Alkami Technology, Inc. (ALKT) on Q1 2024 Results - Earnings Call Transcript

Operator: Good afternoon, ladies and gentlemen, and welcome to the Alkami Technology First Quarter 2024 Financial Results Conference Call. [Operator Instructions] I'd like to turn the conference to Steve Calk, Vice President of Investor Relations. Steve, go ahead. Steve Calk: Thank you, operator. With me on today's call are Alex Shootman, Chief Executive Officer; and Bryan Hill, Chief Financial Officer. During today's call, we may make forward-looking statements about guidance and other make forward-looking statements about guidance and other matters regarding our future performance. These statements are based on management's current views and expectations and are subject to various risks and uncertainties. Our actual results may be materially different. For a summary of risk factors associated with our forward-looking statements, please refer to today's press release and the sections in our latest 10-K entitled Risk Factors and Forward-Looking Statements. Statements made during the call are being made as of today, and we undertake no obligation to update or revise these statements. Also, unless otherwise stated, financial measures discussed on this call will be on a non-GAAP basis. We believe these measures are useful to investors in the understanding of our financial results. A reconciliation of the comparable GAAP financial measures can be found in our earnings press release and in our filings with the SEC. I'd now like to turn the call over to Alex. Alex Shootman: Thank you, Steve, and thank you all for joining us today. I am pleased to report another quarter of strong performance. In the first quarter of 2024, we grew revenue 27% and delivered $3.8 million in adjusted EBITDA, both above the high end of our expectations. We ended Q1 with 18.1 million live registered users on the Alkami platform, up 3 million compared to Q1 2023. Our results are a combination of being in a vibrant market and continuing to execute on our priorities. Since our last earnings call, I've had 32 face-to-face client meetings in 4 different regions of the country and common themes emerged across those conversations. First, we are in a growth market. Second, our clients are seeing the benefits from our platform investments. Third, there is a large opportunity for our data platform to drive AI. And fourth, multiple opportunities exist long term for Alkami. Today, the average U.S. adult has 1.9 financial accounts, which represents almost 480 million user accounts. That's up from 1.65 accounts per adult or 370 million users at the time of our IPO. User accounts are growing, and our clients have a growth mindset. Every client I met with has a growth strategy. Some are growing geographically, some are establishing virtual beachheads. Others are extending into commercial banking or building certain types of loan specialties, but they are all thinking about growing, not playing defense. A lot gets written about the contraction of regional and community financial institutions but the reality is the number of FIs has contracted a consistent 3% per year over 30 years, which means there will still be over 6,000 institutions a decade from now. Our clients tend to be at the top of food chain and are the ones consolidating. When a merger happens, they don't merge with another FI who has the same customers as they do. So consolidation generally means seat growth for Alkami. Not only are user counts growing but in a study Alkami commission through an independent third party in January, we found a number of FIs open to switch digital banking providers is up year-over-year. 58% of regional and community financial institutions say they are open to switching digital banking providers. That's up from 52% in 2023. And this is a comparison among the regional and community financial institutions within our ideal client profile. In addition, in that same study, 90% of banks and 89% of credit unions said they were optimistic about their financial future over the next 18 months. And 67% of banks and 72% of credit anticipate increases in their technology budgets in 2024. Our business is growing because we serve a market that is growing with clients who have a growth mindset. Every client I met with recognizes we are making improvements in areas that are important to them through our platform investments. One of the most critical attributes of the digital banking platform is that it runs 24/7 and has amazing performance. Over the last year, we've improved uptime by over 50 hours eliminated downtime for major releases, achieved over a 99% crash-free rate on our mobile application, increased our quality by 17% and delivered a 4x improvement in application response time all while growing our user count to over $18 million and reducing our cost per user. But now the fun really begins. With our platform investments, we are adding capabilities that will allow our clients to differentiate in their market. The Alkami platform will add broad-based observability, product usage telemetry new messaging architectures, timestamp data lake functionality and an API-centric developer mindset type of