Core Viewpoint - The digital banking space is identified as an attractive investment arena, with a focus on companies like Alkami Technology and Q2 Holdings, which are modernizing customer-facing software for credit unions and regional banks [1][3]. Company Summaries - **Alkami Technology**: - Rated as Overweight by the analyst, with organic revenue growth exceeding 20% and trading at six times EV/Sales for 2026E [4]. - Holds less than 5% market share in a ~$10 billion market, with up to 60% of the market being an addressable opportunity [3]. - Benefits from high customer retention and long contract lengths, supporting revenue visibility [1]. - **Q2 Holdings**: - Also rated as Overweight, with similar characteristics to Alkami Technology in terms of customer retention and contract lengths [1]. - Holds less than 10% market share in the same ~$10 billion market, with significant growth potential [3]. - **nCino**: - Rated as Neutral, focusing on cloud-based banking software solutions for financial institutions [2]. - The analyst has noted idiosyncratic factors that have kept her on the sidelines regarding nCino compared to broader vertical SaaS [2]. Market Dynamics - The digital banking industry is characterized by a defensive monetization model based on the number of bank accounts and products subscribed to by banks [2]. - The opportunity for improving bank efficiency is described as seemingly limitless, indicating a strong growth potential for the sector [2]. Price Actions - As of publication, stock prices are as follows: - Alkami Technology (ALKT) is up 5.26% at $28.24 - Q2 Holdings (QTWO) is up 3.56% at $89.07 - nCino (NCNO) is down 0.44% at $26.96 [5].

Core Insights - Alkami Technology, Inc. has been awarded the Best New Community at the 2025 CMX Community Industry Awards for its successful customer-driven community experience [1][2]. Company Overview - Alkami is a leading cloud-based digital banking solutions provider for financial institutions in the U.S. [6]. - The company focuses on enabling clients to grow confidently, adapt quickly, and build thriving digital communities through various banking and marketing solutions [6]. Community Development - The Alkami Community was launched in April 2024, featuring an open-access experience with role-based permissions, self-registration, streamlined navigation, and real-time analytics [3]. - The community aims to connect users, share best practices, and provide self-service options, transitioning to Gainsight's Customer Communities solution [3]. Customer Engagement Metrics - The community has achieved a 96.6% customer adoption rate, with nearly every customer represented [7]. - Customer satisfaction is high, with an 85% score and the majority of members rating the community as highly valuable [7]. - Membership has grown from 275 to over 3,600 users [7]. - The community hosted over 35 events, achieving a 67% attendance rate and a 96% customer satisfaction score [7]. Leadership Statements - Wayne McCulloch, chief customer officer, emphasized the importance of a thriving customer community for delivering long-term value [4]. - Aaron White, senior community manager, highlighted the initiative's success in creating a hub for connection, feedback, and shared success [4].

Core Insights - The 2025 Update to the Retail Digital Sales & Service Maturity Model reveals significant differences in digital maturity among U.S. financial institutions, emphasizing the importance of digital maturity as a driver of growth and efficiency in banking [1][2] Digital Maturity Findings - Financial institutions are segmented into four maturity stages, with the most digitally mature institutions reporting significantly higher revenue growth, indicating that institutional size alone does not determine maturity [2][4] - The most advanced institutions are leveraging AI and advanced data capabilities, with 42% of them actively using generative AI, compared to only 26% of the least mature institutions [3][4] Revenue Growth and Performance - Digital maturity is correlated with growth, with the most advanced institutions experiencing up to 5 times higher annual average revenue growth than their less mature peers [4] - One-third of the most mature institutions have less than $500 million in assets, while 13% of the least mature institutions have more than $5 billion in assets, highlighting that smaller institutions can also achieve high digital maturity [4] Security and Fraud Mitigation - There are notable differences in fraud mitigation practices and cybersecurity measures between the most digitally mature segments, with Digital-Forward institutions leading in fraud prevention and Data-First institutions offering consumer incentives for improved cybersecurity [4] Employee Experience and Technology - The most mature institutions have more intuitive administrative interfaces, with 38% of Digital-Forward and 53% of Data-First institutions reporting that their digital banking admin consoles are more intuitive than other technologies [4]

Group 1 - Alkami Technology, Inc. is a leading provider of cloud-based digital banking solutions for financial institutions in the U.S. [2] - The company will present at the 45th Annual William Blair Growth Stock Conference on June 4, 2025, with CEO Alex Shootman and CFO Bryan Hill participating [1] - A webcast and replay of the conference will be available on the company's investor relations website [1] Group 2 - Alkami's solutions enable clients to grow confidently, adapt quickly, and build thriving digital communities [2] - The company focuses on transforming retail and business banking, onboarding and account opening, payment security, and data and marketing solutions [2]

