ALKT - Earnings call transcript Q2 2024

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Alkami Technologies Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] I'd like to turn the conference over to Steve Calk, Vice President of Investor Relations. Steve, go ahead.

Steve Calk

Thank you, operator. And with me today on today's call are Alex Shootman, Chief Executive Officer; and Bryan Hill, Chief Financial Officer.

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

Our may actual be different. results materially

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

Alex Shootman

once to ahead Steve, performance XXXX, another everyone. XX% welcome, grew I'm report and of Alkami. pleased quarter revenue In quarter for of expectations. the Thanks, of second Alkami strong again

for in million solution company a to end earnings call, $X.X clients the banking experience. digital significant is an providing delivered Power first with banking EBITDA, Since platform we product be we our addition, by exceeding the high celebrated adjusted outstanding expectations. In of last achievement. J.D. mobile Alkami certified

consumer the certification, meeting Power's earn methodology Alkami this provider had space high J.D. our rigorous to As passed for first in expectations.

aspects operational mobile best benchmark across functionality. application practices J.D. development, Power's covering set a we and industry of exceeded design XXX of all Specifically,

is outstanding. our a that an and the continues is their for J.D. platform customer show This the to research digital customers banking Power's clients, meaningful the is experience voice new ensures for members. FI #X Additionally, we view selecting our user to as our experience exceeded business mobile customers banking which benchmark of criteria

marketplace. Our experience banking second investment X user quarter, we in continues clients, the X banks. unions digital drive signed X credit and success In the in to new

One of clients a union one X-year wins terms top in of become credit our our ARR. of that union is will

upon X now are is contract as our of for be bank currently This a digital users. growth Midwestern we wins under is live have XXX bank ACH Alkami have will Based implementation cross-sold XX a and of a banks XXXX schedule, an by that reminder, end we digital large the million banks those digital our contract One approximately ACH representing strategy. XX% has existing will And banking. successfully have Platform. on our the platform, clients XX QX bank current client approximately banks. We under banking Alert of over commercial

addition, In half remains our market. the bank pipeline in almost strong with sales

Our our targets. performance reinforced product current and XXXX excellence my confidence in

the digital May, to growth clients' and history. transfer greatest driving that This experience continue that our more created are factor a annual in in we the more the banking million of live is in evolution An X% customer We continues drive to being averaging a wealth in growth XXX means our on than banking tailwinds driven of base tailwinds amongst digital our among users digital U.S. intergenerational study digital to institutions our base. TAM clients. trends user generational users, Alkami year financial market every X%. On on market, immutable our platform. In are with published by

than digital This the boomers and average X.Xx been have baby next first, existing XX is XX% plan Some Xers to relationship more findings the financial of number grow include: they of have a driving millennials the providers of whom who months. weighted key with Gen banking growth. over

creates confidence as their finally, with to for and demand, are XXXX base. primary don't clients. Seat their targets. future products a the This And have XX% FIs their broader sold relationship client XX% and Alkami demand. on additional will to demand be and for Xers our FI millennials products our than solution views XX% reinforce our This forces provider, and an driving their these millennials deliver growth while to Alkami demand has Gen in FI. And create to have with provide into in generation which Gen to capitalize grow more innovation our boomers. more demand we more tailwinds opportunity to my Next, demographic And than are boomers Xers this likely market.

converted create previous We which to manual the improvements in allows store, management At which Linux our process. our the rather deployed been to end of certificates continue our scale. We we're One have half enables almost to be of the achieving to services auto and automatically results refreshed is operational example Kubernetes, micro certificate to investments centralized business. platform. QX, than platform our launched that make leverage of our thousands in from

in we and partners minutes. allow This Early and set which line up observability XX that issues our improved quarter, detect conducted troubleshoot monitor experience. a user-friendly to installation than more tool the allows quarter, Wizard, clients in successful less their is new to launched framework, efficiently, will our which we environment pilot a and SDK reducing cost

the on tailored visibility Alkami and wanting developers platform. developer for Alkami control launched the We greater development also their into portal process

such reduced the allows our workload to quality platform; the and infrastructure, API increase of performance our the we've Engineering platform Our user; and investments be us enable Organization, availability, reduce to to the us will on deliver new which the API-first and new on capabilities clients. our in Alkami Wizard capabilities work portal as our of some that have are which platform. These per cost an made

my and execute continue to continues best will talent in to improvements the drive ability Our our who XXXX confidence help our to reinforces attract operational brightest targets. Alkami us vision.

