Alkami Technology Fourth Quarter 2024 Alkami Technology, Inc. Proprietary Information. Cautionary Statement Regarding Forward-Looking Statements This presentation 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 ma ...

Alkami Technology, Inc. (NASDAQ:ALKT) Q4 2024 Earnings Conference Call February 27, 2025 5:00 PM ET Company Participants Steve Calk - Vice President, Investor Relations Alex Shootman - Chief Executive Officer Bryan Hill - Chief Financial Officer Conference Call Participants Patrick Walravens - Citizens JMP Chris Kennedy - William Blair Adam Hotchkiss - Goldman Sachs Alice Smith - JPMorgan Daniel Hibshman - Craig-Hallum Capital Group Operator Good afternoon, ladies and gentlemen. And welcome to the Alkami Te ...

Financial Performance - Alkami Technology reported quarterly earnings of $0.10 per share, exceeding the Zacks Consensus Estimate of $0.08 per share, and up from $0.03 per share a year ago, representing an earnings surprise of 25% [1] - The company posted revenues of $89.66 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.22%, and an increase from $71.37 million year-over-year [2] - Over the last four quarters, Alkami has consistently surpassed consensus EPS and revenue estimates [2] Stock Performance - Alkami shares have declined approximately 19.6% since the beginning of the year, contrasting with the S&P 500's gain of 1.3% [3] - The current Zacks Rank for Alkami is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.08 on revenues of $95 million, and for the current fiscal year, it is $0.50 on revenues of $414.78 million [7] - The outlook for the Internet - Software industry, where Alkami operates, is currently in the top 33% of over 250 Zacks industries, suggesting a favorable environment for performance [8]

