Alkami Technology, Inc. (ALKT) on Q3 2022 Results - Earnings Call Transcript

Operator: Hello and welcome to Alkami’s Third Quarter 2022 Financial Results Conference Call. My name is Danielle and I will be your operator for today’s call. I will now turn the call over to Andrew Vinas. Andrew, you may begin. Andrew Vinas: 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 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 Form 10-K and 10-Q entitled Risk Factors and Forward-Looking Statements. The statements made during the call are being made as of today, and we undertake no obligation to update or revise any forward-looking 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 comparable GAAP financial measures can be found in our earnings press release and in our quarterly filings with the SEC. I will now turn the call over to Alex. Alex Shootman: Thank you, Andrew. Thank you all for joining us today. I’m pleased to report another quarter of strong performance. In Q3 2022, Alkami grew revenue 34%, once again ahead of our expectations. We also exited the quarter with 13.7 million live registered users on the Alkami platform, up 2.3 million users compared to the prior year. This past quarter, we continued to make progress on our key priorities, which we shared with you at the beginning of the year. The first two are to become the digital banking provider of choice for banks, similar to our competitive position with credit unions, and increase our add-on sales. In the first 9 months of 2022, we have outperformed our expectations in both of these areas. We signed 10 new platform logos in the quarter, including 1 bank. This brings our year-to-date 2022 new logo wins to 15 credit unions and 7 banks. The 7 bank wins so far this year outpaced the 5 wins we had during all of 2021. And our momentum continues with an additional 4 banks closed following the end of the third quarter. Our add-on sales momentum continues with Q3 representing the best quarter of the year in terms of total contract value and add-on sales represents 34% of total sales for the first 9 months of 2022. In addition, we renewed 6 client contracts during the third quarter and 11 client contracts year-to-date. The 11 client renewals represent 5% of our ARR and added $40 million to our client contract backlog, which is now $755 million. We also expect to renew an additional 5 to 10 clients during the fourth quarter. Our results continue to demonstrate the energy and passion our Alkamists have to create great outcomes for our clients and position Alkami as the preferred digital banking provider in the industry. Thank you to fellow Alkamists. I am inspired by you daily. I often get questions on the macro environment from the investment community, so let me share some thoughts based upon customer interactions since our last earnings call. The first three themes are consistent since the beginning of the year. The fourth is a change. First, our clients and target market require modern banking solutions at a level of functionality all of us experience in every aspect of our lives. They consider it mandatory innovation, and we expect this trend to continue. People want a bank where the technology is seamless, modern and secure. And for many, they need digital banking more than they need a local branch, effectively making the digital platform the front door of the financial institution. Just last week, I talked with the president of a bank prospect with almost $10 billion in assets who told me, Alex, a great digital experience has become a must-have channel for us. Our customers want an easy-to-use e-branch that is constantly refreshed with new products and services. Second, digital user counts continue to rise and we are experiencing double-digit user growth amongst our clients. This is primarily driven by consumers and businesses seeking financial choice. Historically, we manage our finances from 1 or 2 accounts. But today, businesses and consumers have as many as a dozen accounts across multiple institutions. Forward-thinking FIs see digital product explosion as a growth opportunity, and our own research finds greater financial product penetration is driven by higher digital banking engagement. Third, FIs are realizing that the data they have in their core and digital banking systems is the best data available to target and deliver personalized and relevant messages and offers. The transactional data that FIs have about their customers is uniquely their own and unavailable through other sources, including those coming from web searches and visits. They understand that they have an opportunity to create a walled garden in which they understand their customers, segment their customers effectively, create high-conversion offers and deliver those offers in-channel to their customers. And fourth and this is the change. Our customers have told us that the last several years have been an environment in which they had deposits and were focused on loan growth. And while they are still focused on loan growth on the deposit side, they’ve experienced a rapid shift to a need to attract deposits. And to attract deposits, they are investing in digital onboarding technologies, and some of our credit union customers seek commercial accounts as a way to bring in new deposits and are in need of a great digital business banking experience to attract new customers. These themes are why in a challenging economic environment we continue to see strong demand and high-growth expectations. Our sales pipeline continues to be stronger than at any point in our history, and there are few digital banking companies who can provide a modern cloud-based solution along with the capacity and track record to manage over 1.7 million digital user implementations at a time. Alkami is proud to be a leader and one of the fastest-growing companies in the market. And now I’d like to share with you a few product updates from the last quarter, starting with business and commercial banking. Today, we can fully serve our target bank market with our retail and business portfolio. But we wanted to pressure test the competitiveness of our offering. And during September, we hosted a focus group of executives from banks ranging from $3 billion to $160 billion in assets who are not currently using Alkami’s digital banking product. After spending 2 days together reviewing demonstrations of our business banking products, they confirm that our business banking solution is competitive and differentiated. A key theme in the discussion involves Alkami’s approach when developing our products. We did so by investing hundreds of hours sitting with business end users and financial institutions, better understanding their pain points in business banking, whether in the complexity of assigning privileges to business users, the challenges in managing transaction origination limits for cash management clients or the time wasted on administrative errors that can be disruptive for the end user and the financial institution. As one of the focus group participants put it, Alkami has built a product with banks and did not rely only upon Alkami’s view of what a bank should need. These discussions validate our strategic direction and give us confidence in our ability to have the same success in the bank market we’ve had in the credit union market. Next, I’d like to update you on our data analytics and marketing products. As I stated earlier, most FIs know personalized and relevant communications are a requirement in reducing attrition and expanding relationships. Our 2022 acquisition of Segmint is targeted at this strategic priority for our clients, and I am excited about our product progress last quarter. We completed the initial integration of the Alkami digital banking platform and Segmint’s data analytics and marketing products. This means our clients are now able to seamlessly leverage the target audience from Segmint’s key lifestyle indicators directly in the online and mobile banking experience. Alkami clients are able to deploy user-specific content, driving product recommendations, financial coaching and retention-oriented personalized messaging into the digital banking environment. Additionally, this integration enables Alkami clients to attribute results to marketing campaigns by capturing and sending user interactions from the digital banking platform back to the Segmint solution. These enhancements are in the current release and being made available to our clients. This is the first step that moves Alkami closer to our goal of being both a digital sales and service platform for FIs. Finally, I’d like to provide an update on the launch and rollout of our new mobile platform. As a reminder, this new platform was a complete redesign that includes an enhanced user experience, enabling our clients to customize and expand their mobile solutions while doubling our own mobile development velocity. We started launching new clients on the platform in mid-Q2. And in Q3, we started moving existing clients. 86% of our clients are now on the new platform with the majority of the remaining clients set to go live by the end of the year, another proof point in Alkami’s ability to deploy new technology. At the beginning of the year, I shared with you five company priorities. And let me recap. First, we are committed to becoming the digital banking provider of choice for banks while maintaining our market leadership with credit unions. When we started the year, we talked about 5 to 10 bank wins for 2022, and we are ahead of schedule. Including new sales through to date, we’ve added 11 bank new logos and the year is not yet over. Second, we continue our focus on growing add-on sales. We saw progress on this priority during the third quarter, adding to our year-to-date success. Add-on sales represents over one-third of sales so far this year and are 120% higher than 2021 for the first three quarters. Third, we continue to allocate investment to make our platform the foundation of our clients’ digital banking infrastructure. All of our customers have an analog back office and they need to offer innovative digital products and experiences to their customers. And it’s our intent that Alkami will be the operating platform that allows them to connect their past with their future. Our focus is to become the most scalable and extensible platform in the market. Fourth, we continue to strengthen our focus on talent, ensuring that Alkami becomes the employer of choice in our market. For example, by embracing a remote work strategy, we have reduced our time to hire and we’ve been able to fill key hard-to-find skills. And finally, fifth, we will remain agile on the M&A front. For the remainder of 2022, we will be focused on the integration of Segmint, our bank strategy and our platform scalability. But if we see opportunities that fit our portfolio and drive value for our customers, we will pursue them within our capital return requirements. In closing, thank you again for joining the call to hear about Alkami’s Q3 results. We are proud of the quarter and we are energized by the opportunity in front of us. And with that, let me turn the call over to Bryan. Bryan Hill: Thanks Alex and good afternoon everyone. Third quarter results continue the momentum we experienced during the first half of 2022 across all our key metrics. For the third quarter of 2022, we achieved revenue of $53.4 million, which outperformed the high-end of our financial guidance by approximately $1 million and represented a growth of 34%. This was driven by strong performance across all primary revenue drivers, combined with Segmint’s revenue contribution of just over $3 million. We implemented 10 new logos in the quarter, bringing our digital platform count to 190, compared to 169 in the prior year. We now have 40 new logos in implementation, representing 1.7 million digital users. And during Q4 of 2022, we expect to implement 11 financial institutions from our backlog that represent approximately 520,000 digital users. We exited the quarter with 13.7 million registered users live on our digital banking platform, up 2.3 million or 20% compared to last year and up 390,000 digital users sequentially. Over the last 12 months, digital user growth continues to be driven by two areas. First, we implemented 29 financial institutions supporting 1.2 million digital users. And second, our existing clients increased their digital user adoption by 1.5 million users or 12%. Offsetting digital user growth was churn of 353,000 digital users, of which the majority is represented by a single client that has been transitioning off our platform over the last 18 months. We continue to maintain a very high gross retention rate of approximately 97%, measured in terms of ARR and digital users retained over the last 12 months. We ended the quarter with an RPU of $15.57, which is 15% higher than last year. This compares to our blended market opportunity of approximately $58 per user. The Segmint acquisition contributed $0.89 or 7% of RPU expansion, along with RPU expansion of $1.11 or 8%, driven by add-on sales success, and the addition of new clients who tend to onboard with a higher average RPU. Subscription revenue grew 35% compared to the prior year quarter and represents 95% of total revenue. We increased ARR by 38% and exited the third quarter at $214 million. We expect to exit 2022 with ARR of $226 million to $228 million, representing total growth of 34% to 35%. In addition, we currently have over $43 million of ARR in backlog for implementation over the next 12 months. Our expected 2022 exit ARR and implementation backlog combine to provide early visibility into a successful year in 2023. We continue to see strong demand across our product portfolio, well ahead at this point in 2021. Our total new sales performance outpaces 2021 by over 90%. Keep in mind, 2021 new sales were overweight to the fourth quarter. New sales for 2022 have occurred more evenly throughout the year, and we expect this to continue in Q4. Our add-on sales focus continues to yield returns, representing 34% of new sales for the first three quarters compared to 24% for all of 2021 and 17% for all of 2020. In addition to add-on sales, our client sales team is responsible for our contract renewals of our clients. Through the third quarter, we renewed 11 client relationships representing 5% of ARR and adding over $40 million to our clients’ remaining purchase obligation or client contract backlog. Our client contract backlog is now $755 million and 37% higher than a year ago. We expect to renew an additional 5 to 10 client arrangements in the fourth quarter. We are very excited with the success from this team. Now turning to gross margin and profitability. For the third quarter of 2022, non-GAAP gross margin was 57% compared to 58% in the prior year quarter. Margin dilution was driven by investment in post-sell activities necessary to support our significant implementation backlog and gross margin dilution from our MK Decision acquisition. Previously, we’ve highlighted that past M&A activity and investments in post-sell activities such as our client implementation team could constrain margin expansion for the next few quarters. However, we expect to achieve 100 basis points of gross margin expansion for our 2022 full year results. But let me explain further the complexity of implementation motion. Years where we experience a high concentration of new sales in the quarter can result in project implementation concentration in future quarters. We refer to this as project concurrency. In order to provide our clients a fantastic onboarding experience, we must build implementation capacity to the high-water mark of project concurrency, which can temporarily limit gross margin expansion. A very high project concurrency in Q3 and Q4 2022 results from new sales concentration in Q4 of 2021. A more evenly distributed new sales performance year for 2022 helps navigate high project concurrency in 2023 and the gross margin pressure that can result. Moving to operating expenses, for the third quarter of 2022, non-GAAP R&D expense was $15 million or 28% of revenue. A year ago, R&D represented 30% of revenue. As a reminder, our target operating model is to leverage R&D to 20% of revenue while we continue to invest in our platform. This will occur over several years as we scale revenue. Non-GAAP sales and marketing expense were $8.6 million or 16% of revenue. In the prior year quarter, sales and marketing represented 17% of revenue. The margin expansion is primarily attributable to revenue scale as we maintain our best-in-class sales efficiency. Our go-to-market efficiency outperforms our fintech peers and the majority of high-growth SaaS peer company comparables. We expect to maintain our go-to-market efficiency as we scale the business and gain market share. Non-GAAP general and administrative expense was $11.8 million or 22% of revenue. In the prior year quarter, G&A was approximately 27% of revenue. The margin expansion is attributable to revenue scale. We have reached a sustainable level of G&A spend as the majority of our public company investments are behind us. We expect to leverage G&A expense as a percentage of revenue as we move towards our profitability objectives. Our adjusted EBITDA loss for the third quarter was $4.6 million, which is probably 16% better than our expectations and $1.5 million or 24% better than the prior year quarter. As a reminder, our goal is to balance investment opportunities with revenue growth and to maintain a good line of sight to adjusted EBITDA positive, which we continue to expect to achieve as we exit 2023. Now moving to the balance sheet. We ended the quarter with just under $209 million of cash and marketable securities and just under $85 million of debt. We are comfortable with our net cash position as it represents several multiples of capital necessary to achieve free cash flow positive. Quickly turning to guidance. For the fourth quarter of 2022, we are providing guidance for revenue in the range of $54.3 million to $55.3 million and an adjusted EBITDA loss of $5 million to $4 million. For full year 2022, we are raising our guidance and now expect revenue in the range of $203 million to $204 million and an adjusted EBITDA loss of $18.6 million to $17.6 million. To summarize, we are executing across all areas of the business. We are improving our already attractive position in the marketplace with increasing momentum among banks and a growing contribution from add-on sales. Demand continues to be strong. Our new sales pipeline, implementation backlog and client contract backlog have never been greater, affording early visibility into 2023. With that, I’ll hand the call to the operator for questions. Operator: The first question comes from Andrew Schmidt of Citi. Please go ahead. Andrew Schmidt: Hey, Alex. Hey, Bryan, good sales quarter here. Thanks for taking my question. Wanted to start off just on the environment. And Alex, you had some good commentary upfront, but I just want to confirm, it doesn’t sound like you’re hearing anything about pauses in decision-making or pull back in terms of IT spend. Actually, it sounds like demand is actually or desire to invest is actually stepping up in terms of what you’re getting from your customers. Just wanted to drill down on that, just to be clear in terms of what you’re hearing on that front from your customers. Thanks. Alex Shootman: Yes, Andrew. This is Alex. Thanks for the question. Certainly, demand could soften in the future, right, because neither Bryan and I can predict the future. But right now, we have not seen any slowdown in demand. And I think what it comes back to is that comment that I shared with the president of a bank prospect: this is a mandatory investment that people have to make. They don’t have a choice but to have a great digital banking offering for their customers. And I think the thing that was most interesting to me is, even as things get perhaps a little more challenging to an institution, as they rotate back into needing to drive deposit growth, they see the digital channel as an area to drive deposit growth as well. So kind of all-around they see the digital channel as a critical part of their business environment, but we have not seen a drop-off in demand. Bryan Hill: Andrew, our sales pipeline continues to be at all-time highs. And what’s encouraging for us is we’re maintaining our strong position as it relates to signing new logos for credit unions. But even if we entered into a tougher environment, we are very thinly penetrated into the bank side of the market. And seeing the momentum that we’re presently gaining on the bank side of the market, for us, we feel that could offset future headwinds that could occur from a softening environment. And combining with that is the success that we’re having with add-on sales. I mean, with add-on sales now representing 34% of total contract value originated this year and comparing that to prior years of low 20% and sub 20%, that’s another very strong indicator that the demand is strong, the momentum in the company is still strong, and we have good visibility into the future. Andrew Schmidt: Very clear. Thank you both for that. And then if I could just dig into the visibility for FY ‘23, obviously, long contract durations, implementation time frames. You seem to have pretty good visibility at this point. But sorry if I missed it, what is the – did you mention the exit rate in terms of organic ARR growth? And then maybe you could talk about the puts and takes and how that plays into sort of at least a minimum expectation for 2023 revenue growth. Thank a lot. Bryan Hill: Yes. I’ll provide 2023 revenue guidance and revenue targets in our February update. But what we did say is we expect to exit the year with $226 million to $228 million of live ARR, and that represents a 34%, 35% total growth. And organic is 27% to 28%. And then also, Andrew, what I think is equally as important is we exit Q3 with $43 million of ARR in our implementation backlog, and that’s up well over 50% from the prior year quarter. Andrew Schmidt: Perfect. Congrats on the results, guys. Thanks for taking the questions. Operator: The next question comes from Mayank Tandon from Needham. Please go ahead. Sam Salvas: This is actually Sam Salvas on for Mayank today. Thanks for taking the questions. And congrats on another strong quarter. Good to see the 10 new logo wins this quarter. I was wondering if you guys could talk a little bit more about these – some of the new business wins and renewals from the quarter. And on top of that, maybe give us a sense as to the size and the scope of these wins. Thanks. Bryan Hill: No, no, that’s great. So in 2022 – and I’ll just speak to our year-to-date results, we had 22 new logos that we’ve signed, 15 of those, and this is through Q3 – 15 of those credit unions; seven of those are banks. And what we’re seeing is a much higher revenue per user compared to the prior year. And I’ll give you an example. This cohort in 2022 is about $3 a user higher than what we’ve experienced in 2021 and even much higher than what we experienced in 2020. So that’s very encouraging for us. And then Alex mentioned, during the month of October, we closed an additional four banks. And combined with that, we have closed additional two credit unions. So we’ve had six more new logos that closed in the month of October. So Q4 is starting to look like it could be a pretty nice quarter for us as well. The average size in terms of ARR for the credit unions and the banks is really very comparable. It’s about $800,000 of first year ARR that would come from this 2022 cohort. Now what drives that is that credit unions tend to have more digital users and a little bit lower RPU than the banks because the banks bring a lower number of users that all the banks have or the majority of the banks will bring with the commercial banking platform, which then increases RPU. So we’re very excited with the mix. We’re excited with the momentum that we have in banks. We’re extremely excited about the start to Q4, and we look forward to reporting the Q4 results in February. Sam Salvas: Great. That’s super helpful. And then just touching on gross margins, I appreciate the commentary there, especially in the fourth quarter, expecting 100 bps of expansion in ‘22 for the full year. And I think you guys in the past have said we can expect 200 to 300 bps of expansion in the past. Is that still on the table for 2023 or could you guys provide any color on how we should think about gross margins heading into the next year? Bryan Hill: No, you’re exactly right. On average, we expect 200 basis points of gross margin expansion. That could be 300 basis points in 1 year, 100 basis points in the next, but it should average out at 200 basis points of expansion each year as we progress to 65% gross margin. And then once we have a bit better line of sight to 65%, we can speak to where we will go from there. We have some good indication in gross margin in a couple of areas. As we originate new business, we’re originating that business at around a 70% gross margin. So that’s encouraging for us. The other area is, as we renew clients, the headwind from implementation costs that are deferred over the original contract go away. So upon renewal, we will have a 200 to 300 basis point lift at the unit economic level. So we do have some margin expansion built in structurally to our financial model. Now that can be somewhat tempered depending on the volume of new logo growth because you’re just bringing in new logos. So – but that is a good indication for us. Now at the beginning of the year, a couple of things that we did mention, we mentioned that the MK Decision acquisition would be a headwind to gross margin, and that’s what we have seen throughout 2022. And we also mentioned that, given the significant new logo implementation backlog that we had entering 2022, that resulted in a very high project concurrency that we had to resource for in Q3 and Q4 this year. So our expectations are, and this is all contingent on our success that we have with new logo wins in Q4, our expectations are, in 2022, we pull forward some of the implementation investment we would have expected to have had in 2023, which should put us back on a gross margin expansion trajectory in 2023. Sam Salvas: Great. That’s really helpful commentary. Thanks, guys. Operator: Our next question comes from Bob Napoli of William Blair. Please go ahead. Bob Napoli: Thank you, and good afternoon. What is driving the success in banks? Has the commercial side of your platform been upgraded or – I know you’ve been investing in that for a long time, but what is driving that? And is your win rate in banks going up? Alex Shootman: Bob, this is Alex. So yes, we spent the last couple of years, as I kind of mentioned in my opening comments, we spent the last couple of years improving our commercial bank offering. And then that was reinforced to us in this focus group that we did where we took several non-Alkami customers and had them give us feedback on the bank offering. And the feedback they gave us was really interesting because they said, look, what’s clear is that what you all have done is apply your user experience discipline. So that’s not user interface, but that’s the discipline that we have and the science we have in the company around trying to understand what’s the work that people are trying to do and then how can we have an application that is intuitive because it is anticipating the work that they are trying to do. And so they told us that there is three or four areas of our application where we’ve really rethought the way that the application is presented, and it’s more unified and a better user experience for one of their customers. So what they were reflecting on is, if this was a commercial account of ours, this is what they would be saying to us about the experience that you’re providing. So I think it’s a combination of the product, but then also we’ve made investments from a go-to-market perspective and from a services perspective to bring in skills and talent that understands that market, which is different than the credit union market. Bob Napoli: Thank you. And then your cross-sell success, what is – and I don’t know if this relates to the acquisitions, but how are the MK Decision and Segmint going and the very strong cross-sells? What is – what products are driving – are you cross-selling from MK and Segmint or what other products? I’m sure there is other products as well. Alex Shootman: I’ll give you a quick commentary on Segmint. And then, Bryan, if you can share some broader data, remember, we just closed the Segmint acquisition in the – in the middle of Q2. But we’ve made progress on our go-to-market integration for that line of business. From our own buyer research, we know that marketing is involved in 52% of digital banking purchase decisions. And so we developed a targeted sales play to address marketers, and we closed two new logo wins that included Segmint in the third quarter. We’ve also got a pretty big opportunity in our existing clients, where we can quickly show the value of Segmint’s analytic engine on the digital banking data. And so what we did, we’re so convinced of the ROI on Segmint to FI’s bottom line that we offered a try and buy program, which was signed by six prospects. In addition to that, during the third quarter, we sold Segmint into two existing clients. So we were pleased with the progress on go-to-market from that acquisition. And Bryan, I’ll let you comment overall on add-on sales. Bryan Hill: Yes and just a bit of a tag-on to Alex’s comment on Segmint. Segmint also has direct business that they sell. So in addition to the two new logos, the two cross-sold into our installed base, we had six additional new logos added specifically for the Segmint product, so non-digital banking platform, new logos. And we also see experience like that with ACH Alert. So we would continue to expect as we have acquisitions, we will go to market, sell them into our installed base, include them in new logo sales, but then also be digital banking platform agnostic and sell into new logos specific to those service offerings. But as it relates to our add-on sales success, it’s very consistent with Q2, Bob. Areas – we have eight product families. We have three to four of those that are driving in large part our cross-sell success, add-on sell success. Fraud and security is an area where the individual products that are really driving that are our ACH Alert product, which was an acquisition, as you’re aware. And then also our Account Takeover product is gaining some momentum. And it really gained momentum as we exited 2021, and that’s continued into 2022. Another area is money movement. Money movement is driven by bill pay. It’s also driven by instant account verification. And that’s where our crypto product resides, it’s within that product family group. And then finally, I would say, client service, where FIs are focused on creating an improved experience for their customers, also creating a self-service environment that helps their operating expenses. And so chat and conversational AI products are doing pretty well within that product family group. Bob Napoli: Thank you. Appreciate it. Operator: The next question comes from Charles Nabhan of Stephens. Please go ahead. Charles Nabhan: Hi, good afternoon. Thank you for taking my question. So most of my questions have been asked, but I wanted to get a little color around what’s next on your product road map, whether it comes organically through your product ecosystem or via M&A, if that’s part of the consideration today. Alex Shootman: If you think about Alkami in a three-act play, right, if you think about most indispensable software technologies that you’re familiar with, those technologies evolve through three acts. The first act is it’s a great application where you’ve intuited what the user needs and you build a great experience and people are attracted to your application. And then people start saying, gosh, I’d like to do more because this is a great application. So the application starts to take on platform characteristics. That means that the application becomes extensible and it’s easier for people to connect third-party applications or do their own development into that platform. And then once you’re starting to get those different products connected to your platform, you start gathering a tremendous amount of data and you start realizing that you’ve got an opportunity to take that data and create strategic value for your customer with that data. So think about – when we think about the future of Alkami, we think about it in terms of those three acts, which are happening at the same time, but they are happening at different levels of maturity. What else can we add to our application that makes it more and more usable to the financial institution? And that’s where you saw us make the investment in things like digital account opening. How does our platform become more extensible so that it’s easier for people to plug technologies into our platform, if you look at the number of partners that we have today versus 3, 4 years ago. And then how do we take the data that is uniquely the FI’s data and turn it into strategic value for that FI? That’s how you should think about the planning horizon for Alkami. Charles Nabhan: Got it. I appreciate the color. Thank you very much. End of Q&A: Operator: This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today’s presentation. 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.