• Alkami Announces First Quarter 2023 Financial Results

    Source: Nasdaq GlobeNewswire / 03 May 2023 15:05:01   America/Chicago

    PLANO, Texas, May 03, 2023 (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, 2023.

    First Quarter 2023 Financial Highlights

    • GAAP total revenue of $60 million, an increase of 34% compared to the year-ago quarter;
    • GAAP gross margin of 54%, compared to 55% in the year-ago quarter;
    • Non-GAAP gross margin of 58%, compared to 58% in the year-ago quarter;
    • GAAP net loss of $(17) million, compared to $(13) million in the year-ago quarter; and
    • Adjusted EBITDA loss of $(3) million, compared to $(4) million in the year-ago quarter.

    Comments on the News
    Alex Shootman, Chief Executive Officer, said, “In the first quarter, we continued to experience healthy demand for our solutions. We closed an additional six new logos, renewed three clients and delivered another significant quarter of add-on sales. Our existing clients and prospective clients seek to leverage technology and innovation to attract, retain and grow customer relationships as they advance their digital transformation journeys.”

    Shootman added, “Our recent client conference, Alkami Co:lab, was the most attended client conference in our history, demonstrating marketplace demand for the Alkami digital banking platform. I remain confident that Alkami has the right strategy and platform, matched with the best people and most successful financial institutions in the industry.”

    Bryan Hill, Chief Financial Officer, said, “We celebrated an important milestone in the first quarter, crossing the 15 million digital banking users mark and exiting the quarter with 15.1 million digital banking users on the Alkami platform, 18% higher from the year-ago quarter. In addition, add-on sales represented more than 50% of new sales during the quarter, and there are now 42 new logos and significant add-on sales orders in implementation, representing a total of $47.1 million in Annual Recurring Revenue. We exited the quarter with Annual Recurring Revenue of $240 million, up 36% compared to the year-ago quarter. And our revenue per user continued to increase, ending the quarter at $15.88.”

    2023 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, 2023 of:

    • GAAP total revenue in the range of $62.5 million to $63.5 million;
    • Adjusted EBITDA loss in the range of ($4.5) million to ($3.5) million.

    Alkami is providing guidance for its calendar year ending December 31, 2023 of:

    • GAAP total revenue in the range of $257 million to $261 million;
    • Adjusted EBITDA loss in the range of ($6) million to ($3) 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 1-877-870-4263 and internationally at 1-412-317-0790, using passcode 10177344. 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 and digital loan origination, payment security, and data analytics and marketing solutions. To learn more, visit http://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) loss on financial instruments, (3) amortization, (4) stock-based compensation expense, and (5) acquisition-related expenses, net. 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) loss on financial instruments, (3) interest expense, net, (4) depreciation and amortization (5) stock-based compensation expense, and (6) acquisition-related expenses, net. 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 for all clients on the platform 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,
      2023   2022 
    Assets   
    Current assets   
    Cash and cash equivalents$114,287  $108,720 
    Marketable securities 71,108   87,635 
    Accounts receivable, net 28,429   26,246 
    Deferred implementation costs, current 8,438   7,855 
    Prepaid expenses and other current assets 14,238   11,709 
    Total current assets 236,500   242,165 
    Property and equipment, net 14,214   13,561 
    Right of use assets 14,108   14,670 
    Deferred implementation costs, net of current portion 25,060   24,783 
    Intangibles, net 40,897   42,593 
    Goodwill 148,050   148,017 
    Other assets 3,235   3,096 
    Total assets$482,064  $488,885 
    Liabilities and Stockholders' Equity   
    Current liabilities   
    Current portion of long-term debt$4,250  $3,188 
    Accounts payable 3,163   4,291 
    Accrued liabilities 21,720   21,643 
    Deferred revenues, current portion 9,850   8,835 
    Lease liabilities, current portion 3,118   3,657 
    Total current liabilities 42,101   41,614 
    Long-term debt, net 80,375   81,392 
    Deferred revenues, net of current portion 13,712   13,904 
    Deferred income taxes 1,791   1,712 
    Lease liabilities, net of current portion 15,608   15,817 
    Other non-current liabilities 350   400 
    Total liabilities 153,937   154,839 
    Stockholders’ Equity   
    Preferred stock, $0.001 par value, 10,000,000 shares authorized and 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022 —   — 
    Common stock, $0.001 par value, 500,000,000 shares authorized; and 92,864,741 and 92,112,749 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 93   92 
    Additional paid-in capital 717,450   706,407 
    Accumulated deficit (389,416)  (372,453)
    Total stockholders’ equity 328,127   334,046 
    Total liabilities and stockholders' equity$482,064  $488,885 
        


    ALKAMI TECHNOLOGY, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except share and per share data)
    (UNAUDITED)
     Three months ended March 31,
      2023   2022 
    Revenues$59,996  $44,790 
    Cost of revenues(1) 27,858   19,980 
    Gross profit 32,138   24,810 
    Operating expenses:   
    Research and development 20,549   14,156 
    Sales and marketing 10,878   7,898 
    General and administrative 17,111   17,046 
    Acquisition-related expenses, net 186   (1,378)
    Amortization of acquired intangibles 360   94 
    Total operating expenses 49,084   37,816 
    Loss from operations (16,946)  (13,006)
    Non-operating income (expense):   
    Interest income 1,726   108 
    Interest expense (1,757)  (288)
    Gain (loss) on financial instruments 210   (133)
    Loss before income taxes (16,767)  (13,319)
    Provision for income taxes 196   87 
    Net loss (16,963)  (13,406)
    Net loss per share attributable to common stockholders:   
    Basic and diluted$(0.18) $(0.15)
    Weighted-average number of shares of common stock outstanding:   
    Basic and diluted 92,397,341   90,208,871 

    (1) Includes amortization of acquired technology of $1.3 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively.