interoperability. We are going to deliver to our clients the type of platform that only mega banks have been able to bring market and we will do it while continuing to drive economics associated with our scale. In the majority of my client meetings at some point in time, I got the question, hey, Alex, what should we be doing with AI? I'll remind our clients that, while it really was exciting when GenAI burst onto the scene at the end of 2022, they've been using AI for quite some time. And in evaluating their AI strategy, they need to remember that AI is made up of 2 parts: data and models. Data is a fuel for AI and for AI to run well, data needs 4 characteristics. It must be cleansed, maintained, normalized and curated. The Alkami data platform has these 4 characteristics at scale. Our data platform contains 29 million deposit accounts with 20 billion historical transactions and about 20 million new transactions are added each day. The nature and scale of our data platform allows our clients to apply AI in achieving their business outcomes. The performance of this part of our business, mirrors research we have completed, which shows that siloed data sets ties as the top barrier through regional and community financial institutions adopting AI along with security and regulatory concerns. Our clients recognize that good data drives good AI, which is driving growth for Alkami. From a model perspective, Alkami has a classification model that drives customer insights to build a targeted list of account holders and a predictive model, which identifies daily shifts in financial patterns to predict account holders financial behaviors and needs. This predictive model is used by FIs to identify account holders most likely to stay, grow and adopt new products. Customer insights and targeted offers consistently rank among the top digital banking AI use cases being activated in regional and community financial institutions today. This makes sense, given our research shows 44% of all digital banking users and 55% of millennials wish their financial provider offered a more personalized digital banking experience with half saying they're comfortable with their data being processed by AI if it gave them a better banking experience. The clients I met with, agreed that in the near term, the use cases they will pursue will be models based upon transaction data for fraud and personalized offers models based upon text or other unstructured content for customer support and employee productivity. We believe the Alkami data platform is a differentiator and can become a major long-term growth contributor for Alkami. In addition to the clients I met with in the spring, I got to see several hundred more at our annual conference held near Dallas, April 8 through the 10. We had the largest event our history with over 800 attendees, which is a 26% increase over last year. As evidenced that digital banking is a strategic topic for financial institutions, 30% of client and prospect attendees were in executive roles with 60% of these being business rolls such as CEO, CMOs, CFOs, the other 40% were in technical roles, such as CIOs and Chief Technology Officers. The strength of demand in our market was demonstrated by a 50% increase in qualified prospect pipeline at our conference compared to last year. A few exciting parts of the conference included our first ever hackathon where developers from our client and partner communities created new and innovative digital banking products and services over 2 days, demonstrating the investments we're making in opening up our platform. We had a [indiscernible] women and banking event with close to 150 attendees, and our marketing team pulled off an amazing celestial coordination as the skies over Dallas cleared out for an eclipse-viewing event. In closing, all of the client interaction I've had over the last couple of months has reinforced my belief and the potential of our company to continue to grow at a healthy pace for many years. Our clients like us as a company, they like our culture, and like what our software does for their customers and members. They know there's no turning back. Everything in their operation is up for reinventing, for digitizing and transforming and they like to have a partner they can trust to work with. If we invest in broadening our product portfolio, they will give Alkami the opportunity to participate in areas beyond digital banking, which makes me very bullish on the long-term growth prospects for Alkami. To position ourselves for our long-term potential, in 2024, we'll maintain our focus on the priorities I outlined at the beginning of year. We'll continue to invest in client satisfaction. We'll build upon the momentum we're experiencing banks. We'll maintain our excellence in launching new clients and we will invest in the leadership infrastructure necessary to support our growth. It's really exciting to start the year with a great quarter and get so much customer interaction that reinforces the strength of our market. And it's reassuring to see the level of execution that's happening across Alkami. Thank you to all the Alkamist that keep our clients as the North Star, thank you to our