Alkami(ALKT) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presents Alkami Technology, Inc.'s unaudited condensed consolidated financial statements for Q2 2025 and FY 2024, detailing Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows, with notes Unaudited Condensed Consolidated Balance Sheets Total assets significantly increased, driven by the MANTL acquisition's impact on intangibles and goodwill. Liabilities also rose due to new convertible senior notes and revolving loan borrowings Balance Sheet Metrics | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($ thousands) | Change (%) | | :-------------------- | :------------ | :---------------- | :------------------- | :--------- | | Total assets | $840,389 | $437,277 | $403,112 | 92.2% | | Intangibles, net | $172,182 | $29,021 | $143,161 | 493.3% | | Goodwill | $403,814 | $148,050 | $255,764 | 172.8% | | Total liabilities | $496,373 | $80,247 | $416,126 | 518.6% | | Convertible senior notes, net | $335,208 | — | $335,208 | N/A | | Revolving loan | $50,000 | — | $50,000 | N/A | | Total stockholders' equity | $344,016 | $357,030 | $(13,014) | (3.6%) | Unaudited Condensed Consolidated Statements of Operations Significant revenue growth for Q2 and H1 2025 was offset by increased net losses, primarily due to higher operating expenses, including amortization of acquired intangibles and interest expense Three Months Ended June 30 | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change ($ thousands) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Revenues | $112,059 | $82,160 | $29,899 | 36.4% | | Gross profit | $65,618 | $48,771 | $16,847 | 34.5% | | Loss from operations | $(15,863) | $(13,207) | $(2,656) | 20.1% | | Net loss | $(13,591) | $(12,317) | $(1,274) | 10.3% | | Basic and diluted EPS | $(0.13) | $(0.13) | $0.00 | 0.0% | Six Months Ended June 30 | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change ($ thousands) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------------- | :--------- | | Revenues | $209,894 | $158,287 | $51,607 | 32.6% | | Gross profit | $123,378 | $92,803 | $30,575 | 32.9% | | Loss from operations | $(31,259) | $(25,572) | $(5,687) | 22.2% | | Net loss | $(21,407) | $(23,750) | $2,343 | (9.9%) | | Basic and diluted EPS | $(0.21) | $(0.24) | $0.03 | (12.5%) | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity Total stockholders' equity decreased for H1 2025, driven by net loss and capped call transactions, partially offset by stock-based compensation and ESPP/stock option proceeds Stockholders' Equity Changes | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Balance December 31 | $357,030 | $324,941 | | Stock-based compensation | $36,253 | $29,262 | | Capped call transaction | $(33,879) | — | | Net loss | $(21,407) | $(23,750) | | Balance June 30 | $344,016 | $327,184 | Unaudited Condensed Consolidated Statements of Cash Flows Operating cash flow shifted to negative, investing activities saw significant outflow from the MANTL acquisition. Financing activities provided substantial cash inflow from convertible notes and revolving loan borrowings Cash Flow Activities | Cash Flow Activity (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(4,507) | $1,499 | | Net cash (used in) provided by investing activities | $(392,360) | $22,275 | | Net cash provided by (used in) financing activities | $354,934 | $(3,269) | | Net (decrease) increase in cash and cash equivalents | $(41,933) | $20,505 | | Cash and cash equivalents, end of period | $52,426 | $61,432 | - Net cash used in investing activities for the six months ended June 30, 2025, was primarily driven by the $375.5 million acquisition of MANTL[15][157] - Net cash provided by financing activities for the six months ended June 30, 2025, was largely due to $335.5 million from the issuance of 2030 Convertible Notes and $60.0 million from revolving loan borrowings[15][159] Notes to the Unaudited Condensed Consolidated Financial Statements Provides detailed explanations of accounting policies, significant transactions, and financial statement items, including MANTL acquisition, debt, revenue, and income taxes, crucial for understanding financial position Note 1. Organization Alkami Technology, Inc. provides cloud-based digital banking solutions to U.S. financial institutions via its multi-tenant platform through long-term, subscription-based contracts - Alkami Technology, Inc. provides cloud-based digital banking solutions to community, regional, and super-regional financial institutions