of in institutions and to One, X.X for the and our long-term he strategic who will technology respected Chief Deep of QX, which more leaders. Kanjlia for Alkami most XX Gagan continue is prominent Product Alkami Chief create the resources, welcome Silicon than Alkami's Wayne of Customer where Chief the country, momentum an help developing Officer; we've some including McCullough, the road including clients. X the Bank last refine for the brings are Varma, Product recently, added In years, years, excited Technology Chief Capital product years future executive most to we and Officer. and products Over was Alkami's map, last OnDeck exciting Gagan whom both were experience and as Valley in financial market fintechs senior Officer, is right our our commercial banking Officer. Gagan

we the team the phase growth. of have next place Gagan, now With of Alkami's in executive the addition necessary for

XXXX tailwinds in digital appreciative part Bryan. our with confidence XXXX grateful our to of the improvements to story. over Our In talent, ability ability like investors to with future Gagan Alkami to attract the to my team, who I'll of and targets. I'm [indiscernible] closing, reinforce confidence have Alkami great be Alkami reinforces driving the the call of proud attract people have the and our And us targets. demand, Alkami hand chosen product our performance, their that, clients for my our trusted operational that the current in

W. Hill

good everyone. and afternoon, Alex, Thanks,

progress expectations Alkami, quarter strong long-term another for our was quarter second continuing and beating our towards financial Our objectives.

of up the XX% and achieved implementation, at ARR represents clients $XX in exited and year-over-year registered to new XXX. of currently total for the in users. last revenue For of platform $XX.X backlog, XXX,XXX quarter, ARR months. We quarter quarter backlog increased Subscription client XX.X total by million, the next have have million XX% X.X revenue. approximately the of majority represented or sequentially XX%. live which we exited million year. million. our occur the compared X.X implementation over We million representing growth digital new clients grew second with quarter which XX We revenue XX We count will up XX% platform, now XX% We of implemented digital $XXX.X on to the approximately banking digital of XXXX, our million users bringing XX our and

X.X XX million months, digital the users. Over financial XX institutions we implemented supporting last

their clients million adoption existing our by user addition, digital In increased users. X.X

reminder, year we attrition. X upcoming X than churn. long-term last a churn less the of the have contracts, the to banking we any experienced fiscal expect in have over client our not XX months, of we As And future because XXXX, client X%. In of visibility digital

success modeled term, banking RPU and a of driven add-on churn of long ago, to to year. We the ended compared digital by with we year X% per higher with sale ARR onboard quarter addition new who tend the Over to X% a X% $XX.XX, RPU. average at an the clients up

broad-based are our We demand seeing portfolio. product across

to outpace XXXX. sales new continues XXXX Our performance

areas marketing, growth add-on our banking over customer financial the new and portion data service including represented year, sales. Key signed XXXX product new in to banks For digital XX% insights clients, we categories. family sales effort wellness be concentrated of XX X and fraud continue

sales sales, client renewals. responsible add-on for to our team client addition In is contract

to relationships expect XX renew We over XXXX. in client

the terms During we XX% of $X.X obligation and year in purchase ARR and pricing add-on Xx renewed finally, with XX been our client of ago. adoption. Renewal crossed to compared half product terms have relationships. billion, remaining our a up XXXX, first historical under norms consistent over representing And just

turning gross to Now margin.

expansion delivered well the hosting For expansion per of basis through quarter. our operating as We leverage quarter prior XXX gross user to cost we as in the improvement non-GAAP post-sale year of representing our margin margin compared gross of points second operations. registered XXXX, XX.X% continued across achieved

a As margin objective reminder, is XX our gross XX%.

