10-K: Alkami Technology Reports FY2024 Results, Revenue Climbs 26.1% Amid Continued Investment

Alkami Technology's FY2024 results show a 26.1% increase in revenue, driven by registered user growth and product adoption, while the company continues to invest heavily in growth initiatives.

Summary

• Alkami Technology, Inc. reported its FY2024 financial results, showcasing significant revenue growth and strategic investments.
• Total revenue reached $333.8 million, a 26.1% increase compared to $264.8 million in 2023.
• SaaS subscription services accounted for 95.6% of the total revenue.
• The company experienced a net loss of $40.8 million, an improvement from the $62.9 million loss in 2023.
• This loss is attributed to ongoing investments in sales, marketing, product development, and client activities.
• The number of live registered users grew by 14.2% to 20.0 million.
• The average contract life for the Alkami Digital Banking Platform is approximately 70 months.
• The company established a new subsidiary in India to support potential future operational needs.
• Cross-sell contributed 45% of total contract value (TCV) in 2024.
• On February 27, 2025, Alkami entered into an agreement to acquire MANTL for approximately $380 million, aiming to enhance its onboarding and account opening solutions.

Sentiment

Score: 7

Explanation: The document presents a mixed sentiment. While revenue growth is strong and losses are decreasing, the company is still operating at a loss and faces several risks. The acquisition of MANTL is a positive strategic move, but it also introduces integration risks and potential financing needs.

Positives

• Significant revenue growth of 26.1% year-over-year.
• Reduced net loss compared to the previous year.
• Strong growth in live registered users, indicating increased platform adoption.
• High percentage of revenue from SaaS subscriptions, providing recurring revenue.
• Deepening client relationships, as evidenced by the increase in annual recurring revenue from existing clients.
• Strategic acquisition of MANTL to expand product offerings.

Negatives

• The company continues to incur net losses due to significant investments.
• Reliance on multi-year contracts means changes in subscriptions are not immediately reflected in operating results.

Risks

• Failure to manage future growth effectively could adversely affect the business.
• Inability to attract new clients or retain existing ones could impact revenue.
• Damage to the company's brand could hurt its ability to retain or expand its client base.
• Cybersecurity breaches or other compromises of security measures could materially impact the business.
• Intense competition in the market for digital solutions for financial service providers.
• Downturn, consolidation or decrease in technology spend in the financial services industry could materially affect the business.
• Failure to respond to evolving technological requirements or introduce adequate enhancements and new features could make the digital banking solutions obsolete or less competitive.
• The company's ability to use its net operating loss carryforwards and certain other tax attributes may be limited.

Future Outlook

Alkami intends to continue investing to grow its business and expand its addressable market by deepening existing client relationships, cross-selling, increasing customer penetration, broadening and enhancing its product suite, and selectively pursuing acquisitions.

Management Comments

• The company is committed to ongoing innovation, as evidenced by its research and development spending.
• The company aims to make clients more competitive against megabanks and other technology-enabled competitors.

Industry Context

The United States banking industry is massive, with almost $26 trillion in assets on the balance sheets of nearly 9,500 FIs as of December 31, 2022. Technology has emerged as a differentiating factor among FIs, driving market share gains, operational efficiencies and improved regulatory compliance.

Comparison to Industry Standards

• The four largest banks in the United States spent more than $45 billion in aggregate on technology in 2024, according to their public disclosures.
• Alkami competes with companies like Candescent, Q2 Holdings, Inc. and Temenos AG in the online, consumer and small business banking space.
• Alkami also competes with core processing vendors that also provide digital banking solutions such as Fiserv, Inc., Jack Henry and Associates, Inc. and Fidelity National Information Services, Inc.

Related Party Transactions

• Mr. Todd Clark, a member of the Board, was previously President and Chief Executive Officer of CU Cooperative.
• For the years ended December 31, 2023 and 2022, CU Cooperative Systems, Inc. (CU Cooperative), a vendor, was paid fees of $6.2 million, and $4.4 million, respectively, which relates to services resold to the Company's clients.

Stakeholder Impact

• Shareholders: Potential for long-term growth and value creation, but also risk of continued losses and dilution.
• Employees: Opportunities for professional growth and development, but also potential for increased workload and pressure.
• Customers: Access to innovative digital banking solutions and improved customer experience.
• Suppliers: Potential for increased business and collaboration.
• Creditors: Increased debt and financial obligations, but also potential for improved financial performance.

Next Steps

• The company will continue to invest in research and development to enhance its product suite.
• The company will focus on deepening existing client relationships and cross-selling opportunities.
• The company will work towards integrating the acquisition of MANTL.
• The company will monitor and manage cybersecurity risks and data privacy concerns.
• The company will adapt its solutions to comply with evolving regulations and guidance.

Key Dates