in the United States[17] - The company's Alkami Digital Banking Platform helps FIs onboard and engage new users, accelerate revenues, and improve operational efficiency, supported by a proprietary, true cloud-based, multi-tenant architecture[17] - Alkami cultivates deep client relationships through long-term, subscription-based contractual arrangements, aligning growth with client success[17] Note 2. Summary of Significant Accounting Policies Outlines significant accounting policies for interim unaudited condensed consolidated financial statements, covering basis of presentation, use of estimates, operating segment, and recent accounting pronouncements - The interim unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and do not include all disclosures required for complete annual financial statements[19][20] - Management makes significant estimates and assumptions, particularly in revenue recognition and business combinations, which could differ from actual results[22][23] - The company operates as a single reportable segment, with the CEO assessing performance based on net loss[24] - The FASB issued ASU 2024-03, 'Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures,' effective for fiscal years beginning after December 15, 2026, which the Company is currently evaluating for impact[26] Note 3. Business Combination Alkami acquired MANTL on March 17, 2025, for $375 million, net of cash. MANTL contributed $10.3 million in Q2 2025 revenue, significantly increasing goodwill and identifiable intangible assets - Alkami Technology, Inc. acquired Fin Technologies, Inc. dba MANTL on March 17, 2025, for approximately $375 million, net of cash acquired[27][28] - MANTL provides onboarding and account opening solutions for financial institutions, augmenting Alkami's single reportable segment[27][30] Acquired Assets and Liabilities | Acquired Assets/Liabilities (in thousands) | Adjusted Fair Value as of June 30, 2025 | | :----------------------------------------- | :-------------------------------------- | | Goodwill | $255,763 | | Intangible assets | $153,500 | | Total assets acquired | $417,010 | | Total liabilities assumed | $37,906 | | Net assets acquired | $379,104 | Purchased Identifiable Intangible Assets | Purchased Identifiable Intangible Assets (in thousands) | Weighted-Average Amortization Period (in years) | Total (in thousands) | | :-------------------------------------- | :---------------------------------------------- | :------------------- | | Customer relationships | 15 | $72,500 | | Developed technology | 5 | $75,300 | | Tradenames | 10 | $5,700 | | Total identifiable intangible assets | | $153,500 | - The MANTL acquisition contributed $10.3 million in revenue for the three months ended June 30, 2025, and $11.7 million for the six months ended June 30, 2025[33] - The acquisition resulted in a provisional deferred tax benefit of $12.0 million due to the partial release of the Company's pre-existing valuation allowance[31][64] Note 4. Property and Equipment, Net Property and equipment, net, increased to $24.2 million as of June 30, 2025, from $22.1 million at December 31, 2024, primarily due to capitalized software development costs and higher depreciation Property and Equipment Details | Property and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Capitalized software development costs | $23,328 | $19,728 | | Equipment and software | $3,169 | $2,934 | | Leasehold improvements | $10,238 | $10,229 | | Total property and equipment | $36,735 | $32,891 | | Less: accumulated depreciation and amortization | $(12,545) | $(10,816) | | Property and equipment, net | $24,190 | $22,075 | - Depreciation and amortization expense was $2.1 million for the six months ended June 30, 2025, up from $1.8 million in the prior year[34] Note 5. Revenues and Deferred Costs Total revenues significantly increased, primarily from SaaS subscription services, which form the majority of revenue. Deferred commissions and implementation costs related to client contracts were capitalized and amortized Revenue Sources | Revenue Source (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | SaaS subscription services | $105,859 | $78,371 | $198,667 | $151,383 | | Implementation services | $3,244 | $2,110 | $5,516 | $3,958 | | Other services | $2,956 | $1,679 | $5,711 | $2,946 | | Total revenues | $112,059 | $82,160 | $209,894 | $158,287 | - SaaS subscription services accounted for 94.5% and 94.7% of total revenues for the three and six months ended June 30, 