beyond this approaching models beginning continue operational are and goal to look rapidly XXXX now strengthen. and to financial our are We as

expenses. to Moving operating

product of Related where extensibility operating leverage continue we commercial leverage focus initiatives to areas enhance the R&D of platform, cost quarter and scale. improve XX% basis line. in For continue to include realize expenses to expense Investment we drive our derive the our million while second represented We efficiency of or platform market G&A, of expand offer. and product in R&D, revenue operational fit primarily $XX.X offering, quality of scaling our XXXX, banking XXX operating to operating invest the of and this points.

and non-GAAP we expenses, team achieve continue a to high As efficiency. sales marketing for sales and of level productivity go-to-market

we XX while in For and marketing, in million X.X:X. the ARR last of efficiency this $XX.X ranks among and best of marketing sales $XX.X ratio SaaS months, an terms investing We million efficiency. in sales representing the increased believe

and positive represents Our second quarter EBITDA fourth the was quarter adjusted EBITDA. our consecutive our than of of expectations $X.X adjusted high the better end million, in

progression, We calendar our margin is XXXX. Related year securities. and in are very with marketable year ended X of an in covenants cash we certain profile $XX On to July sheet, $XXX modifies April balance amendment the we our be an with of XXXX. adjusted achieve revolver $XX approximately the to path from extends credit EBITDA with million line which XX% pleased million, to consistent the term X-K and issued our by our to we the amended disclosing more facility. to financial expands The that X, with XX, million quarter

Additional provided in X-K. the detail is

today, of the facility As is undrawn.

guidance. Now turning to

we For growth. in $XX.X the represents XX% to guidance of third total range revenue million for the $XX.X of XX% are quarter revenue to million, providing which

For we XX% to adjusted million year the full $XXX.X XX% and, EBITDA, we for subscription representing revenue And range million. of growth to revenue guidance of are providing the $XXX.X XX% of total range for to revenue in guidance $X.X million, million in providing of $X.X to XX%. XXXX, are growth

call deliver financial and providing I'll questions. our while are continuing go-to-market value. to million about expanding best-in-class the profitability achieving closing, the our to We're that, growth of also increasing this With adjusted $XX quarter. hand performance shareholder I'm operator $XX EBITDA for We guidance efficiency, excited to million. In strong

Operator

Chris Blair. [Operator from comes Instructions] question of the Kennedy first line from Your William

Cristopher Kennedy

the alluded the you that Alkami, can for you're -- of talk you focused next phase about drivers when you about of think key but talk some growth when to Alex, it, on? you

Alex Shootman

my Bryan on and Most targets I go to back XXXX and sent Yes. reflecting is in -- the if of I my was out. that I factors reinforce to confidence continue script, the what that

demographic of -- got talked we've in phase the drivers aspect I not the trying about a my got argumented. about to most though and wasn't We've of So the almost the to any in in consumer is driving seat growth of continue demand It commentary market, a next see that in I'm banks. population growth. really need be are I with changes their digitization for deals that, underlying general. how What

tailwinds to so of term. bit a I'm got tap demand Chris, long can little And Alkami happy lot a we've but into deeper, that go

W. Hill

is XX% plan just to I'll we've to points. In we in is in that And credit by we add-on likely reported pretty we're in more add banks complement in come talked what couple we goal like to union that, about what most in the the a laid XX% of XXXX, XXXX, we sales, And wins XX% just sell Chris, of about was doing full competitive from of beginning total of client from we units. XXXX. would XX% achieve to we're Yes. -- in we what side also out year. the for of a market. to and the contract our XXXX that scale will the credit year-to-date that, the to for And value XXXX what at said addition which this in XX% be new been

I think a we've community XXXX outlined our investment So the back progress lot what XXXX. in we're of which making towards for is goal,

Cristopher Kennedy

a And Understood. And there. you quick track clearly then just on guys are follow-up.

talk on better about about the journey? progress you talked Can APIs. that You leveraging just the