clients that trust us with their business and thank you to our investors who continue to partner with Alkami as we build a great software company. We will keep putting them to work because this industry deserves to have good technology. I'll now hand the call over to Bryan. W. Hill: Thank you, Alex, and good afternoon, everyone. During the first quarter of 2024, we continue to deliver strong financial results and continue to see healthy demand in our sales pipeline for both new clients and for additional products among our existing clients. For the first quarter of 2024, we achieved total revenue of $76.1 million, which represents year-over-year growth of 27%. Subscription revenue also grew 27% and represented approximately 96% of total revenue. We increased ARR by 26% and exited the quarter at $303 million. We currently have approximately $52 million of ARR in backlog implementation the majority of which will occur over the next 12 months. We implemented 8 new clients in the quarter, bringing our digital banking platform client count to 244. We now have 42 new clients in our implementation backlog representing 1.3 million digital users. We exited the quarter with 18.1 million registered users live on our digital banking platform, 600,000 digital users higher than year-end 2023 and up 3 million or 20% compared to last year. Over the last 12 months, we implemented 38 financial institutions supporting 1.5 million digital users. In addition, our existing clients increased their digital user adoption by 1.5 million users. In terms of churn, we did not experience any digital banking client churn over the last 12 months, and we expect to lose 3 clients in 2024, representing less than 1% of ARR. This compares to our expected long-term average churn of 2% to 3%. We ended the quarter with an RPU of $16.71, which is 5% higher than last year, driven by add-on sales success and the addition of new clients who tend to onboard with a higher average RPU. We continue to see healthy demand across our product portfolio. Our first quarter of 2024 new sales performance outpaced 2023 by over 20%. We signed 6 new digital banking platform clients and our add-on sales effort represented over 50% of new sales for the quarter. For the first quarter of 2024, our data insights and marketing, fraud protection, customer service and financial wellness product categories led adoption among our clients. In addition to add-on sales, our client sales team is responsible for client contract renewals. We expect to renew 30 or more client relationships in 2024. During the first quarter of 2024, we renewed 6 client relationships, including our largest client, a top 10 U.S. credit union. And finally, our remaining purchase obligation reached $1.2 billion, representing 4x our ARR and 32% higher than a year ago. Now turning to gross margin. For the first quarter of 2024, non-GAAP gross margin was 61.7%, representing 360 basis points of expansion when compared to the prior year quarter. Gross margin expansion resulted from improvement in our hosting cost per registered user combined with operating leverage across our post-sale operations. Moving to operating expenses. For the first quarter of 2024 operating expenses of $43.6 million or 57.3% of revenue represented an operating leverage of 680 basis points. Operating leverage was led by R&D and G&A, where we continue to realize operational scale. Related to R&D, we continue to invest in our platform while scaling this expense category. Investment focus areas include initiatives to drive quality and cost efficiency of the platform, expand our product offering, improve extensibility and enhance the product market fit of our commercial banking offering. As for non-GAAP sales and marketing expenses, we continue to achieve a high level of sales team productivity and go-to-market efficiency. For the last 12 months, we increased our ARR $63 million while investing $44 million in sales and marketing, representing an efficiency ratio of 1.4:1 for ARR creation to sales and marketing investment. We believe this ranks among the best in SaaS in terms of sales and marketing efficiency. Moving to profitability. We are pleased with our progress since becoming adjusted EBITDA positive in the third quarter of 2023. Our adjusted EBITDA for the first quarter was $3.8 million, which is better than the high end of our expectations. Now moving to our balance sheet and liquidity. We ended the quarter with just under $90 million of cash and marketable securities. Our revolving credit facility remains undrawn and provides $60 million of borrowing capacity. We produced positive operating cash flow that exceeded last year by approximately $11 million. Now turning to guidance. For the second quarter of 2024, we are providing guidance for revenue in the range of $80.5 million to $82 million, which represents 22% to 25% total revenue growth and 26% to 28% subscription revenue growth. Related to adjusted EBITDA, we are providing guidance in the range of $2.8 million to $3.8 million. For full year 2024, we are providing guidance for revenue in the range of $328.5 million to $333 million, representing total revenue growth of 24% to 26% and