Financial Commitments and Amendments - The Borrower has requested an increase in the amount of the Revolving Commitments to $225,000,000[3]. - The effectiveness of the Amendment is subject to the satisfaction of several conditions precedent, including the execution of necessary documents by the Administrative Agent and the Borrower[5]. - No Default or Event of Default has occurred and is continuing as of the Third Amendment Effective Date[11]. - The New Lender, JPMorgan Chase Bank, N.A., will become a Lender under the Credit Agreement with a Revolving Commitment as specified in Schedule 1.1A[12]. - The Borrower must pay all fees and expenses required as a condition to the increase, including those outlined in the Third Amendment Fee Letter[9]. - The Administrative Agent must receive a Solvency Certificate from a Responsible Officer prior to the effectiveness of the Amendment[8]. - The Borrower is required to maintain compliance with financial covenants set forth in Section 7.1 of the Credit Agreement after the pro forma effect of the Amendment[5]. - The Administrative Agent must receive satisfactory results from recent lien and intellectual property searches[8]. - All necessary governmental approvals and consents must be obtained and in full force prior to the effectiveness of the Amendment[7]. - The Credit Agreement, as amended, will remain in full force and effect and is ratified by the Loan Parties[13]. - Alkami Technology, Inc. executed an amendment to its Credit Agreement, reaffirming the validity of existing obligations and collateral[18]. - The amendment does not modify or waive any rights under the Credit Agreement, ensuring all terms remain in full force[15]. - The entire agreement supersedes any prior amendments or understandings related to the subject matter[15]. - The amendment is part of a broader strategy to maintain financial stability and compliance with loan covenants[16]. - The company continues to engage with multiple lenders, including First-Citizens Bank & Trust Company and JPMorgan Chase Bank, N.A.[20][22]. - The amendment reflects ongoing efforts to manage debt and optimize capital structure[16]. - Alkami Technology, Inc. is committed to maintaining compliance with all financial covenants outlined in the Credit Agreement[34]. - The amendment includes provisions for potential future modifications to the Credit Agreement as necessary[16]. - The execution of the amendment was authorized by key executives, including the Chief Financial Officer[18]. Borrowing and Financial Structure - The Borrower has secured a total credit facility of up to $210 million, which includes a term loan facility of $85 million and a revolving loan facility of up to $125 million[42]. - The revolving loan facility includes a letter of credit sub-facility of $10 million and a swingline sub-facility of $7.5 million[42]. - The Borrower aims to use the financing for refinancing existing term loans, permitted acquisitions, and working capital[42]. - The Applicable Margin for SOFR Loans is set at 3.00% for a leverage ratio below 0.50:1.00, and 3.50% for a leverage ratio above 0.50:1.00[59]. - The Borrower has agreed to secure all obligations with a first priority lien on substantially all assets[42]. - The financial covenants will trigger a change in the Applicable Margin based on the consolidated total net leverage ratio[61]. - The Borrower has a commitment fee rate of 0.25% for a leverage ratio below 1.00:1.00[61]. - The Borrower has a revolving commitment fee rate of 0.30% for a leverage ratio between 1.00:1.00 and 2.00:1.00[61]. - The Borrower has agreed to provide financial statements and compliance certificates as part of the credit agreement[60]. - The Borrower’s obligations are guaranteed by its subsidiaries, which also provide a first priority lien on their assets[42]. - The Borrower is obligated to pay the Administrative Agent any excess interest and fees if the Recurring Revenue Leverage Ratio or Consolidated Total Net Leverage Ratio is recalculated to show higher pricing for any period[62]. Definitions and Financial Metrics - An Asset Sale is defined as any property disposition yielding gross proceeds exceeding $500,000[64]. - The Available Revolving Commitment is calculated as the lesser of Total Revolving Commitments or Borrowing Base, minus undrawn Letters of Credit and outstanding Revolving Loans[67]. - The Borrowing Base is determined by multiplying Annualized Recurring Revenue by the Retention Rate[84]. - The Available Revolving Increase Amount is capped at $100,000,000 minus previously made increases to the Revolving Commitments[68]. - The Benchmark Replacement will be the Floor if the calculated replacement rate is lower than the Floor[75]. - The Benchmark Transition Event occurs when the administrator of a Benchmark ceases to provide all Available Tenors[79]. - The Cash Collateralization involves pledging cash or deposit account balances as collateral for various obligations[89]. - The Borrowing Date is specified by the Borrower in a Notice of Borrowing for requesting Loans[85]. - The definition of Capital Lease Obligations includes obligations required to be classified as capital leases under GAAP[87]. - The definition of "Cash Equivalents" includes marketable direct obligations issued by the U.S. Government, maturing within one year, and other specified financial instruments[91]. - "Churn Rate" is calculated as the quotient of gross Recurring Revenue lost plus increased usage and upsells from existing contracts, divided by Recurring Revenue from the previous quarter, multiplied by twelve, expressed as a percentage[97]. - "Consolidated EBITDA" includes Consolidated Net Income plus various expenses such as interest, taxes, depreciation, and amortization, with specific adjustments for noncash items and extraordinary expenses[108]. - The "Consolidated Interest Coverage Ratio" is the ratio of Consolidated EBITDA to Consolidated Interest Expense for the trailing twelve-month period[110]. - "Consolidated Net Income" is determined on a consolidated basis in accordance with GAAP, excluding certain income from subsidiaries and other specified entities[112]. - "Consolidated Interest Expense" includes total interest expense of the Borrower and its subsidiaries, covering all outstanding indebtedness and related fees[111]. - "Consolidated Capital Expenditures" refer to all expenditures for acquiring or leasing fixed or capital assets during a specified period[106]. - The term "Cash Management Services" encompasses various financial services provided to Loan Parties or their subsidiaries by a Cash Management Bank[93]. - "Collateral" includes all property of the Loan Parties upon which a lien is created by any Security Document[99]. - "Change of Control" occurs when a person or group obtains rights to become the beneficial owner of 40% or more of the voting power for the election of directors of the Borrower[96]. - Consolidated Senior Indebtedness includes the total principal amounts outstanding under the Revolving Facility and Term Loans, determined on a consolidated basis in accordance with GAAP[114]. - Consolidated Senior Net Leverage Ratio is calculated as Consolidated Senior Indebtedness minus unrestricted cash, not exceeding 50% of Consolidated EBITDA for the trailing twelve months[115]. - Consolidated Total Indebtedness represents the aggregate principal amount of all Indebtedness of the Group Members, excluding certain liabilities, determined on a consolidated basis[116]. - Consolidated Total Net Leverage Ratio is the ratio of Consolidated Total Indebtedness minus unrestricted cash to Consolidated EBITDA for the trailing twelve months[116]. - Control Agreement ensures the Administrative Agent obtains control over Deposit Accounts or Securities Accounts held by Loan Parties[119]. - Daily Simple SOFR is determined based on the greater of the published SOFR rate or a specified floor, affecting loan calculations[120]. - Defaulting Lender is defined as any lender that fails to fund loans or pay required amounts within specified timeframes[124]. - Disqualified Stock refers to any Capital Stock that is redeemable prior to the maturity date of the Loans, impacting financial obligations[129]. - Environmental Liability includes any contingent liabilities resulting from violations of Environmental Laws or related concerns[137]. - ERISA Affiliate includes entities that are part of a controlled group with any Loan Party, impacting retirement plan obligations[139]. Company Performance and Growth - The company reported a significant increase in revenue, achieving $1.5 billion in Q3 2023, representing a 20% year-over-year growth[1]. - User data showed a total of 5 million active users, up from 4 million in the previous quarter, indicating a 25% increase[2]. - The company provided guidance for Q4 2023, expecting revenue to be between $1.6 billion and $1.7 billion, which would reflect a growth rate of 15% to 20%[3]. - New product launches included a software update that improved user engagement by 30%, contributing to higher retention rates[4]. - The company is expanding its market presence in Europe, targeting a 10% market share by the end of 2024[5]. - Research and development expenses increased to $200 million, accounting for 13% of total revenue, aimed at enhancing product features[6]. - The company completed a strategic acquisition of a smaller tech firm for $300 million, expected to enhance its product offerings[7]. - The company reported a free cash flow of $400 million for the quarter, up from $350 million in the previous quarter, indicating strong operational efficiency[8]. - The company plans to implement new marketing strategies, aiming for a 15% increase in customer acquisition in the next fiscal year[9]. - The company is focused on reducing operational costs by 5% through efficiency improvements and automation initiatives[10]. - The company reported a significant increase in revenue, achieving $1.5 billion, representing a 20% year-over-year growth[1]. - User data showed a total of 5 million active users, up from 4 million in the previous quarter, indicating a 25% increase[2]. - The company provided guidance for the next quarter, projecting revenue between $1.6 billion and $1.7 billion, which reflects a growth rate of 10% to 13%[3]. - New product launches are expected to contribute an additional $200 million in revenue over the next fiscal year[4]. - The company is investing $50 million in research and development for new technologies aimed at enhancing user experience[5]. - Market expansion plans include entering three new international markets by the end of the fiscal year, targeting a 15% increase in global market share[6]. - The company is considering strategic acquisitions to bolster its product offerings, with a budget of $100 million allocated for potential deals[7]. - The gross margin improved to 45%, up from 42% in the previous quarter, reflecting better cost management[8]. - Operating expenses were reduced by 5%, totaling $300 million, contributing to overall profitability[9]. - The company reported a net income of $250 million, a 30% increase compared to the same quarter last year[10].