Core Insights - Alkami Technology, Inc. has acquired MANTL, both companies recognized as top employers in the fintech industry by American Banker in 2025 [1][2][3] - The acquisition aligns two organizations with complementary products and a shared commitment to innovation and employee growth, enhancing Alkami's digital banking solutions [3][4] Company Recognition - Alkami and MANTL were named to American Banker's 2025 list of the Best Places to Work in Fintech, highlighting their strong cultural values and employee satisfaction [1][2] - The recognition serves as an inspiration for other companies in the financial technology sector to attract and retain top talent [3] Strategic Alignment - The acquisition of MANTL allows Alkami to enhance its offerings, including onboarding and account opening solutions, solidifying its position as a leading digital sales and service platform [3][4] - Both companies share a mission-driven approach and a passion for helping financial institutions thrive, which is reflected in their cultural alignment [4] Industry Impact - Alkami's Digital Banking Solution, combined with MANTL's technology, positions the company to better serve financial institutions, enabling them to onboard and engage customers more effectively [3][4] - The collaboration aims to create a unified team that can deliver greater impact in the digital banking space [3][4]

Group 1 - Alkami Technology, Inc. (ALKT) is experiencing significant activity in the options market, particularly with the Jun 20, 2025 $35.00 Put showing high implied volatility, indicating potential for a major price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that investors anticipate a significant event that could lead to a rally or sell-off [2] - Analysts have mixed views on Alkami Technology, with the Zacks Consensus Estimate for the current quarter decreasing from nine cents per share to eight cents due to one upward and one downward revision in estimates [3] Group 2 - The high implied volatility surrounding Alkami Technology may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to benefit from time decay [4]

Summary of Alchemy (ALKT) FY Conference Call - May 15, 2025 Company Overview - Alchemy provides technology solutions for smaller banks and credit unions, allowing them to compete with larger institutions like Chase and Bank of America by white labeling their technology [4][5] - The addressable market consists of approximately 250 million seats, with Alchemy currently having about 20.5 million seats live and registered [5] Core Business Insights - Alchemy's customer base primarily consists of institutions that are replacing legacy systems with modern technology, indicating a strong existing budget for digital banking solutions [6][7] - The company aims for a balanced growth strategy, targeting new logos and expanding sales to existing customers, with a focus on both banks and credit unions [9][10] Market Dynamics - Despite macroeconomic uncertainties, demand for digital banking remains strong, with long contract cycles (5-7 years) ensuring continued interest in upgrading technology [11][12] - Market consolidation among regional banks is ongoing, with Alchemy benefiting from this trend as smaller institutions merge into larger ones, increasing the number of seats and potential revenue [15][18] Financial Performance and Projections - Alchemy expects to add 300,000 to 400,000 users this year, driven by client acquisitions [18] - The company reported a backlog of $68 million in Annual Recurring Revenue (ARR) for implementation, with a significant portion coming from new logos [24][25] - The average revenue per user (RPU) for banks is significantly higher than for credit unions, indicating potential for revenue growth within the existing client base [25] Profitability and Growth Strategy - Alchemy is focused on improving gross margins, targeting 65% gross margin and 20% adjusted EBITDA margin in the coming years [34][36] - The Mantle acquisition is expected to enhance Alchemy's product offerings, particularly in digital account openings, which is a key demand from customers [38][39] Mantle Acquisition Insights - The Mantle acquisition aims to provide integrated account opening solutions, addressing the needs of customers who require both digital and in-branch capabilities [41][42] - Mantle has a customer base that complements Alchemy's existing clients, with minimal overlap, allowing for significant cross-selling opportunities [50][49] Capital Allocation and Financing - Alchemy strategically managed its capital structure during the acquisition process, opting for a convertible note offering to minimize dilution while securing necessary funds [55][60] - The company is positioned to pursue further acquisitions in the next twelve months, maintaining flexibility in its capital structure [59][60] Conclusion - Alchemy is well-positioned for growth in the digital banking sector, with a strong focus on customer needs, strategic acquisitions, and efficient capital management, aiming to become a billion-dollar revenue company in the next four to five years [37][36]