Alex Shootman

that parts put platform. that is to they can pieces get and able access an pieces feedback the that of through into our to or access They of access our from we've other Thanks. back the access platform two gotten want of different it can The Alkami Yes. today. information of they -- The customers it customers be that either our they platform information or API the application partners can an more through out SDK. the there's so ways

into an no customers And ultimately so do the them longer out is our then put to SDK, of into through this unique do to other platform the of want what to things so there from And they effort What have to of allow the we platform how the will in customers software customer. a lower integrate software API-first Alkami can information platform use in it they and because it that for service that's information we so their an we're And to come capability pieces from and inside the more partner platform do members. connect the all is how of into platform. And if that platform. third-party result an platform. stickiness be will enable into going more redesign then information third-party API turning the out standpoint or to will of allow the

Operator

Your from Tandon the Needham. next line Mayank from comes question of

Mayank Tandon

which to comment Alex, the Just around add-on start where I a most sales lies the hear which they're areas momentum maybe or bit to the the lagging of a traction, sort there. wanted products. positive add-on terms Bryan on with of within seeing might you unpack great any that the Could little bit? momentum, color momentum in be little the

W. Hill

what Yes. There's acquisition. that's four refer marketing, and data areas large where we're segment part, in seeing some significant to progress. our which One we is insights as

So not new a or win adoption within of also new perspective, sales just but logo from a an we're lot from perspective, add-on seeing client segment.

to of our In fact, XX% XX% total base. today, installed approximately

represents has by protection, bank pretty sold of segment, move the clients. And ACH been we So which driven one that and another followed you the areas. areas live Alert service XX% which banking year have is principally XXX also our and digital that sold into adopted then X ACH ACH by our is movement. then adoption And Alert about wellness live think digital into of banking we fantastic. move you fraud money are clients two -- bills customer Alert. overall again, And those in acquisitions, is X which, then and then this financial on

clients our fact average the we XX just offer that today, it's and XX. So products,

in we're a from insights view, adopted. fraud business what the So a bit marketing, depending within definitely what strategy and are they point of on are seeing interested drives products really quite of But area, traction. and operation data

Alex Shootman

again product about and under they financial users We institutions, And billion anecdote our give both -- were total million digitize really $XX little we're topics we had up was, talk to coming and Advisory be One, represents end to the lot customers. We've our we're that weeks of to in an a wanted banks X to you together lending was need loan which in credit a that to Customer XX going of ago board there platforms that drive assets of of level point unions, take a volume couple those about. experience platform. for of digital across are a close with those besides there able a meeting. front look, X.X Customer the to just I'll probably a I'll to connected Board We'll that place, a Advisory performance. our either specific or modern digital-first our product. leave legacy a Maybe providing but need we new got office. new really back attracting where customer

in the about the like. personalized mobile to thoughts I analytics of would a be for big fine AI that talk then is mobile specific grain a One it So look data. the for And would our -- talked use clear more center How there's just a able process in I AI, in of to I end be them the offer channel channel it's what about front Very around to make fraud. contact cases quickly. And respond they customers their to more AI Bryan the to could be of loan data generative Difficulty] customers then people want around battling sophisticated to do that [Technical the use How X predictive digitization about do lot itself. offer? terms understand it. specific in in for already think help use AI. deliver

from So they're terms on of in then specific customer Brian's what of you section the base perspective a and products an overview got just our in. interested

Mayank Tandon

helpful. very That's

follow-up, on model. the a maybe, for Bryan, Just quick

in targets quarters? you as maybe good Is growth the a the framework And model? expect ARPU. for of a that of the really better to use guide then terms a we what should several next recent sort of what's the expectations 'XX half. think fiscal back for Should to for get want and to your trajectories the Just sustainable sense user about

W. Hill

last coming been on from cohorts driven higher I that unions mix, are is. expansion how is ARPU expansion. X% to in it driven sales away saying the we've also more included higher average ARPU new what years we a wouldn't that's break coming banks the fact several and X% with both a at on achieved much that are by points for No, growth, but percentage credit revenue by more come ARPU. will from XX% much ARPU. products Part in

I'm a think and good So secondly, we're very what time that's And portfolio. future. And expansion for come cross-sell client adoption midstream good we And sales of do that seeing renewal and in from we're about seeing. seeing our the then Whether us through ARPU of it's that product visibility or can have excited at it's we're if an what driver. MSA, we quite comes honestly, organization. the the our nice

mentioned, I our contract year-to-date that's As total sales. value XXXX for

XX% So come ARPU X% from balance will and to user X% to XX% from the expansion growth.

quarter, any X any it ARPU point in away revenue within providing. to reason that expansion, or variability see different user percentage Now been break be or we've we versus but from don't could calculus a the growth

Operator

comes Walravens question the Citizens of Pat line of from next Your JMP.