2025, respectively[97] - The remaining performance obligation totaled approximately $1.6 billion as of June 30, 2025, with 49.5% expected to be recognized over the next 24 months[38] - Deferred commissions capitalized increased to $3.5 million for the six months ended June 30, 2025, from $2.9 million in the prior year, with amortization included in sales and marketing expenses[40] - Deferred implementation costs capitalized increased to $5.3 million for the six months ended June 30, 2025, from $5.2 million in the prior year, with amortization included in cost of revenues[41] Note 6. Accounts Receivable, net and Prepaid expenses and other current assets Accounts receivable, net, and prepaid expenses and other current assets both significantly increased as of June 30, 2025, reflecting growth in trade receivables and other current assets Accounts Receivable and Prepaid Expenses | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Accounts receivable, net | $47,679 | $38,739 | | Prepaid expenses and other current assets | $28,411 | $13,697 | - The increase in prepaid expenses and other current assets was primarily due to a $9.1 million pending vendor refund receivable as of June 30, 2025, which was received in July 2025[155] Note 7. Accrued Liabilities Total accrued liabilities increased to $31.0 million as of June 30, 2025, from $24.5 million at December 31, 2024, driven by higher bonus, commissions, and other accruals Accrued Liabilities Details | Accrued Liability (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Bonus accrual | $9,398 | $7,989 | | Commissions accrual | $2,119 | $1,708 | | Accrued consulting and professional fees | $1,467 | $653 | | Other accrued liabilities | $11,631 | $8,633 | | Total accrued liabilities | $30,965 | $24,520 | Note 8. Debt Alkami amended its credit facility, extending maturity and increasing revolving loan commitment to $225 million. The company also issued $345 million in 1.50% convertible senior notes due 2030, partially funding the MANTL acquisition - The Amended Credit Agreement extended the Revolving Facility maturity to February 27, 2030, and increased the commitment to $225 million[45] - The company had $50 million outstanding on the Revolving Facility as of June 30, 2025, with an effective interest rate of 7.68%[46] - Alkami issued $345 million principal amount of 1.50% convertible senior notes due March 15, 2030, with a conversion price of approximately $32.82 per share[51] 2030 Convertible Notes Interest Expense | 2030 Convertible Notes Interest Expense (in thousands) | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :----------------------------------------------------- | :------------------------------- | :----------------------------- | | Contractual interest expense | $1,293 | $1,509 | | Amortization of debt discount and issuance costs | $488 | $624 | | Total interest expense | $1,781 | $2,133 | - The net carrying amount of the 2030 Convertible Notes was $335.2 million as of June 30, 2025, with an estimated fair value of $406 million[56][57] Note 9. Stockholders' Equity Stock-based compensation expense significantly increased for Q2 and H1 2025, partly due to accelerated vesting of equity awards related to the MANTL acquisition Stock-based Compensation Expense | Stock-based Compensation Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenues | $1,706 | $1,347 | $4,342 | $2,525 | | Research and development | $5,424 | $4,256 | $10,858 | $8,254 | | Sales and marketing | $3,550 | $2,291 | $6,397 | $4,322 | | General and administrative | $8,835 | $7,119 | $17,920 | $13,464 | | Total stock-based compensation expenses | $19,515 | $15,013 | $39,517 | $28,565 | - The MANTL acquisition resulted in an additional $3.9 million of stock-based compensation expense for the six months ended June 30, 2025, due to accelerated vesting of unvested equity awards[61] Note 10. Income Taxes A significant income tax benefit was recorded for Q2 and H1 2025, primarily due to the partial release of a pre-existing valuation allowance from the MANTL acquisition, which generated a net deferred tax liability Income Tax Metrics | Income Tax Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax (benefit from) provision | $(4,296) | $185 | $(11,581) | $374 | | Effective tax rate | 24.0% | (1.5%) | 35.1% | (1.6%) | - The MANTL acquisition generated a net deferred tax liability of $12.6 million, leading to a provisional deferred tax benefit of $12.0 million from the partial release of Alkami's pre-existing valuation allowance[64][148] - The