Alkami(ALKT) - 2025 Q2 - Quarterly Results

Company Overview Alkami Technology, Inc. is a leading cloud-based digital banking solutions provider for U.S. financial institutions About Alkami Alkami provides cloud-based digital banking solutions for U.S. financial institutions, covering retail, business, onboarding, payments, and data services - Alkami is a leading cloud-based digital banking solutions provider for financial institutions in the United States[6] - Solutions include retail and business banking, onboarding and account opening, payment security, and data and marketing[6] Second Quarter 2025 Financial Highlights This section presents Alkami's key financial and operational achievements for the second quarter of 2025, including revenue growth, user metrics, and profitability CEO and CFO Commentary Alkami's CEO and CFO highlighted strong Q2 2025 financial performance, including 36% revenue growth, $12 million Adjusted EBITDA, and significant user and ARR expansion - CEO Alex Shootman reported strong Q2 financial performance with 36% revenue growth and $12 million Adjusted EBITDA[4] - Alkami exited Q2 with 20.9 million users on the platform, up 2.3 million compared to the year-ago quarter[4] - CFO Bryan Hill noted Annual Recurring Revenue (ARR) of $424 million, up 32%, and Revenue per Registered User (RPU) of $20.28, up 17% compared to the year-ago quarter[4] Key Financial and Operational Metrics (Q2 2025) Alkami's Q2 2025 saw significant growth in key operational metrics, with Annual Recurring Revenue (ARR) reaching $423.8 million, a 32% increase year-over-year Q2 2025 Key Financial and Operational Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YoY Change | | :----- | :--------------------- | :--------------------- | :--------- | | Annual Recurring Revenue (ARR) | $423,763 | $321,284 | +32% | | Registered Users | 20,891 | 18,584 | +12.4% | | Revenue per Registered User (RPU) | $20.28 | $17.29 | +17.3% | GAAP Financial Performance (Q2 2025) For Q2 2025, Alkami reported GAAP total revenue of $112.1 million, a 36.4% increase year-over-year, though GAAP net loss widened to $(13.6) million Q2 2025 GAAP Financial Performance Summary | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | YoY Change | | :----- | :-------------------- | :-------------------- | :--------- | | GAAP Total Revenue | $112.1 | $82.16 | +36.4% | | GAAP Gross Margin | 58.6% | 59.4% | -0.8 pp | | GAAP Net Loss | $(13.6) | $(12.3) | -10.6% (worsened) | Non-GAAP Financial Performance (Q2 2025) Alkami's Non-GAAP performance in Q2 2025 showed improvement, with Non-GAAP gross margin increasing to 65.1% and Adjusted EBITDA significantly growing to $11.9 million Q2 2025 Non-GAAP Financial Performance Summary | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | YoY Change | | :----- | :-------------------- | :-------------------- | :--------- | | Non-GAAP Gross Margin | 65.1% | 63.2% | +1.9 pp | | Adjusted EBITDA | $11.9 | $4.6 | +158.7% | 2025 Financial Outlook This section provides Alkami's financial guidance for the third quarter and full fiscal year 2025, including projected revenue and Adjusted EBITDA Third Quarter 2025 Guidance For Q3 2025, Alkami projects GAAP total revenue between $112.5 million and $114.0 million, and Adjusted EBITDA between $13.0 million and $14.0 million Third Quarter 2025 Financial Guidance | Metric | Q3 2025 Guidance (in millions) | | :----- | :----------------------------- | | GAAP Total Revenue | $112.5M - $114.0M | | Adjusted EBITDA | $13.0M - $14.0M | Fiscal Year 2025 Guidance Alkami's full fiscal year 2025 guidance anticipates GAAP total revenue in the range of $443.0 million to $447.0 million, with Adjusted EBITDA projected between $51.5 million and $54.0 million Fiscal Year 2025 Financial Guidance | Metric | FY 2025 Guidance (in millions) | | :----- | :----------------------------- | | GAAP Total Revenue | $443.0M - $447.0M | | Adjusted EBITDA | $51.5M - $54.0M | Explanation of Non-GAAP Financial Measures and Key Business Metrics This section defines the non-GAAP financial measures and key business metrics used by Alkami to evaluate its operational performance and strategic progress Non-GAAP Definitions Alkami defines various non-GAAP financial measures, including Adjusted EBITDA, to provide a clearer view of operational performance by excluding non-cash and non-recurring items - Non-GAAP financial measures exclude certain non-cash or non-recurring items to help investors understand short-term and long-term financial, operational, and strategic trends[10] - Non-GAAP Cost of Revenues is defined as cost of revenues, excluding amortization and stock-based compensation expense[11] - Adjusted EBITDA is defined as net loss plus (benefit from) provision for income taxes, loss on financial instruments, interest expense (income), net, depreciation and amortization, stock-based compensation