Patrick Walravens

Congratulations, you guys.

So I two guess I have questions.

The mean super Alex, the millennials X Gen first And press I'm it's I this interesting. reading boomers. baby release versus about the is, and

still is, for would for Or thoughts would hear providers? why feel they to to I as grabs is does doing your bit expand of to providers? and get Just a then it Is need be they second love love M&A -- more that? more more number something just on sort what I'd on wealth, financial there your you expanding of you their my up guys millennials question why they're the how parameters little are about the And and it?

Alex Shootman

for thanks question. the Yes. Pat,

is that's that, what I large the think then to study most it to of not millennial millennial, Generational why fact tap then partnership out of generation. can't First, first deposited, as half I millennial Alkami set is of opportunity it to it's things this more I in -- kind going that huge shift on for -- what reason much good advisory it the the is wealth. from question, it's millennials their financial I can of in study the for that important whisperer, bank. of so of the to which be And generation And are not products the of use you really Center define to more millennials be. the digital of of the very experience. for some institution that, for that I'm into Kinetics us our a thing regional is know, do inherit we customers. other aspects, to and is this with which there's customers because learn an you primary told institution. In in And And we an our opportunity That an might means that about interesting, wealth not you where very boomer that's up community the we define But what that all, them and many paycheck there's are for both set -- be baby the is a don't terms discovered, is for and out a of but innovative. grabs -- half the a do to what lot to generation first change to having read we ability for their

you've was our So us but customers have research. exciting it, for pretty -- read and appreciated the it it's

grow has to relationships product. you with grow In we'll M&A, we were terms we build that grow would it do an in, products. M&A, M&A our we if -- been couple we to M&A, our of characteristics. through through of and expect have From property third-party will bake perspective, philosophy We'll through a intellectual organic into

that fits the something our segment they behalf Alkami that to you to the that shareholders, do expect to if into whatever know us our brings to sense sense the to that accomplish financial fit our would like makes expect right? So look And that at things we sense on profile, we're anything, into much you say make I of makes that customers would and to want don't customers. add would to You financial table, do would expect acquisition that financially it you that trying Brian? to would profile. the would it me

W. Hill

I'll a M&A in points, away mix product we've is opportunity M&A view of about this mean, way digital as an couple we past. move the where of add our to today terms scale, talked banking. we our from are Yes. don't to I in And is, Pat. expand view a

So of the bring I quarter with maybe to protection financial can what acquired data positive financial that we not we'd we're And end and into very quickly We're that proud our willing our digital We're extent good digital marketing. adjusted is that From to have to EBITDA. to to money mean an even the loss, the positive. areas straight our that. What and very model. is if of and got growth add or experience either for EBITDA comes of to at would through attractive fourth experience, a something the are a we or mean, to rate. we've we not movement, something financial this was hard fraud are I dilutive at wellness, back EBITDA work step initially is complementing those it us. of model, acquire take be lot on back. that looking our

And with transaction. years it's finally, the then is very the available company [ criteria, I'll much through is but since mention of move what of high-quality kind So X assets. we're as starts thought become facility. The That been smaller, I to was our what's to intentional that really on another for the prepared organizationally imminent looking this go complete very transaction. credit ] our last scope

But I have make and and move opportunity us Not alternatives start move that's capital thinking imminent. And room. will many. I've options right can looking create like ahead does of period. we start growth help quickly. But know product arise, acquisition companies. that from as sustain in feel a we so very we and the let's generally, point very long XX% of that but making any So target let's a a an view, bought We're for organic to you buy at for north IRRs financial our past, my