company is evaluating the impact of the recently enacted OBBBA, which retroactively repeals the requirement to amortize Section 174 R&D expenses over five years[66] Note 11. Fair Value of Financial Instruments Financial instruments, including cash equivalents and marketable securities, are measured at fair value using a three-tier hierarchy, with most assets classified as Level 1 or Level 2 Financial Assets Fair Value | Financial Assets (in thousands) | June 30, 2025 (Total Fair Value) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :------------------------------ | :------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Cash equivalents | $37,585 | $37,585 | $— | $— | | Marketable securities | $34,686 | $22,269 | $12,417 | $— | | Total assets | $72,271 | $59,854 | $12,417 | $— | - The fair value of the 2030 Convertible Notes was estimated at $406 million as of June 30, 2025, based on Level 2 inputs[57] Note 12. Earnings Per Share Basic and diluted net loss per share were identical due to net losses, rendering potentially dilutive shares, including 2030 Convertible Notes and Capped Calls, anti-dilutive Net Loss and EPS | EPS Metric (in thousands, except EPS) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(13,591) | $(12,317) | $(21,407) | $(23,750) | | Basic and diluted EPS | $(0.13) | $(0.13) | $(0.21) | $(0.24) | Anti-dilutive Common Share Equivalents | Anti-dilutive Common Share Equivalents | As of June 30, 2025 | As of June 30, 2024 | | :------------------------------------- | :------------------ | :------------------ | | Stock options | 983,034 | 2,860,009 | | Restricted Stock Units | 7,491,398 | 7,347,640 | | ESPP | 29,488 | 28,748 | | 2030 Convertible Notes | 10,511,495 | — | | Total anti-dilutive common share equivalents | 19,015,415 | 10,236,397 | Note 13. Commitments and Contingencies The company is involved in ordinary course legal proceedings but does not expect any pending claims to materially adversely affect its financial position or results of operations - The company may be party to legal actions, including intellectual property claims, but believes current liabilities from such proceedings are not material[75] Note 14. Leases The company amended its Plano, Texas office lease, reducing space and extending the term to August 31, 2033. Operating lease expense remained stable, with future lease liabilities detailed - The company reduced its leased office space in Plano, Texas, by approximately one-third and extended the lease term to August 31, 2033[76] Lease Expense | Lease Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease expense | $671 | $674 | $1,343 | $1,343 | | Short-term lease expense and other | $351 | $129 | $526 | $432 | | Total lease expense | $1,022 | $803 | $1,869 | $1,775 | Future Operating Lease Liabilities | Future Operating Lease Liabilities (in thousands) | June 30, 2025 | | :------------------------------------------------ | :------------ | | 2025 (six months remaining) | $1,457 | | 2026 | $2,843 | | 2027 | $2,636 | | 2028 | $2,777 | | 2029 | $3,067 | | Thereafter | $11,912 | | Total minimum lease payments | $24,692 | | Less: present value discount | $(6,595) | | Total lease liability balance | $18,097 | Note 15. Goodwill and Other Intangibles Goodwill significantly increased to $403.8 million as of June 30, 2025, primarily due to the MANTL acquisition. A $1.7 million impairment loss was recognized on certain intangible assets and capitalized software development costs - Goodwill increased to $403.8 million as of June 30, 2025, from $148.1 million at December 31, 2024, largely due to the MANTL acquisition, which added $255.8 million[79] Intangible Assets | Intangible Assets (in thousands) | As of June 30, 2025 (Net Carrying Value) | As of December 31, 2024 (Net Carrying Value) | | :------------------------------- | :--------------------------------------- | :------------------------------------------- | | Customer Relationships | $86,580 | $16,285 | | Developed Technology | $79,563 | $12,198 | | Tradenames | $6,014 | $513 | | Total amortizable intangible assets | $172,157 | $28,996 | | Website domain name (Indefinite-lived) | $25 | $25 | | Total intangible assets | $172,182 | $29,021 | - Amortization expense on intangible assets was $9.0 million for the six months ended June 30, 2025, a substantial increase from $3.4 million in the prior year, primarily due to MANTL acquisition[81][143] - A $1.7 million impairment loss was recognized for the six months ended June 30, 2025, on