subscription revenue growth of 26% to 28%. We are also providing adjusted EBITDA guidance of $20.5 million to $23.5 million. Because of the impact from expense timing such as our client conference, we expect the second quarter to be the low point of our adjusted EBITDA performance in 2024. In closing, I'm very pleased with our continued execution, both operationally and financially. We are demonstrating growing success in the market and continued discipline managing our operating costs and investments. We remain on track to cross over our 65% gross margin and 20% adjusted EBITDA margin objectives in 2026 all while establishing Alkami as the premier digital banking provider in the marketplace. With that, I'll now hand the call over to the operator for questions. Operator: [Operator Instructions] Your first question comes from the line of Patrick Walravens from Citizens JMP. Patrick Walravens: Great. So Alex, a question for you. Thank you so much for the introduction and the tone of business and what's driving it. That was super helpful. One thing -- one comment you made kind of later in your remarks was about the investments that you've made to open up the platform. Can you talk about that a little bit more? What are they? And what's driving that? Alex Shootman: Yes. It's 2 things, Pat. Today, we have APIs into the platform, and we have a software development center or an SDK. And the feedback that we had gotten from our customers is they like being able to access the platform both through APIs and through the SDK. But they found that the way that we supported the SDK was too fragmented for them across the company and the process by which they would provision the SDK was challenging. And so we rebuilt the entire provisioning process of the SDK, and we built a developer site as well that's got the consolidation of the -- all of the ways that they would find code snippets, get access to help and support with respect to the SDK. And so that's an area that we've worked on. We -- longer term, from an API perspective, there's things that we're doing in the platform that will make the entire platform more API-centric. So rather than just having a set of APIs that you can use, the APIs would allow for more access into the application to allow customers to do various different things that they'd like to do. So think of the second piece is a final transformation of Alkami into an API-centric platform. Patrick Walravens: Right. Okay. Great. And then, Bryan, can I ask you, so 600,000 net adds in Q1, how should we think about that throughout the rest of the year? W. Hill: Yes. You should think about user growth in 2024 to be reflective of the same user growth that we had in 2023 in terms of the quarters. Across Q2, Q3 and Q4, it will be a little bit lower in the second quarter compared to Q3 and Q4 and then Q3 and Q4 would be somewhat even, but for the full year, we'll have user growth in terms of implementations comparable to what we had in 2023. Operator: Your next question comes from the line of Mayank Tandon from Needham. Mayank Tandon: Alex and Bryan, congrats on the quarter. So Alex, I think the slide on Page 5 is very helpful. I just wanted to dive into that a little bit more. So as we look at that base of 210 million users with the legacy providers. How fast would you expect to capture that market? And realistically, do you have a number in your mind that you could share with us in terms of how much you think you can penetrate the portfolio that you have today with your products? W. Hill: Yes. So the way that we think about our growth algorithm is we expect to grow users between 18% and 20% a year and user growth is the result of 50% coming from implementation, so new client sales and the remaining 50% coming from our existing base. Our existing base today is growing about 10%. And then the other side of our growth algorithm is ARPU expansion. And ARPU expansion is occurring from us bringing on new clients with more products and a richer RPU as well as cross-selling into our base additional products because today, our clients only possess about 13 products on average when we 32 products to sell them. So you should expect between 5% and 7% ARPU expansion from quarter-to-quarter. Mayank Tandon: Great. And then as a quick follow-up, I wanted to just get an update on your success in the bank space. I think in the past, you've shared some metrics around your pipeline, how much of that breaks down between banks versus credit unions. So if you could give us an update, your progression there? And if that's resulted in any kind of change to your go-to-market strategy drive that success? W. Hill: No. So our sales force -- the way that we're arranged go-to-market is our sales reps are really pretty strong and adept at selling both credit union as well into a bank client. So at this point, our go-to-market rhythm, there's no change in that. But just a step back as it relates to banks, there's really 4 areas that we're focused on. The first area is we need to ensure that we have strong product market fit. And as we mentioned on our last quarter call, we had a third party come in evaluate our product against the market. And the view was that we covered 92% of the businesses in the United States that are utilizing a treasury management platform. So we have pretty strong product market fit. The second area is around core integrations. And today, we have 16 clients in backlog that are banks. We have 15 that are live and they represent about 7 core integrations. So by the end of the year, in 2024, we're going to implement in total, 13 banks, and we'll have multiple core integrations with each core that we integrate into. So that's a proof point for us as well. Third, we need market awareness. We need greater brand recognition as it relates to commercial banking in the space. And if you look back over the last 12 months, we've competed in about 70 commercial bank RFPs, and our win rate is in, call it, the mid-teens as it relates. So we're making progress and being out in the number of deals that are being presented in the market. Now it's a push to use core integrations and product market fit to drive a higher win rate. And then finally, it's about having additional resources internally at Alkami from a product, from a client success, from an implementation perspective that truly move well and interact well with commercial banks because we have a legacy a history of credit unions. And we have a couple of new hires that we'll be announcing over the next 30 to 45 days for individuals who have accept positions that will help when we announce those roles, it will evidence our commitment and investment in the space. So we feel like we're making a lot of progress on those 4 foundational areas that will ultimately result in our goal of having about 50% of the new clients we win each year coming from banks by 2026. Operator: Your next question comes from the line of Jacob Stephan from Lake Street. Jacob Stephan: Congrats on the quarter. Maybe just touching on kind of that win rate that you referenced. I think last quarter -- last call, you had mentioned that kind of came down as a result taking more shots on goal. But maybe you could just kind of give us a sense for how that's been trending kind of since the last call here, I guess, into 2024? W. Hill: Yes. I mean the way that we evaluate win rates is we evaluate it over a longer continuum of time of any 1 quarter. And we've been consistently on a trailing 12-month basis. being in the mid-teens, kind of executing in the mid-teens level as it relates to banks compared credit unions where we're in more like the mid-30s in terms of win rates on a historical basis, looking at 12-month periods of time. We feel that, again, by 2026, we can push our win rate to be more commensurate with the credit union space with success in the 4 areas that I just outlined in my last question. Jacob Stephan: Okay. Got it. And I guess maybe the 1.4x sales efficiency kind of ARR divided by sales and marketing expenditures. Obviously, that's nice, that's high, but maybe you could just kind of touch on a question, why won't you spend more if you kind of getting that at such high efficiency rate? Alex Shootman: Great thing about our market is that the customers are very well known, and there's a lot of data about the customers. If you think markets where you have to spend a lot of money on sales and marketing, it's either because you're trying to stimulate the market. You've got a product that's a new product or a new concept and you have to stimulate demand or the market is very, very large, and you have to be found by people that have a need. The great thing for us is we don't have to do either one of those things in terms of the regional and community financial institution market. Digital banking is a known solution. People have it. It's a budgeted line item, so you're not having to spend sales and marketing dollars to stimulate demand. And then the great thing about this market is because it's regulated, there's a tremendous amount of information that's published about all of the financial institutions. What that results in is our ability to create territories that are pretty precise in terms of when people are going to be coming up on their contract, and it allows us to spend marketing dollars that is -- that's very precise. So for us to all of a sudden double our sales and marketing expense, we don't think would be prudent because of the nature of the market itself. And so the nature market allows us to maintain the spend envelope that we have on sales and marketing and still drive the business performance that we have. W. Hill: Yes. And I'll make a couple of more comments to what Alex just -- how he just answered. We are investing more in sales and marketing. I mean we're growing sales and marketing just at or slightly below our revenue growth rate. And we expect to maintain between 14% and 15% of revenue for sales and marketing. But what that really does for us is that allows us to then take the sales and marketing dollars we otherwise would have invested in and allocate those to our platform. And that really provides more value for the end market. It provides more value for our client base versus spending more, investing more heavily in sales and marketing. And that's the way the companies always approach go-to-market is best platform