     
    ALKAMI TECHNOLOGY, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
    (UNAUDITED)
     Three months ended March 31,
      2023   2022 
    Cash flows from operating activities: 
    Net loss$(16,963) $(13,406)
    Adjustments to reconcile net loss to net cash used in operating activities:   
    Depreciation and amortization expense 2,586   1,018 
    Accrued interest on marketable securities, net (398)  (42)
    Stock-based compensation expense 11,440   9,920 
    Amortization of debt issuance costs 45   10 
    Gain on revaluation of contingent consideration —   (2,700)
    (Gain) loss on financial instruments (210)  133 
    Deferred taxes 47   34 
    Changes in operating assets and liabilities:   
    Accounts receivable (2,183)  (2,915)
    Prepaid expenses and other current assets (2,654)  (172)
    Accounts payable and accrued liabilities (1,290)  628 
    Deferred implementation costs (859)  (469)
    Deferred revenues 824   (384)
    Net cash used in operating activities (9,615)  (8,345)
    Cash flows from investing activities:   
    Purchase of marketable securities (20,987)  (112,079)
    Proceeds from maturities and redemptions of marketable securities 38,122   — 
    Purchases of property and equipment (229)  (282)
    Capitalized software development costs (1,141)  (1,206)
    Net cash provided by (used in) investing activities 15,765   (113,567)
    Cash flows from financing activities:   
    Principal payments on debt —   (313)
    Payments for taxes related to net settlement of equity awards (1,984)  — 
    Proceeds from stock option exercises 1,416   936 
    Net cash (used in) provided by financing activities (568)  623 
    Net increase (decrease) in cash and cash equivalents and restricted cash 5,582   (121,289)
    Cash and cash equivalents and restricted cash, beginning of period 112,337   312,954 
    Cash and cash equivalents and restricted cash, end of period$117,919  $191,665 


     
    ALKAMI TECHNOLOGY, INC.
    RECONCILIATION OF GAAP TO NON-GAAP MEASURES
    (In thousands, except per share data)
    (UNAUDITED)
     Three Months Ended
     March 31,
      2023   2022 
    GAAP total revenues$59,996  $44,790 
        
     March 31,
      2023   2022 
    Annual Recurring Revenue (ARR)$240,050  $176,897 
    Registered Users 15,119   12,819 
    Revenue per Registered User (RPU)$15.88  $13.80 
        
        
    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,
      2023   2022 
    GAAP cost of revenues$27,858  $19,980 
    Amortization (1,599)  (308)
    Stock-based compensation expense (1,146)  (978)
    Non-GAAP cost of revenues$25,113  $18,694 
        
        
    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,
      2023   2022 
    GAAP gross margin 53.6%  55.4%
    Amortization 2.6%  0.7%
    Stock-based compensation expense 1.9%  2.2%
    Non-GAAP gross margin 58.1%  58.3%
        
      
    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,
      2023   2022 
    GAAP research and development expense$20,549  $14,156 
    Stock-based compensation expense (3,775)  (1,884)
    Non-GAAP research and development expense$16,774  $12,272 
        
      
    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,
      2023   2022 
    GAAP sales and marketing expense$10,878  $7,898 
    Stock-based compensation expense (1,590)  (750)
    Non-GAAP sales and marketing expense$9,288  $7,148 
        
      
    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,
      2023   2022 
    GAAP general and administrative expense$17,111  $17,046 
    Stock-based compensation expense (4,733)  (6,162)
    Non-GAAP general and administrative expense$12,378  $10,884 
        
      
    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,
      2023   2022 
    GAAP net loss$(16,963) $(13,406)
    Provision for income taxes 196   87 
    (Gain) loss on financial instruments (210)  133 
    Amortization 1,959   402 
    Stock-based compensation expense 11,244   9,774 
    Acquisition-related expenses, net(1) 186   (1,378)
    Non-GAAP net loss$(3,588) $(4,388)
        
    (1) Acquisition-related expenses, net, for the three months ended March 31, 2023 include expenses associated with the acquisition of Segmint, primarily related to legal, consulting, and professional fees. Acquisition-related expenses, net, for the three months ended March 31, 2022 includes the accrual of deferred compensation due to the former owner of ACH Alert, in addition to expenses associated with the acquisition of MK, primarily related to legal, consulting, and professional fees. These expenses were offset by the $2.7 million gain on contingent consideration related to the purchase of MK.
        
        
    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,
      2023   2022 
    GAAP net loss$(16,963) $(13,406)
    Provision for income taxes 196   87 
    (Gain) loss on financial instruments (210)  133 
    Interest expense, net 31   180 
    Depreciation and amortization 2,586   1,018 
    Stock-based compensation expense 11,244   9,774 
    Acquisition-related expenses, net 186   (1,378)
    Adjusted EBITDA$(2,930) $(3,592)
        
    (1) Acquisition-related expenses, net, for the three months ended March 31, 2023 include expenses associated with the acquisition of Segmint, primarily related to legal, consulting, and professional fees. Acquisition-related expenses, net, for the three months ended March 31, 2022 includes the accrual of deferred compensation due to the former owner of ACH Alert, in addition to expenses associated with the acquisition of MK, primarily related to legal, consulting, and professional fees. These expenses were offset by the $2.7 million gain on contingent consideration related to the purchase of MK.
     

    Investor Relations Contact
    Steve Calk
    ir@alkami.com

    Media Relations Contacts
    Marla Pieton
    marla.pieton@alkami.com

    Katie Schimmel
    katie@outlookmarketingsrv.com

     


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