developed technology, customer relationship intangible assets, and capitalized software development costs due to the MANTL acquisition[82][144] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides a comprehensive discussion and analysis of Alkami's financial condition and results of operations, highlighting revenue growth, operating expenses, acquisitions, key metrics, and liquidity Overview Alkami provides cloud-based digital banking solutions, expanding its product suite and market reach through strategic acquisitions like MANTL. Revenues show strong growth, but net losses persist due to significant growth investments - Alkami's vision is to create an integrated ecosystem of premium technology and fintech solutions delivered as a SaaS solution[89] - The company has made several acquisitions to expand its offerings, including ACH Alert (fraud prevention), MK Decisioning Systems (onboarding/account opening), Segmint (data analytics), and MANTL (onboarding/account opening)[89] - Total revenues increased by 36.4% to $112.1 million for the three months ended June 30, 2025, and by 32.6% to $209.9 million for the six months ended June 30, 2025, compared to the same periods in 2024[95] - Net losses were $13.6 million and $21.4 million for the three and six months ended June 30, 2025, respectively, driven by continued investment in sales, marketing, product development, and client activities[97] Recent Developments Recent developments include the $375 million MANTL acquisition, amendment of the credit agreement to increase and extend the revolving facility, and issuance of $345 million in 1.50% convertible senior notes due 2030 - Alkami completed the merger with MANTL on March 17, 2025, for approximately $375 million, net of cash acquired[98] - The Third Amendment to the Amended Credit Agreement extended the Revolving Facility maturity to February 27, 2030, and increased the commitment[99] - The company issued $345 million principal amount of 1.50% Convertible Senior Notes due 2030 on March 13, 2025[100] Factors Affecting our Operating Results Key factors influencing Alkami's operating results include growing its FI client base, deepening customer penetration, expanding its product suite, client renewals, and maintaining innovation through R&D investments - As of June 30, 2025, Alkami served 280 FIs through its Digital Banking Platform and over 900 clients including acquisitions[101] - Revenue generation is primarily based on a per-registered-user pricing model, incentivizing clients to drive digital adoption[102] - Product depth, supported by over 300 integrations, is crucial for winning new clients and expanding Revenue per Registered User (RPU)[103] - Client renewals are a key driver of revenue stability and long-term gross margin targets, with 6 and 10 renewals for the three and six months ended June 30, 2025, respectively[103] - Research and development spend was 27.0% and 27.2% of revenues for the three and six months ended June 30, 2025, respectively, reflecting commitment to innovation[104] Components of Results of Operations Details the composition of Alkami's revenues, cost of revenues, and operating expenses, explaining recognition methods and their impact on gross margin and overall profitability - The majority of revenues are derived from multi-year SaaS subscription services, recognized ratably over the contract term, with an average contract life of approximately 70 months[105] - Implementation and other upfront fees are recognized on a straight-line basis over the client's initial agreement term[106] - Cost of revenues includes personnel costs, third-party cloud hosting, direct costs of bill-pay services, and amortization of acquired technology[109] - Gross margin for the three and six months ended June 30, 2025, was 58.6% and 58.8%, respectively[111] - Operating expenses include Research and Development, Sales and Marketing, General and Administrative, Acquisition-related expenses, Amortization of acquired intangibles, and Loss on impairment of intangible assets[113][114][115][116][117] Results of Operations Alkami saw substantial revenue growth for Q2 and H1 2025, driven by user growth and the MANTL acquisition. Increased operating expenses led to higher net losses for Q2, though H1 net loss improved Financial Performance | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change ($ thousands) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :------------------- | :--------- | | Revenues | $112,059 | $82,160 | $29,899 | 