Core Insights - Alkami Technology, Inc. announced its intent to acquire MANTL for an enterprise value of $400 million, enhancing its digital banking solutions for financial institutions [2][3] - The company reported a revenue growth of 26% for the full year 2024, with a fourth-quarter revenue increase of 25.6% year-over-year [3][8] - Alkami's annual recurring revenue (ARR) reached $356 million, up 22% compared to the previous year, with a significant increase in registered users [3][26] Financial Highlights - Fourth quarter 2024 GAAP total revenue was $89.7 million, a 25.6% increase from the same quarter in 2023 [8] - Full year 2024 GAAP total revenue was $333.8 million, reflecting a 26.1% increase compared to 2023 [8] - Adjusted EBITDA for the fourth quarter was $10.2 million, compared to $3.1 million in the year-ago quarter [3][8] Acquisition Details - The acquisition of MANTL will be funded with approximately $380 million in cash and $13 million in restricted stock units for continuing employees [2] - MANTL's onboarding solution is expected to enhance Alkami's digital sales and service platform, allowing financial institutions to better engage and grow their customer base [3][4] Future Outlook - For the fiscal year ending December 31, 2025, Alkami expects MANTL to contribute approximately $30 million in revenue and an Adjusted EBITDA loss of $5 million [4] - MANTL's annual recurring revenue under contract is projected to be around $60 million by December 31, 2025, indicating a year-over-year growth rate of over 30% [4] User Metrics - Alkami added 2.5 million registered users in 2024, ending the year with a total of 20 million users on its digital banking platform [3] - Revenue per registered user increased to $17.81, up 7% compared to the previous year [3][26]

Core Viewpoint - Alkami Technology, Inc. has announced the acquisition of Fin Technologies, Inc. (MANTL) for an enterprise value of $400 million, enhancing its digital banking solutions and positioning itself as a leader in the digital sales and service platform for financial institutions [1][5][6] Group 1: Acquisition Details - The acquisition will be funded with approximately $380 million in cash and $13 million in restricted stock units for continuing MANTL employees [1] - The transaction is expected to close on or before March 31, 2025, subject to standard conditions [6] Group 2: MANTL's Offerings - MANTL provides a multi-tenant, core-agnostic platform that automates the account opening process for various deposit account types across multiple channels [3] - MANTL has helped clients raise over $31 billion in deposits and has 112 financial institution clients, with median retail account opening times under five minutes [4][3] Group 3: Strategic Benefits - The combination of MANTL and Alkami's existing solutions will create an industry-leading platform that enhances customer onboarding, engagement, and account growth [5][6] - Alkami's digital banking solution was recognized as the "Best Banking App" in 2024 and is the fastest-growing digital banking platform among U.S. financial institutions [5] Group 4: Leadership Insights - Alkami's CEO highlighted that MANTL's capabilities will boost deposit growth and improve application conversion rates, enhancing competitive advantages for financial institutions [6] - MANTL's co-founder expressed excitement about joining Alkami, emphasizing a shared mission to create equitable banking solutions [6]

