Alkami(US:ALKT)2022-08-07 00:31Financial Data and Key Metrics Changes - Alkami reported Q2 2022 revenue of $50.5 million, a 38% increase year-over-year, exceeding guidance by approximately $2 million [15][18] - The company exited the quarter with an annual recurring revenue (ARR) of $204 million, a 41% increase, and expects to reach $225 million to $228 million by the end of 2022 [18][21] - The average revenue per user (RPU) was $15.33, up 14% from the previous year, with organic RPU expansion of $0.97 or 7% [16][17] Business Line Data and Key Metrics Changes - Subscription revenue grew 38% year-over-year, representing about 95% of total revenue [18] - Add-on sales accounted for over 40% of new sales in the first half of 2022, compared to 23% in 2021 [18][19] - The company implemented 8 new logos in Q2, bringing the total client count to 182, with 39 new logos in implementation [15][16] Market Data and Key Metrics Changes - Alkami exited Q2 with 13.3 million live registered users, an increase of 2.6 million or 24% year-over-year [16] - The company noted a strong demand for digital banking solutions, with a qualified pipeline at an all-time high, particularly among banks [9][10] Company Strategy and Development Direction - Alkami aims to become the digital banking provider of choice for banks while maintaining its leadership with credit unions [10][14] - The company is focusing on expanding its product offerings and enhancing its platform to support larger institutions [10][14] - Alkami is committed to integrating Segmint and enhancing its platform scalability while remaining agile on potential M&A opportunities [14][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for digital banking solutions despite economic volatility, viewing it as a mandatory innovation for financial institutions [8][9] - The company anticipates continued growth in ARR and strong performance in add-on sales, with a robust pipeline for the remainder of 2022 [18][21] Other Important Information - Non-GAAP gross margin for Q2 was 58%, slightly up from 57.5% year-over-year, with expectations for continued margin expansion in the future [19] - The company ended the quarter with over $213 million in cash and marketable securities, having funded the Segmint acquisition with $61 million in debt and $71 million in cash [21] Q&A Session Summary Question: What are the material differences in the new platform versus the prior platform? - The new mobile platform is built on Flutter, allowing for a single codebase across iOS and Android, enhancing customization and deployment speed [25] Question: Are you still on track for gross margin expansion? - The company expects to achieve its long-term gross margin target of 60% to 65%, but does not anticipate reaching the 200 to 300 basis points expansion target for 2022 due to investments and acquisitions [27] Question: Which add-on products are driving growth? - Significant adoption is seen in money movement products, client service products, and fraud security products [29] Question: What is the size and scope of the banks being won? - Alkami is targeting banks that serve SMB and mid-market customers, which represent a large portion of the U.S. banking institutions [31] Question: Is there any change in the demand environment? - There has been no observed softness in demand, with a strong sales pipeline and increased adoption of digital banking solutions [38] Question: Are there inflationary price escalators in contracts? - Contracts typically include a step-up in minimum commitments rather than inflationary price increases [41] Question: What is the potential for ARPU growth? - There are significant opportunities for ARPU growth across various product categories, particularly in money movement and client services [48]