
implementation
services or when the customer goes live on your platform, and the
basis for this
determination.
18. You disclose that for those services that are processed by third party
applications you
evaluate whether you are acting as a principal or an agent based upon
the transfer of
control of the services to the customer and after evaluating each of
the applications used to
provide SaaS services, you have determined that you are acting as the
principal in these
transactions and record revenue on a gross basis. Please further
clarify the nature of
the services that are processed by third party applications and how
you considered each of
the factors in ASC 606-10-55-36 through 55-40.
Stock Based Compensation, page F-11
19. Tell us how you considered your recent sales of preferred shares in
the determination of
the fair value of your common stock.
Note 8. Redeemable Convertible Preferred Stock and Stockholder's Equity
(Deficit)
Conversion, page F-19
20. Please clarify your disclosure to state whether all of your redeemable
convertible
preferred shares are convertible upon a qualified IPO, and describe
how a qualified IPO is
defined.
Note 9 Equity Compensation Plan
Stock Options, page F-20
21. Please disclose the fair value of your shares of common stock used in
the determination of
the fair value of your stock options for each period presented.
Financial Statements
Notes to Financial Statements
Note 15. Subsequent Events, page F-27
22. Please provide your significance test for the acquisition of ACH Alert.
We refer you to
FirstName LastNameMichael Hansen
Rule 3-05 of Regulation S-X. Based on the significance please provide
the required
Comapany NameAlkami
audited Technology,
financial statements andInc.
pro forma information as required by
Article of 11 of
Regulation S-X.
January 8, 2021 Page 4
FirstName LastName
Michael Hansen
FirstName LastNameMichael Hansen
Alkami Technology, Inc.
Comapany
January NameAlkami Technology, Inc.
8, 2021
January
Page 5 8, 2021 Page 5
FirstName LastName
General
23. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
You may contact Laura Veator, Staff Accountant, at (202) 551-3716 or
Stephen
Krikorian, Accounting Branch Chief, at (202) 551-3488 if you have questions
regarding
comments on the financial statements and related matters. Please contact Jeff
Kauten, Staff
Attorney, at (202) 551-3447 or Larry Spirgel, Office Chief, at (202) 551-3815
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology