ALKT - Earnings call transcript Q1 2022

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Operator

Hello and welcome to Alkami’s First Quarter 2022 Financial Results Conference Call. My name is Danielle and I will be your operator for today’s call. [Operator instructions]. I would now like to turn the call over to Steve Calk, Steve, you may begin.

Steve Calk

Thank you, Danielle. the Hill, Alex chief on officer, chief today Bryan and financial me call Shootman, are executive With officer.

statements our During forward-looking today’s and performance. are regarding and various and statements make on These future uncertainties. about guidance subject current call, and other expectations we views are based may risks management’s to matters

results may materially different. be actual Our

be Form entitled and with to these understanding forward-looking of We earnings statements. refer non-GAAP stated, filings any to please Factors a For I’ll financial now Also, and the be in on A Statements. turn during forward-looking sections financial measures Alex. measures our Statements summary XX-Q no a the of revise can of being in measures the risk SEC. statements, and our in in XX-K our the forward-looking otherwise and useful found call call obligation unless latest discussed press believe to to of we investors over or our undertake GAAP financial Risk made the reconciliation results. factors our release will and today, basis. comparable on with associated release are made call press quarterly update today’s as are this

Alex Shootman

which million over users on our to million a registered quarter with thank We Alkami quarter another share XX% you, platform, minutes, of earnings our but exited XX.X first we strong grew call. which was some joining Bryan Thank quarter few In expectations. year. and is you delivered us performance. Steve, ahead users of quarter, provide XXXX highlights. that I’d report I’m the for all X.X today in details first live year Alkami up for like pleased will the to the

In sales, solid. quarter terms first was of

expectations. logos and existing growth sales our pipeline new clients exceeded We of renewals and four our five have

thank in to we passion We be you have product implementation opportunity $XX the well. market team, in And your impressed welcoming of and continue outcoming XX started already all and with us. Last considerable year portfolio significant conference of new prospect This million partners, In digital event week, heard ARR. is execution. addition, totaling financial and user our a a service mandatory all to innovation. I the off industry it our the very we consistent become logos and Texas us and many with have annual add-on kind for in The held that sales gain we representing age. clients, opportunity front and knows through in XXX transform a prospects in hours for demand client largest that attendees the history XXX the and I of institutions. to our has customers in-person

good that digital Our a retains experience customers. attracts clients understand and

company. specifically of conducted for essential a fact, of XX% In conference, response quality say generation digital of of new around a purposes their banking Americans becoming steady new this they mind such a Z of specific provides digital attendees. of our the like that financial I’d account providers of with bad millennials conference the share of an a top some at XX% financial experience Gen provider the offering with banking that is to primary open you and firm were to their with XX% of in experience digital at areas banking

user experience. is First

a of is the best experience App happen. user the Our one passionate about experience We’ve and store great that as experience been banking as of based upon always much customers make the possible, to market. the need ratings in to want independent user digitize that they Mobile delivering

to and a banking our than few new an that And doubling our Our one investments mobile release mobile in development expand provider. velocity. any effectively will user major their ease, continue also clients in we platform experience enhanced mobile we solutions to why and while faster functionality, weeks, are a customize includes that integration speed digital enables and grow

providing help focused Alkami Second been innovations security security. to always our clients institutions has is on and protect customers. their

range biometric foreign and of tokens security security heuristics, behavior security, for learning, authentication digital of the soft Our partnerships users. machine

acquisition with an alert example have is monitored billion account of and in XX ACH financial over last just intervention. technology security Our in transfers, without this mind. holders of months, ACH in products fraud $X.X check over stopped purity later we’ve flow institution of the the and billion With $XXX

are offered more by learning institutions known acquisition now financial marketing frictionless innovative just we is open a the relevant we expand on clients. provide provides and referenced their financial TAM as Segmint analytics. data-driven We XX% that world. has communities. economic Alkami data financial and Z to with study can see always the Alkami experience interact requirement. digital communications $X Segmint, banking and accounts, deposit Third of seat to marketing In found artificial It’s businesses This front-row experience. a a and provider that modern for is platform our credit decision I know onboarding XXX and platform that’s financial billion. one digital MK Gen announced an with institutions of backbone Ignite. is we consumers their serve a personalized leverages and financial users the data previously, how the union with credit help of Fourth or that access. example institutions of institutions intelligence data. Segmint banking we our a personal, seamless Alkami Ignite wish access expands with acquired resources. power Financial strategy machine targeted, since as why and to unlocked why is

to opening cycle to can servicing the relationships resilience is see path most to enhances I’m on MK of our broaden revenue and helps Alkami overlap a offer customer as complement base set the with generate the by account account combined to met of market. complete with And About deposits cross-sell Alkami back acquisition engagement surged I product and and and for very told the of incremental of month Ignite. clear CEOs, from Segmint called pandemic, interest which now cash to client is, to earlier, stage the also they Alkami a I end great recent our every customer Decision, since Segmint customer immediate the attributable of solution and on and the in opening. portfolio XX said now base. beginning margins. clients our life that threat little ago, and encouraged our Alkami value a me we our the platform. As the a in weighed net data also

recovery having loan are the of key confidence that were they their in see demand. in businesses these continued leaders types And some However, that cycle. certain will aware be innovation a strengthening next they to

among market financial digital was also growth we’ve institutions the continue in and in XXXX said And than the user that institutions acquirers average. as elevated to marketplace. which activity XX% the their higher We are see this we before, typically market is XX,XXX M&A in serve the

we Alkami. global investment Customers focus tenant, to quarter. the part, banking digital we’re partner to creates attractive and banks ensuring our employer allocate which with three, and date pipeline demand ever, extensible more a strong are that two, will performance strengthening market I’m track are infrastructure. innovation growth remain progress strategy unions. add-on as at financial is agile view quarter. our Fourth, to that make of investments provider our to as the And Number want continue right like And for we the foundation talked banking on a digital for the I great careers. M&A platform we to this here This position seeing first we one, fifth, our our our digital Number Number our make and keep core is play good says the them and evidenced in see on in will an digital they banking unions For continue Alkami our the than growing banking committed conference to focus five becoming innovation. leadership maintaining our with we choice with on banks on teammates the plug we’re focus platform our allows but credit sales, right front. of market by continue an we our convinced credit on fintech that areas. while remains in clients’

I delivered of acquisition of to-date speak measured for to our again I With that and the recent me of progress are the that, joining the for demonstrates to that proud can energized expect opportunity the in Alkami’s and management thoughtful and ahead. and strategic I that continue entire and Segmint we’ve front we’re results approach. call Bryan. we we thank about you to over hear call by company. Our the of the acquisitions us. turn team are But closing, let road the say In

Bryan Hill

quarter, first the financial In everyone. execute afternoon, deliver continued good and strong results. and Alex, Thanks, we to

to driven guidance digital our of In count growth begin primary QX, million, in This $XXX,XXX platform our the XXX end $XX.X which our to revenue Let’s client across three outperformed revenue. by financial compared and bringing the high was all logos continued of in revenue by year. XX% year. the prior We with quarter, drivers. performance prior XXX the strong represented implemented to new compared achieved we of

with the expect year is in the terms in of as expected new the first the XXXX with we well. of for we reminder, a XXXX XXXX cadence our of be which As lowest and be quarter the line implementations, consistent remainder to to

XX new logos representing process million in of digital have For the X.X example, now implementation. we users

live institutions million representing exited year registered with During users digital XX% the expect to remainder platform, implement or up XXX,XXX on XX.X compared users. sequentially. our X.X of X.X backlog the to up from the last quarter million XXXX, and we We million financial

driven growth the user last continues digital XX months, two by be areas. to Over

have And million we’ve X.X XX% user million financial second, institutions digital increased supporting digital users, our their representing First, growth. implemented clients by adoption X.X users.

RPU annual exited revenue. for X% $XX or over our to drive year to backlog quarter. million. revenue, million ARR revenue next first and the to Segmint, important the growing note quarter sales year user through It’s grew This XX% compared to in $XX.XX, opportunity, of We represented per XX implementation compares new XX% at to Subscription market which will RPU, opportunity momentarily. per up approximately over prior to user, recurring of the of address continue market the by revenue blended XX% ARR, We and client currently prior $XX hire the add-on I excluding quarter months. compared $XXX have and total we increased