36.4% | | Cost of revenues | $46,441 | $33,389 | $13,052 | 39.1% | | Gross profit | $65,618 | $48,771 | $16,847 | 34.5% | | Operating expenses | $81,481 | $61,978 | $19,503 | 31.5% | | Loss from operations | $(15,863) | $(13,207) | $(2,656) | 20.1% | | Net loss | $(13,591) | $(12,317) | $(1,274) | 10.3% | | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change ($ thousands) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------------- | :--------- | | Revenues | $209,894 | $158,287 | $51,607 | 32.6% | | Cost of revenues | $86,516 | $65,484 | $21,032 | 32.1% | | Gross profit | $123,378 | $92,803 | $30,575 | 32.9% | | Operating expenses | $154,637 | $118,375 | $36,262 | 30.6% | | Loss from operations | $(31,259) | $(25,572) | $(5,687) | 22.2% | | Net loss | $(21,407) | $(23,750) | $2,343 | (9.9%) | - Revenue growth was driven by user growth on the digital banking platform, new client implementations, additional solutions sold to existing clients (increasing RPU), and higher termination fees. The MANTL acquisition contributed $10.3 million (3 months) and $11.7 million (6 months) to revenue[129][130] - Cost of revenues increased due to higher costs from third-party partners, increased amortization of intangible assets (primarily MANTL-related), and higher personnel-related costs[132][133] - Operating expenses increased across all categories (R&D, S&M, G&A) primarily due to headcount growth, stock-based compensation, and acquisition-related expenses[136][137][138][139][140][141][142][143] - Non-operating expense increased due to higher net interest expense from the 2030 Convertible Notes and Revolving Facility[145] - The income tax benefit of $11.6 million for the six months ended June 30, 2025, was primarily due to the partial release of a valuation allowance related to the MANTL acquisition[146][148] Key Business Metrics Alkami tracks Adjusted EBITDA, ARR, Registered Users, and RPU to measure operational performance and growth, with all metrics showing positive year-over-year growth Annual Recurring Revenue, Registered Users, and RPU | Metric (in thousands, except RPU) | June 30, 2025 | June 30, 2024 | Change ($ thousands) | Change (%) | | :-------------------------------- | :------------ | :------------ | :------------------- | :--------- | | Annual Recurring Revenue (ARR) | $423,763 | $321,284 | $102,479 | 31.9% | | Registered Users | 20,891 | 18,584 | 2,307 | 12.4% | | Revenue per Registered User (RPU) | $20.28 | $17.29 | $2.99 | 17.3% | Adjusted EBITDA | Adjusted EBITDA (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Adjusted EBITDA | $11,921 | $4,554 | $23,990 | $8,363 | - Adjusted EBITDA is a non-GAAP measure defined as net loss before income taxes, financial instrument loss, net interest expense/income, depreciation and amortization, stock-based compensation, acquisition-related expenses, and impairment loss[124] Liquidity and Capital Resources Alkami's liquidity as of June 30, 2025, includes $87.1 million in cash and marketable securities. The MANTL acquisition was funded via convertible notes, revolving loan borrowings, and existing cash. Management deems current resources sufficient for operations - As of June 30, 2025, Alkami had $87.1 million in cash and cash equivalents and marketable securities, and an accumulated deficit of $497.6 million[149] - The MANTL acquisition was funded by issuing 2030 Convertible Notes, borrowings from the Revolving Facility, and cash from the balance sheet[150] - Net cash used in operating activities was $4.5 million for the six months ended June 30, 2025, a decrease from $1.5 million provided in the prior year[153][154] - Net cash used in investing activities was $392.4 million for the six months ended June 30, 2025, primarily due to the $375.5 million MANTL acquisition[153][157] - Net cash provided by financing activities was $354.9 million for the six months ended June 30, 2025, mainly from $335.5 million in convertible senior notes and $60.0 million in revolving loan borrowings[153][159] - Total interest expense for the six months ended June 30, 2025, was $4.0 million, significantly higher than $0.1 million in the prior year, due to the new debt instruments[163] Contractual Obligations and Commitments No material changes to contractual obligations and commitments were reported as of June 30, 2025, compared to the Annual Report on Form 10-K for December 31, 2024 - No material changes to contractual obligations and commitments were reported as of June 30, 2025, compared to the previous annual