Operator

Jacob comes Your line Stephan of Street. the from Lake next question from

Jacob Stephan

the on Congrats quarter.

you trend the off, talked implementation that you moving see could can through to of change? and added start pattern to or just forward you Bryan, if XX of clients, how existing was last from about little kind to wanted versus about we expect you a kind XX-XX a Just expect about over mix bit talk similar months. Maybe that if users it

W. Hill

it's a asset bank it's new you credit not users aware, dependent sign a that has other. a and profile We're of credit a size. clients, the clients generally the mix pattern. unions movement of seeing going versus fewer as I similar or of those would we direction banks because significant are retail than a there's union that one of to the the Jacob, anything believe similar be to us lead all upon mean timing when

make will that. there's quarter. on to variability drives the So from be mix change there no reason any in some what X But quarter-to-quarter a

Jacob Stephan

your a It how XX% client. them you've the customer just ACH Okay. an curious a ACH total of client. where sounds ACH, like situation common then banking ACH digital it you that won sounds just common ACH That take there's and from I'm clients. like base in on to got where somebody is contract there. is bank nice And side? But essentially an bank is guys situation -- was the -- how onboard that you

W. Hill

Bank, the base of or of goes small product. large is such mean fantastic some very those Valley financial I it's Regions financial Bank, institutions institutions. from Trustmark type to ACH institutions, And financial a Bank financial -- ACH I as mean, institutions, of client the Silicon

penetration be of could it's In to the strategic not and just and off fix. we us for time, to be the banking to draft Alkami it's follow platform. But the us. it's it not -- in where that to point banks cross-sell product our a bank good today, But is spear today, of banking main digital the over meant very market market through for digital a for a join ACH then additional success source of So tip the part, are platform.

Alex Shootman

forward Today, several important. into potential moved that you. going look market. you it's customers of is for why you think market and company -- in when One market, Here's about successful into any new going new things we've our a aware in of entering being terms

you in aided look #X the at Alkami space. today, is So credit or awareness, #X either if union

awareness, aided at #X look you If is in bank market. the Alkami

is, a that And entering then stand-alone selling not so participant Alert through would they in awareness. ended and is market, them that that the the aware relationship, up to prove market conserve aware we and to important a then in as banking us, the the market #X ultimately both needs. in ACH bank why aided the was their reason the that we're bank in because to customer became this, digital situations ACH product was Alkami was like we And

we So potential that's times. that is now we've figure seeing -- what's that really exciting got to replicate if and could to out us go more

W. Hill

XXXX Jacob, in very the high the if that X general adoption at Alert XXXX, rate sold you banks direction sell transactions. then there's alert into we And of those draft today ACH look in is bank, and ACH a we when transaction. that a we

Operator

Gogolev from line Your next JPMorgan. from question Alexei comes of the

Unknown Analyst

Gogolev. for This on is Alexei [indiscernible] Smith

So you're business. about the very your tailwinds driving I know first, that secular confident

any to RFPs banking are add there to in that more be if customers? product to are wondering are order for pieces" competitive you in We "missing portfolio planning your

Alex Shootman

market ability say, line. look question. more be we bank necessarily at It -- large the end is so don't to be the the we that fit our about and in not bank's wire process the for that the a our to might that ability a piece capability day. let's of space, product at need Thanks Yes. increasingly fit transactions have market bank add into around there's When to competitive product customer have our to of tends we

We very able have transactions to to transactions a serve more the market the enable to the with of may that individual serve around end have the payments, to at there customer. bank ability we need the complex has day. But we to very day, want ability to large an wire capability of buyer our the at that of that be customer example. and portion that process process bank end for a a be And has the

about So already product for Alkami, pretty have the product segment fit for when we fit. commercial think good market market we

necessarily not have. additional some that don't are of large steps next piece Our adding we functionality

have X a [Technical to need customers serve complex need. that Difficulty] X have Our ability or next that our step, complex

Unknown Analyst

a That's very quick And clear. for follow-up.

add You've previously banks do concentration of user your your seeing your unions? than consolidation the XX environment? digital tougher as continued you credit rather external given of Were accounting you XX% XX are about discussed in-market of largest how to Or you top for clients more base the expect reduce base.

W. Hill

us. added, we I'm back clear that impacting market but the on not from and Generally, to stats just just market generally, consolidation more Yes. you up benefit just is consolidation. how kind of

in us picked In that's institution fact, discussing which some we've M&A up activity. have the that positive. result in been occurred we leaving we this we of year quarter for had digital X last users, later Also a couple fall where consolidation financial the of events the was a as do as the quarters,

activity consistent, time -- a of some But in mean decades. last and around little does been a changing X% it we significantly don't pretty I M&A couple There's is where over the So that periods it's future. the the of more, less. see might not X% little averaged be

driven Alkami consolidation really doesn't accounts, and users. gaining good you're a that Now protocol have we is users, and I activity pricing additional fewer consolidation and normally the by from about that's typically benefit others mean have to digital share gaining news going now mean for the market would that. a

Operator

line of question Group. the of Your comes Capital Craig-Hallum Henry next from

Unknown Analyst

on Jeff. for Daniel is This

implementation like looked users. on million Just X.X backlog the

even implementation is I in said strong, backlog bit. highest down little while, little the has count though think a client a you been

looks getting the it clients So are coming in larger. like

Just anything upmarket incremental here we this we're Or should shift? of just is there in read a terms to is there be see? moving major beginning to an opportunity --

W. Hill

It's the on just incremental based an story shift of quarter. the

was the digital backlog, mentioned, almost still obviously example, For users. That's that X XXX,XXX the given union client. that quarter signed Alex X during just we we in our Tier credit won

see the driven it's mix in X quarters. to to like quarter-to-quarter, nuances we've and So that just the preceding from you're of going that X sold by business

Unknown Analyst

by implementations 'XX, there then think QX on signing nice pace and -- implemented the for I there. just backlog be expected with now a bank follow-up banks to expected one said XX Okay. you really me And of

open that looking been there broken belt? for some should just acceleration thoughts is be other more your any under at has wide there? getting by we implementations Or the factor Just driving what's

Alex Shootman

First of market. all, we're the pleased with the progress bank that we're making in

in demand? be the successful you we internally number -- our number logos we're look Number do particularly Number probably are that, we from and customers experience in we to come than of successful? got What because have we we unions. so one, market, those that time, skills market than to kind of internally progress the to over And product on in our but of in we've banks there's answer from are a at at expectation the do a said a then Bryan to new driving be concentration market fulsome able that asked, is those market internally cores four, more As of look half have half what on bringing we in credit back-end core. bank to you scorecard the three, two, will in being market, will the come ultimate bringing our the fit? earlier, be cores is successful bank them

able it and like So of give side the that of number demand to X of these we're at on to customer all us where conversion, first." areas, making in we've walk do terms statistics through them says, times, you're progress. of kind the and done when couple you and risk a yes, a or let be X a new I'll product So not your I looks we're cores. then Bryan "Hey, a the really going of to

W. Hill

Great. Yes.

participating there's a we're couple at. So metrics in deals looking is of demand, we're the of terms that One number the couple of in. that a that at, looking factors we're of

processes to that available TCV XX% good. XX was about XX of the months, is last which bank bank we've processes, in won and the we Over participated be acquired those during

looking the you moving mentioned and happen pipeline bank of representation XX we the If to the to into continually going was comments our other this now what's participated it well, we're sales And prepared it's up that close at is and XXXX, the we that So area in. call. in is, future? XX%, in look as then

core, areas at that cores those have great And that's each multiple going the X just other like that it those would integrations right So of of implementation Alex movement. integrations. we represent the that our where close is target market. represent good made happens of cores. core implementations, XX% By Other any of to be about view core XX XX point have what's longer X XXXX, and over cores, financial that bank institution first to to will with one but into that's the those no to with end X we're market going of the QX or in

of lots areas, different are were we market. feel which client our new achieving the progress is wins bank in So we the XX% understand -- again, scorecard in and from many XXXX, we ultimate