Core Insights - Alkami Technology, Inc. is hosting a webinar on May 20, 2025, focusing on modernizing account opening and onboarding processes for financial institutions to enhance growth in a competitive market [1] - Recent research indicates that 58% of digital banking Americans are interested in obtaining a debit or checking account, and 35% are interested in a savings account within the next year, highlighting the need for improved onboarding experiences [2] - Quontic Bank successfully raised over $150 million in net new deposits in 2024 using MANTL for deposit account opening, showcasing the effectiveness of combining MANTL and Alkami's technologies [4] Company Overview - Alkami is a leading cloud-based digital banking solutions provider in the U.S., enabling financial institutions to grow and adapt through various services including onboarding, payment security, and data solutions [6] - Quontic Bank focuses on providing adaptive banking solutions that cater to diverse customer needs, emphasizing a curated experience over a one-size-fits-all approach [8] Webinar Details - The webinar will feature industry experts from Alkami, MANTL, and Quontic Bank, discussing the benefits of a digital sales and service platform for onboarding and customer engagement [3][5] - Attendees will learn about the importance of delivering seamless omnichannel experiences and leveraging automation to enhance operational efficiency and reduce fraud [7]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 2025 show significant asset and liability growth from the MANTL acquisition, with improved net loss [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets nearly doubled to $837.2 million by March 31, 2025, driven by the MANTL acquisition, while liabilities surged due to new debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$837,161** | **$437,277** | **+91.4%** | | Cash and cash equivalents | $61,660 | $94,359 | -34.6% | | Goodwill | $400,158 | $148,050 | +170.3% | | Intangibles, net | $178,801 | $29,021 | +516.1% | | **Total Liabilities** | **$503,117** | **$80,247** | **+527.0%** | | Convertible senior notes, net | $334,720 | $— | N/A | | Revolving loan | $60,000 | $— | N/A | | **Total Stockholders' Equity** | **$334,044** | **$357,030** | **-6.4%** | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Revenues grew 28.5% to $97.8 million in Q1 2025, with net loss improving to $7.8 million due to a tax benefit, despite higher operating expenses Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $97,835 | $76,127 | +28.5% | | Gross Profit | $57,760 | $44,032 | +31.2% | | Loss from Operations | $(15,396) | $(12,365) | +24.5% | | Net Loss | $(7,816) | $(11,433) | -31.6% | | Net Loss Per Share (Basic & Diluted) | $(0.08) | $(0.12) | -33.3% | - Operating expenses in Q1 2025 included a **$1.7 million** loss on impairment of intangible assets and **$2.4 million** in acquisition-related expenses, which were not present or were minimal in Q1 2024[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity decreased to $334.0 million in Q1 2025, primarily due to a capped call transaction and net loss, partially offset by stock-based compensation - A capped call transaction reduced additional paid-in capital by **$33.9 million** in Q1 2025[14](index=14&type=chunk) - Stock-based compensation added **$16.4 million** to additional paid-in capital in Q1 2025, compared to **$13.9 million** in Q1 2024[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flows in Q1 2025 were dominated by the MANTL acquisition, funded by new debt, resulting in a net decrease of $32.7 million in cash and equivalents Summary of Cash Flows (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(5,664) | $951 | | Net cash (used in) provided by investing activities | $(389,413) | $6,808 | | Net cash provided by (used in) financing activities | $362,378 | $(4,507) | | **Net (decrease) increase in cash** | **$(32,699)** | **$3,252** | - The acquisition of MANTL for **$375.5 million** (net of cash acquired) was the primary use of cash in investing activities[16](index=16&type=chunk) - Financing activities were driven by proceeds from issuing **$335.5 million** in convertible senior notes and borrowing **$60.0 million** under a revolving loan[16](index=16&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the MANTL acquisition, new debt instruments including $345 million in convertible notes, and a $8.4 million tax benefit from the acquisition - On March 17, 2025, the Company acquired MANTL for approximately **$375 million**, net of cash acquired, to augment and diversify its offerings[29](index=29&type=chunk)[30](index=30&type=chunk)[32](index=32&type=chunk) - The Company issued **$345 million** in 1.50% convertible senior notes due 2030 and entered into a related **$33.9 million** capped call transaction to reduce potential dilution[54](index=54&type=chunk)[61](index=61&type=chunk) - The credit facility was amended, increasing the revolving loan commitment to **$225 million**, with **$60 million** borrowed in March 2025 to help fund the MANTL acquisition[48](index=48&type=chunk)[49](index=49&type=chunk) - A provisional deferred tax benefit of **$8.4 million** was recorded due to the partial release of a pre-existing valuation allowance, triggered by the net deferred tax liability from the MANTL acquisition[67](index=67&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 revenue growth driven by user expansion and RPU, the strategic MANTL acquisition, increased operating expenses, and altered liquidity [Overview](index=23&type=section&id=MD%26A%20Overview) Alkami's cloud-based digital banking platform drives subscription revenue, with Q1 2025 revenues reaching $97.8 million and a net loss of $7.8 million - Alkami's business model centers on a proprietary, cloud-based, multi-tenant digital banking platform for financial institutions[91](index=91&type=chunk) - Growth is driven by both organic expansion and strategic acquisitions, with MANTL in March 2025 enhancing account opening solutions[92](index=92&type=chunk) Q1 2025 Financial Highlights | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $97.8 million | $76.1 million | | Net Loss | $7.8 million | $11.4 million | [Recent