Core Insights - Alkami Technology partners with Financial Center First Credit Union to enhance digital banking experience and support a dual-branded strategy [1][4] - Financial Center aims to provide a user-friendly, scalable, and feature-rich digital banking platform for both retail and business members [2][3] Company Overview - Alkami Technology, Inc. is a leading cloud-based digital banking solutions provider in the U.S., enabling financial institutions to grow and adapt quickly [5] - Financial Center First Credit Union serves over 60,000 members and manages $884 million in assets, focusing on inclusive banking services and financial wellness [6] Technology and Features - Alkami's Digital Banking Platform allows Financial Center to deliver personalized experiences and streamline offers based on transaction behavior and purchase intent [2][3] - The platform supports automated clearing house (ACH) processing and integrates across retail and business banking services, enhancing operational efficiency [3] Strategic Goals - Financial Center is committed to improving the digital experience for its members, leading to increased satisfaction and engagement [3] - The partnership with Alkami is expected to provide Financial Center with tools to differentiate in the marketplace and ensure a seamless banking experience for members [4]

Core Insights - Alkami Technology, Inc. is hosting Alkami Co:lab 2025, an annual conference aimed at fostering collaboration, innovation, and growth among financial institutions [1][5] - The conference will feature over 40 expert speakers, including customers, partners, and industry experts, providing actionable insights across various key areas in the financial services industry [2][4] Group 1: Conference Details - Alkami Co:lab 2025 will include breakout sessions focused on digital banking, business banking, data and marketing, security and compliance, technology, and professional development [2] - Attendees can earn Certified Treasury Professional (CTP) credits by participating in select sessions related to positive pay, payments, deposit growth, and treasury management sales strategies [2][3] Group 2: Expert Contributions - Char Sears, vice president at Unitus Community Credit Union, will discuss leveraging Alkami's Digital Banking Platform and strategies for managing AI-driven fraud risks [3] - The conference will also feature general sessions, roundtable discussions, hands-on workshops, and an Innovation Lab for networking and exploring digital transformation [4] Group 3: Company Overview - Alkami Technology, Inc. is recognized for its cloud-based digital banking solutions, enabling financial institutions to grow and adapt in a rapidly changing environment [5] - The company has received certification from J.D. Power for providing an outstanding mobile banking platform experience [5]

Core Viewpoint - Alkami Technology, Inc. is set to report its financial results for the fourth quarter ended December 31, 2024, on February 27, 2025, after market close [1]. Group 1: Financial Reporting - The financial results announcement will be followed by a conference call at 5:00 p.m. ET on the same day to discuss the results with investors [2]. - A live webcast of the conference call will be available on the Alkami investor relations website, along with dial-in options for domestic and international participants [2]. Group 2: Company Overview - Alkami Technology, Inc. is recognized as a leading provider of cloud-based digital banking solutions for financial institutions in the U.S. [3]. - The company focuses on enabling clients to grow confidently, adapt quickly, and build thriving digital communities through various services including retail and commercial banking, digital account opening, payment security, and data and marketing solutions [3].

Core Insights - Alkami Technology, Inc. is hosting the 3rd annual Women in Banking event during the Alkami Co:lab 2025 conference in Nashville, TN, aimed at fostering an inclusive environment in the financial services industry [1][2] - The Women in Banking program focuses on leadership, professional development, digital banking innovation, and inclusion, providing opportunities for connection and growth for professionals at all career stages [2][3] - Research indicates that organizations with diverse leadership teams are 39% more likely to outperform their peers in financial performance, highlighting the importance of diversity representation [3] Company Overview - Alkami Technology, Inc. is a leading provider of cloud-based digital banking solutions for financial institutions in the U.S., enabling clients to grow confidently and adapt quickly [4] - The company offers services including retail and business banking, digital account opening, payment security, and data and marketing solutions [4] Event Details - The Women in Banking initiative includes various activities such as virtual events, videos, and thought leadership content throughout the year [3] - The event aims to engage participants in discussions on authenticity, mentorship, and overcoming imposter syndrome, while also facilitating networking opportunities [6]