Operator

from Citi. line comes Schmidt question next the of from Andrew Your

Andrew Schmidt

missed which years more year or this ARR penetration. a signed more I the good just ago? to average on -- versus contract trending, How banks, apologies results maybe average the X take The speak between of should you to general, about clients ARR the talking ARR and average if of just tie just Bryan, [indiscernible]. question, the it, I a quarter here. that then is modules to previous wanted this. Good with maybe the call

W. Hill

That's ARPU -- of because consideration trending the over higher the a resulting of But amount So lower a a bank top with up the the XX our it's XX What between our a change coming $XXX,XXX. that some what ARR Yes. couple have to ARPU clients. credit have of is slightly year, for have much slightly years we're of ARR more average The you still this ARR in into very a even users our or are last more that. number trending and overall there. is very, and average of seeing $XXX,XXX union is in ARR, significant seeing some average upwards. below this that of above live cohorts That not clients of But is all in and to regardless multiples take terms large higher do we dramatic we're clients. with recent associated of are year,

Alex Shootman

to just really banking, I projects. there's a capability me, just for from that a like-for-like them she the and staged bring -- the -- if of in being then little customers consume. And capability right additional digital She talked of step on more away from cycle. added I'm like they're home thoughtful push -- if maybe ARR a digital now. through portion X X it the it's transformation, of you in home to the day, the year. get can made that thing which the X X one projects are change perspective, to is other went CEO team that I'm being a so happy after see doing be entire if But if But what's the over bit they'd that period They're like progress we've digital call about a out to that a buffet. Andrew, they're banking. will. I can renewal discrete of that that conversion, I handle second, the things I seeing to but were a for they of other to customers doing my The digital handle I renewal in want, conversion, we -- and knowing buffet a that able that the they what team conversion, said my initiatives. just really out they I the said tranches cycle, still the very new of a products thoughtful, have like going very

thoughtful the it out of about to want stage team people lot that but need time change. I a seeing period there's so be can a So we over that I are handle to my consume

Andrew Schmidt

-- to with we that Is revs makes for due and Got it. gross right than model. have terms just to what's margin the And in subscription already, other nicely think the the year? this just the other addressed mix That in sense. -- higher Maybe this of remainder what way but margin factors? higher then forecast our gross of may was

W. Hill

ultimately, platform, for drives our in -- our gross we're some costs. in that lower seeing We're a investments per how as which hosting cost that user making the margin

within would post-sale I continue to clients' our Client area And one of that's group. for is McCulloch that They're year. expect this operations. remainder Wayne the is So through great trend responsible doing the our area other job experience -- organization. a experience then

and we're basis also So from client front implementation that's through XX.X% resulting points on some expectation. in utilization this improvements our and good. in nice everything exceeded to expansion margin expansion. seeing areas. And is nice quarter honestly, XXX of gross support that's implementation other Quite client productivity success the in year-over-year really It

in year range likely year we the settle with I remainder the XXXX. achieve year, under exit XX% in our to think that before XX% for the goal just of another for and we'll full go the of year

achieve can XX%, there, can that it's conversation once have not -- XX%. will we we hit it from we'll as as hit on which it's call, So when if I mentioned the where we take now, XX%, we we

Alex Shootman

here's the gross it's margin progress. pretty little say quarter, sometimes is it's little sometimes been to to This amount consistent a higher, a going we've low. per how And

So kind maybe just of for everybody.

W. Hill

that's XXXX, towards we than XXXX. we were our XXX, not really objective factoring -- around ultimate we've and be XX% right XXX in year points confidence first gross is driving first the just investment platform, that when what in early provided we XXXX to we outlook of clear, acceleration expansion. beyond us when margin achieve with set the also set mean, which for gives And our higher I can our success what's goal in long-term per basis our the

Andrew Schmidt

so know there, kudos. doing I Good work guys. [indiscernible] of lot is Yes, it. job, Got a

Alex Shootman

sure. Yes,

Operator

for any over you don't concludes And the participation. Ladies gentlemen, have and Thank speakers, questions today's call. this your we conference phone.

disconnect. now may You

Alkami Technology (ALKT) 31 Jul 242024 Q2 Earnings call transcript