Alkami(US:ALKT)2025-02-28 12:50PART I Business Alkami provides a cloud-based digital banking platform for financial institutions, serving 272 clients and 20.0 million users, generating $333.8 million in 2024 revenue Key Business Metrics (as of December 31) | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Alkami Digital Banking Platform Clients | 272 | 236 | 199 | | Live Registered Users (Millions) | 20.0 | 17.5 | 14.5 | | Total Revenues ($M) | $333.8 | $264.8 | $204.3 | | Net Loss ($M) | $(40.8) | $(62.9) | $(58.6) | - The company's growth strategy focuses on deepening existing client relationships through cross-selling and increasing user adoption, winning new FI clients, enhancing its product suite, and pursuing selective acquisitions34 - The Alkami Digital Banking Platform is built on a true cloud, multi-tenant architecture hosted on AWS, featuring a single code base and continuous delivery model, which enables rapid innovation and scalability274048 - The platform offers 34 products across 10 categories, including digital account opening, marketing, data insights, and business banking, with new clients in 2024 contracting for an average of 20 products compared to the overall client average of 141437 Risk Factors The company faces significant risks including managing rapid growth, client retention, third-party dependence, cybersecurity threats, intense competition, and historical operating losses - Business risks include challenges in managing rapid growth, attracting and retaining clients, dependence on third-party software and data centers (principally AWS), and retaining key personnel828598 - Cybersecurity is a major risk, with threats of breaches, reliance on third-party security, and the need to comply with numerous data privacy laws like GLBA and CCPA, which could lead to significant costs and liabilities119129 - The company faces intense competition from established core processing and point solution vendors who have greater financial resources, brand recognition, and larger client bases137138 - Financial risks include a history of operating losses, uncertainty in achieving future profitability, and potential limitations on using its substantial net operating loss (NOL) carryforwards due to ownership change rules under IRC Section 382174178 Unresolved Staff Comments The company reports that it has no unresolved staff comments - Not applicable201 Cybersecurity Alkami implements a cybersecurity risk management program based on SCF, overseen by the Board's Information Systems Audit Committee, with no material incidents identified - The cybersecurity risk management program is based on the Secure Controls Framework (SCF) and includes a security team, risk assessments, training, an incident response plan, and third-party risk management202208 - The Information Systems Audit Committee of the Board of Directors oversees the cybersecurity program, receiving quarterly reports from management205206 - The company has not identified any past cybersecurity threats or incidents that have materially affected its business, operations, or financial condition204 Properties The company's principal executive offices are located in a leased 83,939 sq. ft. space in Plano, Texas, until August 2033 - The main office is a leased space of 83,939 sq. ft. in Plano, Texas, with the lease running until August 31, 2033212 Legal Proceedings The company states that it is not involved in any pending legal proceedings that would have a material impact on its business, financial condition, or results of operations - Management believes there are no pending claims or actions that would have a material impact on the company213 Mine Safety Disclosures This item is not applicable to the company - Not applicable214 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Alkami's common stock trades on Nasdaq under 'ALKT' since April 2021; the company has not paid and does not anticipate paying cash dividends - Common stock is listed on Nasdaq under the symbol "ALKT" since April 15, 2021217 - The company has never paid cash dividends and does not intend to in the foreseeable future219 - Net proceeds of $192.8 million from the IPO have been fully utilized for general corporate purposes220 - No equity securities were repurchased during the three months ended December 31, 2024224 Reserved This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Alkami's 2024 revenue grew 26.1% to $333.8 million, with improved gross margin and positive Adjusted EBITDA, and plans to acquire MANTL for $380 million Financial Performance Comparison (2024 vs. 2023) | Metric | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues ($M) | $333.8 | $264.8 | +$69.0 | +26.1% | | Gross Profit ($M) | $196.6 | $144.1 | +$52.5 | +36.4% | | Gross Margin (%) | 58.9% | 54.4% | +4.5 p.p. | +8.3% | | Net Loss ($M) | $(40.8) | $(62.9) | +$22.1 | -35.1% | | Adjusted EBITDA ($M) | $26.9 | $(1.6) | +$28.5 | N/A | Key Business Metrics Comparison (as of Dec 31) | Metric | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Annual Recurring Revenue ($M) | $355.9 | $291.0 | +$64.9 | +22.3% | | Registered Users (Thousands) | 19,984 | 17,502 | +2,482 | +14.2% | | Revenue per Registered User ($) | $17.81 | $16.63 | +$1.18 | +7.1% | - On February 27, 2025, the company entered into an agreement to acquire MANTL for approximately $380 million to enhance its onboarding and account opening solutions240473 - Cash flow from operations turned positive to $18.6 million in 2024, a significant improvement from a $17.5 million use of cash in 2023, driven by a lower net loss and higher non-cash charges286287 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations on its credit agreement, with a 10% change not expected to be material - The primary market risk is interest rate changes on the Amended Credit Agreement, but a hypothetical 10% change in rates is not expected to have a material impact315 Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements, with an unqualified opinion from Ernst & Young LLP, detailing financial position and results - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements and on the effectiveness of internal control over financial reporting321330 Consolidated Balance Sheet Data (as of Dec 31) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Total Current Assets ($K) | $181,377 | $148,585 | | Total Assets ($K) | $437,277 | $399,825 | | Total Current Liabilities ($K) | $45,570 | $39,430 | | Total Liabilities ($K) | $80,247 | $74,884 | | Total Stockholders' Equity ($K) | $357,030 | $324,941 | Consolidated Statement of Operations Data (Year Ended Dec 31) | (in thousands) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Revenues ($K) | $333,849 | $264,831 | $204,270 | | Gross Profit ($K) | $196,630 | $144,111 | $108,324 | | Loss from Operations ($K) | $(44,626) | $(63,705) | $(57,689) | | Net Loss ($K) | $(40,835) | $(62,913) | $(58,600) | | Net Loss per Share ($) | $(0.41) | $(0.67) | $(0.64) | - Subsequent to year-end, on February 27, 2025, the company agreed to acquire MANTL for ~$380 million and entered into a Third Amendment to its Credit Agreement, increasing its revolving commitment to $225 million473475 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None476 Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024 - Management concluded that disclosure controls and procedures were effective as of December 31, 2024478 - Management concluded that internal control over financial reporting was effective as of December 31, 2024, based on the COSO 2013 framework481 Other Information The Chairperson and an affiliated entity adopted a Rule 10b5-1 trading plan for up to 3,276,000 shares - The Chairperson of the board, Brian Smith, and an affiliated entity adopted a Rule 10b5-1 trading plan for the sale of up to 3,276,000 shares485 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not Applicable488 PART III Part III incorporates information by reference from the 2025 Proxy Statement, covering directors, executive compensation, security ownership, and related transactions - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Stockholders490492493 Directors, Executive Officers and Corporate Governance Information is incorporated by reference from the 2025 Proxy Statement Executive Compensation Information is incorporated by reference from the 2025 Proxy Statement Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information is incorporated by reference from the 2025 Proxy Statement Certain Relationships and Related Transactions, and Director Independence Information is incorporated by reference from the 2025 Proxy Statement Principal Accountant Fees and Services Information is incorporated by reference from the 2025 Proxy Statement PART IV Part IV lists exhibits filed with the Form 10-K, including financial statements, schedules, and a comprehensive index of all exhibits Exhibit and Financial Statement Schedules This item lists the financial statements, notes that no financial statement schedules are required, and provides an index of all exhibits filed with or incorporated by reference into the annual report - This section provides the index to the Consolidated Financial Statements (under Item 8) and the Exhibit Index497501 Form 10-K Summary The company indicates there is no Form 10-K summary - None508 Signatures The report is duly signed by the company's executive officers and Board of Directors, including a Power of Attorney for amendments