Developments](index=25&type=section&id=Recent%20Developments) Q1 2025 saw three major strategic transactions: the MANTL acquisition for $375 million, issuance of $345 million in convertible notes, and an increased $225 million credit facility - **MANTL Merger:** Acquired MANTL, a provider of onboarding and account opening solutions, for ~**$375 million** net of cash acquired[101](index=101&type=chunk) - **Credit Agreement Amendment:** Increased revolving loan commitment to **$225 million** and extended the maturity date to February 2030[102](index=102&type=chunk) - **Convertible Notes Issuance:** Issued **$345 million** principal amount of 1.50% Convertible Senior Notes due 2030[103](index=103&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q1 2025 revenues grew 28.5% to $97.8 million, driven by user growth and RPU, with gross margin improving to 59.0% despite increased operating expenses Revenue and Key Metrics Comparison | Metric | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $97,835K | $76,127K | +$21,708K | +28.5% | | Annual Recurring Revenue (ARR) | $403,885K | $302,659K | +$101,226K | +33.4% | | Registered Users | 20,461K | 18,113K | +2,348K | +13.0% | | Revenue per Registered User (RPU) | $19.74 | $16.71 | +$3.03 | +18.1% | - Cost of revenues increased by **$8.0 million** (24.9%), slower than revenue growth, leading to a gross margin improvement to **59.0%**[133](index=133&type=chunk) - Total operating expenses increased by **$16.8 million** (29.7%), driven by higher personnel costs, MANTL acquisition expenses (**$2.4M**), and an impairment loss (**$1.7M**)[135](index=135&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company held $95.3 million in cash and equivalents as of March 31, 2025, with the MANTL acquisition funded by new debt, and expects sufficient liquidity for the next 12 months - The company had **$95.3 million** in cash and marketable securities as of March 31, 2025[146](index=146&type=chunk) - The MANTL acquisition was funded via the issuance of 2030 Convertible Notes, borrowings on the Revolving Facility, and balance sheet cash[147](index=147&type=chunk) Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $(5,664) | $951 | | Net cash from investing activities | $(389,413) | $6,808 | | Net cash from financing activities | $362,378 | $(4,507) | [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its credit agreement, with minimal impact expected due to short-term investments - The primary market risk is interest rate risk associated with the Amended Credit Agreement[167](index=167&type=chunk)[168](index=168&type=chunk) - Due to the short-term nature of cash equivalents and marketable securities, the company does not believe an increase in market rates would have a significant negative impact on the value of its investments[169](index=169&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at the reasonable assurance level[170](index=170&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[171](index=171&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to materially adversely affect its business or financial condition - The company states it is not currently party to any litigation expected to have a material adverse effect on its business[172](index=172&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) New risk factors primarily relate to increased indebtedness from the 2030 Convertible Notes, including cash flow limitations, repurchase challenges, and potential stock dilution - Increased indebtedness from the 2030 Convertible Notes could limit cash flow, increase vulnerability to adverse economic conditions, and limit flexibility[174](index=174&type=chunk)[179](index=179&type=chunk) - The company may be unable to raise sufficient funds to repurchase the 2030 Convertible Notes if required after a "fundamental change" or to pay cash due upon maturity or conversion[175](index=175&type=chunk) - The conversion of the 2030 Convertible Notes could dilute the ownership interests of existing stockholders[181](index=181&type=chunk) - The company is subject to counterparty risk with the financial institutions involved in the capped call transactions, which are intended to reduce dilution[184](index=184&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - None [Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - None [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure item is not applicable to the company's operations - None [Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers in Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement in Q1 2025[188](index=188&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section indexes exhibits filed with the Form 10-Q, including the MANTL merger agreement, convertible notes indenture, and amended credit agreement - Lists key legal and financial documents filed as exhibits, such as the MANTL merger agreement and the indenture for the 2030 Convertible Notes[190](index=190&type=chunk) [Signatures](index=43&type=section&id=Signatures) The report was duly signed by the Chief Executive Officer and Chief Financial Officer on May 1, 2025 - The report was signed by the Principal Executive Officer and Principal Financial Officer on May 1, 2025[195](index=195&type=chunk)

Group 1: Earnings Performance - Alkami Technology reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.09 per share, and up from $0.04 per share a year ago, representing an earnings surprise of 44.44% [1] - The company posted revenues of $97.84 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.83%, compared to year-ago revenues of $76.13 million [2] - Alkami has surpassed consensus EPS estimates for four consecutive quarters [2] Group 2: Stock Performance and Outlook - Alkami shares have declined approximately 28% since the beginning of the year, while the S&P 500 has decreased by 5.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.09 on revenues of $108.12 million, and for the current fiscal year, it is $0.41 on revenues of $442.89 million [7] - The estimate revisions trend for Alkami is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Group 3: Industry Context - The Internet - Software industry, to which Alkami belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment [5]