XXXX, products we remain for As begin strong. our demand

with the start first quarter We during stronger are than sales excited XXXX. execution experienced to the year

sales ago our over the new of with quarter. opportunity continues year momentum amount addition, to double In the gain creation sales pipeline

performance quarter XX-month prior year the sales new for QX and outperformed for both basis. a trailing Our XXXX the

quarter. team in team XX% of quarter. to over sales Our just representing also sales success add-on the This build clients new renewed four sales first continue client on during their the

with client excited in through Segmint. billion. very product the and and expect $X TAM significant this digital area nearly in now we to acquisition an to the billion as activity. continued are our continued success of team TAM We be TAM opportunity includes We And our serve to from a both the our of banking $XX believe expand related and growth provider recent sales investment. This we a have space, development M&A premier of

turning to Now gross margin profitability. and

is to operating margin as model non-GAAP XX% Our our we gross revenue. XX% scale target

year. We at points XXX average pace margin basis per of to achieve expect expansion to of this XXX a on gross

activity. However, our years may M&A might Conversely, resulting expansion years experience exceed lower in margin objective. expansion some investment we or some from quarters, quarters, and in gross or average

margin the client associated team primarily margin by M&A client the first client constrain greater quarter. somewhat such quarter and relationships Decision few XX% in higher success margin efficiencies was costs client revenue and utilization was and expansion the by implementation note driven Expansion our compared third-party cost scale, integration For implementation, support gross non-GAAP our ago revenue and XXXX, dilution and to in functions our of year Please and was as postal next for our offset that quarters. from investments with MK gross acquisition. activities will XX%

expenses. to Moving operating

$X.X investments The million we to XXXX, margin quarter absolute marketing expansion to but of grow XX.X% non-GAAP the million to the for year in return team marketing continue headcount scale primary driver our an for uptick $XX.X the basis revenue. attributable is quarter, The revenue. when administrative quarter. our is phase was In approximately first sales teams, XX% and our and pre-pandemic next margin expense a revenue was or the sales primarily growth, to of revenue on of of prior Non-GAAP of and officer sales the year year we revenue or chief sales of scale, to as revenue. represented A executive revenue. R&D Non-GAAP, ago conferences. to attributable was expansion XX% R&D is year of of scale. revenue. $XX.X expense the such and ago, dollar revenue. XX% as million industry general activities primarily The XX% and R&D quarter, of expense XX% In were For ago represented or G&A XX% or the compared marketing addition

During absorb expense XXXX. and expense costs. in XXXX, sustainable year a percentage G&A expect we to as a experienced reached We the leverage now we QX revenue we as throughout level growth company in public G&A incremental as of of evidenced have

was Our the quarter. better adjusted high our million, $X.X than EBITDA than the quarter end year expectations ago loss and for the better first of considerably

which EBITDA we revenue XXXX. As growth maintain goal opportunities a a expect balance and to investment achieve as positive, reminder, adjusted good to our is of exit with line toward we sight to

We balance CIBC. securities $X which We and representing quarter of we of with ended includes Now now April Bank, April moving the to use $XXX on amended of Bank agreement, on marketable Comerica million the acquisition Segmint a credit cash quarter. XX Valley XX, and million. On Silicon just closed the over the cash consideration our $XXX.X sheet. for during net million

to very will $XX revolver our and It excited The million XXXX, with partner expands $XX to institutions. million. to on amended agreement our to $XX million XX, credit agreement are April credit The these million. financial principal We term We amended expands from $XX loan loan it to from the million mature $XX term sheet. funded of of incremental also approximately $XX request revolving acquisition aggregate Segmint subject an allows with million. our debt to in up us million of amount from certain and conditions additional $XX.X commitments balance cash

M&A expand we acquisition opportunities our integration, M&A. forward. access Segmint, guidelines to to and with by continue through market to deal We our technology around to expect our seek and growth accelerate and going conservative addressable this approach evidenced size we with to approach As capital balance use portfolio continue ROI, of and sheet

Now turning to guidance.

the For $X.X providing in the XXXX, million EBITDA of we range are loss second and million $X of revenue of million, to $XX.X $XX.X million. quarter for adjusted guidance to

includes $X million acquisition. the Our Segmint QX revenue guidance from approximately

and strategic includes costs from projects QX expected an incremental our strategy, Segmint to AWS small QX our guidance acquisitions Our we QX begin EBITDA and adjusted incremental from [indiscernible] environment loss acquisition related the from go-to-market client event talent to shifting as integration.