wins, and by having a very efficient sales and marketing ratio and result allows us to invest more in our platform. Operator: Your next question comes from the line of Alexei Gogolev from JPMorgan. Elyse Kanner: This is Elyse Kanner on for Alexei Gogolev. So my first question was regarding gross margins. You kind of talked about how it was largely driven by this focus on containerization and reducing hosting costs. I was wondering what you see is the exit rate for the year and kind of the cadence of margin expansion we can expect here? And if there's any upside to the 2026 target that you mentioned you'd likely exceed? W. Hill: Yes. So we're still committed to the 65% gross margin for 2026. So we're not making a move from that and the way that we have described our progression to 65% is on average gross margin expansion of 200 basis points per year. It just so happens in Q1. We did far better than that. And I would expect in 2024, we're going to do a bit better than 200 basis points per year. And the factors that are going to drive that will be continued success and becoming more efficient with our hosting cost per user as well a lot of the activities and initiatives we have around implementation and other post-sale operations, but more efficiency in those areas. Alex Shootman: And I would just add from a commentary perspective, we're really pleased with the results that we're getting from the investment in the platform. That's not just delivering improved gross margin, which is important, but it's delivering increased customer satisfaction and attractiveness to Alkami. And we're really pleased with what the services team is doing in terms of how they're onboarding customers and how they're thinking about the roles and responsibilities when they're onboarding customers where they've just turned out to be doing some things that allow us to scale as we continue to onboard, we think more customers than anybody else. So Alkami is really pleased with what the implementation teams are doing and what the platform teams are doing in terms of both business results and customer satisfaction. Elyse Kanner: Got it. And then as a quick follow-up, you were talking about how a lot of your RPU expansion comes from new customers adopting more products. Do you have any breakdown between how banks versus credit unions are adopting new products if there are trends with maybe one adopting more than the other? W. Hill: No. It's about the same, but when a couple of products are included in just about... . Alex Shootman: [indiscernible] difference between banks and credit unions. W. Hill: Yes. But the product adoption is about the same, except for a couple of the different products that banks will always take. In general, about 85% of the commercial banks that we sell, will take our ACH Alert product, which is a high RPU product. And then they always take our commercial banking product, which is also a high RPU product. So I'll give you some ideas of what I mean by higher RPU and how those products can drive a higher RPU. When you look at our backlog today, we have 42 clients in backlog. Of those 27 are banks and 17 -- 15 of those are of those are -- 27 of those are credit unions and 15 of those are banks. The credit unions had an average RPU of $22 and the banks have an average RPU of $27. So our overall backlog is about $24 and banks are driving up the higher average. Compare that to our company average of $16.71. So as new logos are coming on, they're coming on at a much higher RPU than the existing base today. Alex Shootman: And the great news for us is that higher RPU for both credit unions and banks coming on board. Certainly, a contribution to that is we've got a really excellent sales team. But also the surface area of what people want to do with digital banking has grown. And so there's a demand pull in terms of number products that people are purchasing today versus, call it, 5 or 6 years ago. Operator: Your next question comes from the line of Jeff Van Rhee from Craig-Hallum. Jeff Van Rhee: A couple on the product side. First, I guess, as banks are really struggling and credit unions, too -- and focused on asset gathering, I want to correlate that into the analytics. I mean, since you bought segment, can you just talk about whether and how it's met or not met your expectations. Just curious, your overall thoughts on analytics as it relates to the segment. And then also in terms of recent deals, maybe I missed it, but any update in terms of attach rates to deals? Alex Shootman: Yes. Well, first of all, let me just give you a commentary on the attracting assets because the really interesting thing that's happening with our customers is they're trying to navigate 2 different competing pressures. One is they want to offer very convenient items like digital account opening, right? So really convenient capabilities for folks like digital account opening. But the more that the more that they enable digital account opening, the more that they can suffer from fraud attacks. Several of the customers that I talked to had anywhere upwards of 70% to 75% of the accounts that were open with digital account opening were fraudulent accounts. So I