expense, acquisition-related expenses, and loss on impairment of intangible assets[17] Key Business Metrics Definitions Alkami defines key operating metrics including Annual Recurring Revenue (ARR), Registered Users, and Revenue per Registered User (RPU) to evaluate business performance and future revenue potential - Annual Recurring Revenue (ARR) aggregates annualized recurring revenue related to SaaS subscription services and the next 12 months of expected implementation services revenues[18] - Registered Users are defined as individual or business account holders of an FI client on Alkami's digital banking platform with access as of the last day of the reporting period[19] - Revenue per Registered User (RPU) is calculated by dividing ARR for the reporting period by the number of registered users, providing insight into product adoption and expansion[20] Condensed Consolidated Financial Statements This section presents Alkami's condensed consolidated balance sheets, statements of operations, and cash flows for the reported periods Condensed Consolidated Balance Sheets As of June 30, 2025, Alkami's total assets significantly increased to $840.4 million, primarily driven by acquisitions, while total liabilities also rose sharply Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :----- | :--------------------------- | :------------------------------- | :----- | | Total Assets | $840,389 | $437,277 | +92.2% | | Total Liabilities | $496,373 | $80,247 | +518.6% | | Total Stockholders' Equity | $344,016 | $357,030 | -3.6% | - Intangibles, net increased from $29.0 million to $172.2 million, and Goodwill increased from $148.1 million to $403.8 million, indicating significant acquisition activity[23] - New Convertible senior notes, net of $335.2 million and a Revolving loan of $50.0 million were major contributors to the increase in total liabilities[23] Condensed Consolidated Statements of Operations For Q2 2025, Alkami's revenue grew to $112.1 million, but net loss increased to $(13.6) million due to higher operating and interest expenses Condensed Consolidated Statements of Operations | Metric (Three months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | YoY Change | | :---------------------------------- | :------------------ | :------------------ | :--------- | | Revenues | $112,059 | $82,160 | +36.4% | | Gross Profit | $65,618 | $48,771 | +34.5% | | Total Operating Expenses | $81,481 | $61,978 | +31.5% | | Loss from Operations | $(15,863) | $(13,207) | -20.1% (worsened) | | Net Loss | $(13,591) | $(12,317) | -10.3% (worsened) | | Basic and Diluted Net Loss per Share | $(0.13) | $(0.13) | 0% | - Interest expense increased significantly from $(74) thousand in Q2 2024 to $(3,188) thousand in Q2 2025[25] - For the six months ended June 30, 2025, net loss improved to $(21,407) thousand from $(23,750) thousand in the prior year period[25] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, Alkami experienced a net cash outflow from operating activities of $(4.5) million, with significant outflows from investing and inflows from financing activities Condensed Consolidated Statements of Cash Flows | Cash Flow Activity (Six months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change | | :------------------------------------------ | :------------------ | :------------------ | :----- | | Net cash (used in) provided by operating activities | $(4,507) | $1,499 | $(6,006) (decrease) | | Net cash (used in) provided by investing activities | $(392,360) | $22,275 | $(414,635) (decrease) | | Net cash provided by (used in) financing activities | $354,934 | $(3,269) | $358,203 (increase) | | Net (decrease) increase in cash and cash equivalents | $(41,933) | $20,505 | $(62,438) (decrease) | - Acquisition of business, net of cash acquired, resulted in a $(375,499) thousand cash outflow in investing activities for the six months ended June 30, 2025[27] - Proceeds from issuance of convertible senior notes ($335,513 thousand) and borrowing under revolving loan ($60,000 thousand) were major financing inflows[27] Reconciliation of GAAP to Non-GAAP Measures This section provides detailed reconciliations of Alkami's GAAP financial results to its non-GAAP financial measures for various operational metrics Non-GAAP Cost of Revenues Reconciliation For Q2 2025, Non-GAAP cost of revenues was $39.1 million, a 29.3% increase from Q2 2024, after adjustments Non-GAAP Cost of Revenues Reconciliation | Metric (Three months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | YoY Change | | :---------------------------------- | :------------------ | :------------------ | :--------- | | GAAP cost of revenues | $46,441 | $33,389 | +39.1% | | Amortization adjustment | $(5,636) | $(1,793) | -214.3% | | Stock-based compensation expense adjustment | $(1,706) | $(1,347) | -26.7% | | Non-GAAP cost of revenues | $39,099 | $30,249 | +29.3% | Non-GAAP Gross Margin Reconciliation Alkami's Non-GAAP gross margin improved to 65.1% in Q2 2025 from 63.2% in Q2 2024, reflecting the exclusion of certain expenses Non-GAAP Gross Margin Reconciliation | Metric (Three months ended June 30) | 2025 | 2024 | Change (percentage points) | | :---------------------------------- | :--- | :--- | :----------------------- | | GAAP gross margin | 58.6% | 59.4% | -0.8 | | Amortization impact | 5.0% | 2.2% | +2.8 | | Stock-based compensation expense impact | 1.5% | 1.6% | -0.1 | | Non-GAAP gross margin | 65.1% | 63.2% | +1.9 | Non-GAAP Research and Development Expense Reconciliation Non-GAAP research and development expense for Q2 2025 was $24.8 million, an increase of 26.2% from Q2 2024, after excluding stock-based compensation expense Non-GAAP Research and Development Expense Reconciliation | Metric (Three months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | YoY Change | | :---------------------------------- | :------------------ | :------------------ | :--------- | | GAAP research and development expense | $30,231 | $23,909 | +26.4% | | Stock-based compensation expense adjustment | $(5,424) | $(4,256) | -27.4% | | Non-GAAP research and development expense | $24,807 | $19,653 | +26.2% | Non-GAAP Sales and Marketing Expense Reconciliation Non-GAAP sales and marketing expense for Q2 2025 increased to $19.4 million, representing a 32.5% year-over-year increase after adjustments Non-GAAP Sales and Marketing Expense Reconciliation | Metric (Three months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | YoY Change | | :---------------------------------- | :------------------ | :------------------ | :--------- | | GAAP sales and marketing expense | $22,991 | $16,964 | +35.5% | | Stock-based compensation expense adjustment | $(3,550) | $(2,291) | -54.9% | | Non-GAAP sales and marketing expense | $19,441 | $14,673 | +32.5% | Non-GAAP General and Administrative Expense Reconciliation Non-GAAP general and administrative expense for Q2 2025 was $17.2 million, a 27.5% increase from Q2 2024, after excluding stock-based compensation Non-GAAP General and Administrative Expense Reconciliation | Metric (Three months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | YoY Change | | :---------------------------------- | :------------------ | :------------------ | :--------- | | GAAP general and administrative expense | $26,039 | $20,612 | +26.3% | | Stock-based compensation expense adjustment | $(8,835) | $(7,119) | -24.1% | | Non-GAAP general and administrative expense | $17,204 | $13,493 | +27.5% | Non-GAAP Income Before Income Taxes Reconciliation Alkami reported Non-GAAP income before income taxes of $9.5 million in Q2 2025, a substantial increase from $5.3 million in Q2 2024, after various adjustments Non-GAAP Income Before Income Taxes Reconciliation | Metric (Three months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | YoY Change | | :---------------------------------- | :------------------ | :------------------ | :--------- | | GAAP loss before income taxes | $(17,887) | $(12,132) | -47.4% (worsened) | | Total Adjustments | $27,400 | $17,411 | +57.4% | | Non-GAAP income before income taxes | $9,511 | $5,279 | +80.2% | Adjusted EBITDA Reconciliation Adjusted EBITDA for Q2 2025 significantly increased to $11.9 million from $4.6 million in Q2 2024, reflecting strong operational performance after adjustments Adjusted EBITDA Reconciliation | Metric (Three months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | YoY Change | | :---------------------------------- | :------------------ | :------------------ | :--------- | | GAAP net loss | $(13,591) | $(12,317) | -10.3% (worsened) | | Total Adjustments | $25,512 | $16,871 | +51.2% | | Adjusted EBITDA | $11,921 | $4,554 | +161.8% | Cautionary Statement Regarding Forward-Looking Statements This section warns that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, and the company does not undertake to update them - Forward-looking statements are based on management's beliefs and assumptions and involve known and unknown risks and uncertainties that may cause actual results to differ materially[9] - Factors affecting forward-looking statements include limited operating history, ability to manage future growth, client acquisition and retention, unpredictable sales cycles, intense competition, and regulatory compliance[9] - The company undertakes no obligation to update or revise any forward-looking statements, except as required by applicable law[9] Contact Information This section provides contact details for investor relations and media inquiries, including names and email addresses for relevant personnel - Investor Relations Contact: Steve Calk, ir@alkami.com[44] - Media Relations Contacts: Marla Pieton, marla.pieton@alkami.com; Valerie Kerner, alkami@fullyvested.com[44]