report[166] Off-Balance Sheet Arrangements The company had no off-balance sheet financing arrangements or relationships with unconsolidated entities during the reported period - The company did not have any off-balance sheet financing arrangements or relationships with unconsolidated entities during the period[167] Critical Accounting Policies and Significant Judgments and Estimates No material changes to critical accounting policies and estimates were reported compared to the Annual Report on Form 10-K for December 31, 2024 - No material changes to critical accounting policies and estimates were reported as compared to the Annual Report on Form 10-K for the year ended December 31, 2024[169] Item 3. Quantitative and Qualitative Disclosures About Market Risk Alkami is primarily exposed to interest rate risk from its Amended Credit Agreement and cash equivalents. This risk is managed through diversified investment-grade securities, with a 10% rate change not expected to materially impact financials - Alkami's primary market risk exposure is from fluctuations in interest rates, particularly related to its Amended Credit Agreement[171][172] - A hypothetical 10% change in interest rates is not expected to have a material impact on the consolidated financial statements, assuming the Amended Credit Agreement is fully drawn[172] - The company intends to minimize interest rate risk by maintaining its cash equivalents in a variety of short-term, investment-grade securities[172] Item 4. Controls and Procedures Alkami's management concluded disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025, with no material changes in internal control over financial reporting during the period - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[173] - No material changes in internal control over financial reporting occurred during the period covered by this report[174] PART II - OTHER INFORMATION Item 1. Legal Proceedings Alkami is not a party to any legal proceedings expected to have a material adverse effect on its business, operating results, cash flows, or financial condition - The company is not involved in any litigation that is believed to have a material adverse effect on its financial position, results of operations, cash flows, or financial condition[175] Item 1A. Risk Factors Highlights additional risk factors, primarily increased indebtedness from 2030 Convertible Notes and Amended Credit Agreement, which could limit cash flow, affect financial condition, and potentially dilute stockholders upon conversion - Increased indebtedness from the 2030 Convertible Notes and Amended Credit Agreement could limit cash flow, increase vulnerability to adverse conditions, and reduce funds available for other purposes[177][182] - The company may be unable to raise funds to repurchase the 2030 Convertible Notes following a fundamental change or pay cash amounts due upon maturity or conversion, potentially leading to default[178] - Provisions in the Indenture for the 2030 Convertible Notes could make a third-party acquisition more difficult or expensive[179] - The accounting method for the 2030 Convertible Notes, including amortization of debt discount and issuance costs, will result in higher reported interest expense and potentially reclassify the liability as current, affecting reported working capital[180][181][183] - Conversion of the 2030 Convertible Notes could dilute existing stockholders, and transactions by option counterparties related to Capped Calls may affect common stock value[184][185][186] - The company is subject to counterparty risk with respect to the Capped Calls, as its exposure is unsecured and dependent on the financial stability of the option counterparties[187] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report during Q2 2025 - No unregistered sales of equity securities or use of proceeds were reported[188] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report during the period - No defaults upon senior securities were reported[189] Item 4. Mine Safety Disclosures There were no mine safety disclosures to report during the period - No mine safety disclosures were reported[190] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[191] Item 6. Exhibits Lists exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications, XBRL documents, and a consulting agreement - The exhibit index includes certifications from the Principal Executive Officer and Principal Financial Officer, Inline XBRL documents, and a consulting agreement[193]