Benzingaยท2025-06-18 19:09Core 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].