would just say, overall, and then I'll get to the discussion on analytics. But overall, we see this really interesting intersection between what customers want to do is have a great digital account open experience. They want to have very easy and intuitive money movement. But the more that they press on those than the more that they're challenged by fraud. So that's a great place for somebody like an Alkami to be both a strategic provider and a product provider to help a customer navigate. I mentioned in my opening comments that we're seeing -- we're seeing demand in the Alkami data platform, which is what is able to drive analytics. And so that product is something that's creating great business results for us. And Bryan, I know we don't break it out separately, but you may have some commentary just in terms of that product line. W. Hill: Yes. In terms of the contribution, both segment and ACH Alerts, so 2 of our acquisitions, they contribute a little over 20% our new sales bookings, both in Q1 of this year as well as full year of 2023. So that's been pretty consistent for the last 15 to 18 months. And each of those contributing about 10% each. So it's not really weighted more one towards the other. Jeff Van Rhee: Very helpful. And then I guess just when you do see the existing base come back for up-sells or additional product, and you think about the next year or 2, it's a variation of the last question. But curious, where you see the greatest white space -- the greatest opportunity to upsell value-wise into your existing base by product? W. Hill: Jeff, right now, on average, our clients are taking 13 of our products, and we have 32 products that we offer. So the white space is significant. And it depends on the financial institution strategy of what they're trying to accomplish on the areas that they'll choose to invest in. We called out in our prepared comments a few areas that we saw greater adoption in the first quarter of 2024 and those were around marketing and data insights, which that's predominantly segment. Also in the fraud area, because fraud is top for financial institutions, and that covers ACH Alert, and account takeover in some of those type products. And then other areas where we saw some nice adoption was within our customer service area. So that's where AI starts to come into play through chats and other types of products and then finally, financial wellness, which is around credit scoring and those types of subproducts. Alex Shootman: One thing I would -- so if you translate that to customer conversation, it's always about can I get transactional data that I can either analyze with your models or drive into the data stack that I have internally help me manage fraud, either keeping bad guys out or keeping money from leaving, help me make money movement easier and then a tremendous amount of demand on I want to be able to do a digital card issuance and then I want to be able to push that card to a digital wallet. So anything that you think about that you read in terms of creating a really great digital experience for a customer and a member, that's driving demand for our products. Operator: There are no more questions at this time. Thank you for attending the Alkami First Quarter Earnings Call. You may now disconnect.
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Alkami Technology, Inc. (NASDAQ: ALKT) Secondary Offering and Market Performance

Alkami Technology, Inc. (NASDAQ:ALKT) is a leading provider of cloud-based digital banking solutions in the United States. The company offers innovative software that helps banks and credit unions enhance their digital offerings. Alkami competes with other fintech companies in the digital banking space, striving to provide superior technology and customer service.

On November 8, 2024, GENERAL ATLANTIC, L.P., a significant shareholder and director of Alkami, sold 2.5 million shares of ALKT at $37.50 each. This transaction is part of a larger secondary offering involving 7.5 million shares, as highlighted by entities like S3 Ventures Fund III and George B. Kaiser. The offering is set to close on the same day, pending standard conditions.

The secondary offering allows the selling stockholders to capitalize on their investment, with Alkami not receiving any proceeds. The underwriter has a 30-day option to purchase an additional 1.125 million shares, which could further impact the stock's supply and demand dynamics. This offering reflects confidence in Alkami's market position and growth potential.

Currently, ALKT's stock is priced at $37.87, showing a slight increase of 0.29% or $0.11. The stock has experienced fluctuations, with a daily low of $37.53 and a high of $38.20. Over the past year, ALKT's stock has ranged from a low of $20.55 to a high of $41.36, indicating significant volatility and investor interest.

Alkami's market capitalization stands at approximately $3.81 billion, reflecting its substantial presence in the fintech industry. With a trading volume of 2,002,639 shares today, investor activity remains robust. The company's performance and strategic moves, such as the secondary offering, continue to attract attention from market participants.