revenue we are and $XXX million. For of now $XX expect the million full our an in million year year range to $XX of XXXX, million guidance loss full and raising $XXX to adjusted EBITDA

guidance year a of revenue approximately full to Our amount $X negative Segmint from million of acquisition. adjusted EBITDA immaterial the an positive of in range includes million $X

rate This the the at year. to in We growth expect prior contract the revenue to under XX, annual a represents range recurring December $XX of metric segment’s to in be $XX million. XXXX on based of million XX% XX% same

increasingly an and strong to XXXX competitive retaining and talent. focus posted acquisition To we first In from an continues TAM expands on $X closed EBITDA be pressure resulting a the substantial area for to that addition, beyond. key billion. is environment of to in moderate year This full our summarize, success assume by guidance adjusted quarter, wages our and continues a recruiting

call continued to continue questions. in marketplace. the With improve hand human and for We we position the technology to our sales, that, progress I’ll our capital implementations, infrastructure in operator the good and

Operator

instructions]. [Operator

Please ahead. First question comes Mayank Needham. Tandon go from of

Unidentified Analyst

the with on as Hey, more and good your the results. the Segmint Segmint if was expectations Alkami core platform. today. bit could afternoon. guys as Congrats a the far This little you cross-selling offering for wondering talk acquisition on is I Sam Salvas Mayank about

Alex Shootman

Alex. Thanks for is this the question. Hi,

with a built this as So success -- one, company that product sale, Segmint stand-alone that selling right? financial is Number company attractive very into and XXX things. two motion has well an about attractive directly earlier, we would expect and over themselves motion. institutions, said a we’ll excited to with, the I customers We’re as continue

base. about excited very also Alkami We’re to the cross-selling

marketing Our to that you targeting a and and but into also -- channel. back offers wanted it have personalize way this about able mobile had to to space, the product, in improve data customers be our deliver have offers always customers products as if the wanted they their then always use we’ve think

would offer customer target started To conference. better customer one better data our mobile allow had offer develop -- example, you mobile and offer, channel. to we and the give into we target an make So then take an you a before but a acquisition product our the and Segmint of closed from as we customer Alkami that that distribute right also the

were for and customer And our standing there. were conference from sessions The enthusiasm topics obviously customers And our lot so room there were the customer a our only. was folks Segmint Segmint of at the base. breakout

technology in So without created got lot selling also to customers summary, opportunity the Alkami Segmint our product for our a and product. that’s into a we customer great sell this we’ve base. back And stand-alone in value see of

Unidentified Analyst

was very a it. up. and wins the renewals guys of little unions? then business from there some new wondering if the was Got the talk like between about And credit quick helpful. just I mix more a and And you quarter. That’s could banks follow what bit

Bryan Hill

five. quarter $XX XX a company dominated about. an and all Out start very in which resulting assets it institutions four RPU those resulted just of average. of year Primarily, financial or On And in heavily $XX.XX Yes, excited of sales about of they compare that’s we’re is over when XX But banks. that in to that were different a $X for which a logos trailing you great. had in year, the average, the QX, areas. basis, a for successful to we products new we compares couple quarter either that the us. is for In billion significant across month our had in prior was QX banks, a took exciting new five super

-- Client see that logo up getting sales is So good sales in It’s QX, over new each we’re lower our quarter. step now a and from from represented we year that it product team. up initial force TCV the last each the team business during That’s the as during is very our order. more as to a client XX% selling quarter continuing us. equally we a exciting year. What’s expand for step the added was our quarter, quarter at platform total sales of

represent would a of but client sales the basis, quarter expect client to up during sales was So more the sales you on year-over-year significantly.

and of ARPU as new renew and of the So that again, XXXX, out of great our part this we product that In business million evenly renewals. on we rate that increasing ARR price four to between ARR life And we all team. cycle up to run adding momentum The of existing a years fairly million renewals ARR. those represented close in product which collectively million coming $XX renewed close across successful $XX to X% we only were in increase point had to split from expect the renewal. $X across

a the in exciting year the renewal to had very at So we that for perform we us and level same past. hope

Unidentified Analyst

for on helpful. questions That’s hear. to Great the Awesome. and again taking super results. congrats the Thanks

Bryan Hill

you. Thank

Operator

first questions. Thank There conference for are attending XXXX remaining quarter no you call. Alkami’s

You may disconnect. now

Alkami Technology (ALKT) 7 May 222022 Q1 Earnings call transcript