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Alkami Announces Third Quarter 2021 Financial Results


PLANO, Texas, Nov. 04, 2021 (GLOBE NEWSWIRE) — Alkami Technology, Inc. (“Alkami”), a leading cloud-based digital banking solutions provider for U.S.-based financial institutions, announced today results for its third quarter ending September 30, 2021.

Third Quarter 2021 Financial Highlights

  • GAAP total revenue of $39.8 million, an increase of 37% year-over-year;
  • GAAP gross margin of 56.3%, an expansion of nearly 390 basis points year-over-year;
  • Non-GAAP gross margin of 57.9%, an expansion of over 520 basis points year-over-year;
  • GAAP net loss of ($11.2) million compared to a net loss of ($21.3) million in the prior year; and,
  • Adjusted EBITDA loss of ($6.1) million compared to a loss of ($5.4) million in the prior year quarter.

Comments on the News

“Third quarter financial results strength underscores our goal of being the best-of-breed digital banking platform for our industry,” said Mike Hansen, Chief Executive Officer. “We continue to focus on our key innovation areas of UI/UX, business banking, open platform capabilities and data solutions. We further strengthened our commitment to these areas with the acquisition of MK Decision which expands our total addressable market by over $2.5 billion while gaining new cross-selling opportunities among a larger installed base. MK’s solutions unlock digital account opening and loan origination innovations previously reserved for the largest technology companies, megabanks and fintechs in the market. We believe this innovation mindset helped us secure six new digital banking clients during the quarter that possess significantly higher product adoption levels than we’ve seen historically.”

“Third quarter financial results were strong,” said Bryan Hill, Chief Financial Officer. “We added over 675,000 digital banking users to our platform during the third quarter, exited the quarter with 11.4 million digital banking users on our platform, annual recurring revenue of $155 million and revenue per user of $13.57.”

2021 Financial Outlook

Alkami’s financial outlook is based on current expectations. The following statements are forward-looking and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement Regarding Forward-Looking Statements.”

Alkami management is providing the following guidance for its fourth quarter ending December 31, 2021.

  • GAAP total revenue in the range of $40.3 million to $41.3 million;
  • Adjusted EBITDA loss in the range of ($6.0) million to ($5.0) million.

Alkami management is providing the following guidance for its calendar year ending December 31, 2021.

  • GAAP total revenue in the range of $150.0 million to $151.0 million;
  • Adjusted EBITDA loss in the range of ($23.5) million to ($22.5) million.

Conference Call Information

The Company will host a conference call at 5:00 p.m. ET today to discuss its financial results with investors. A live webcast of the event will be available on the Alkami investor relations website at investors.alkami.com. In addition, a live dial-in will be available domestically at 800-708-4540 and internationally at 847-619-6937 using passcode 50201363. A replay will be available on the “News & Events” page of the Alkami investor relations website.

About Alkami

Alkami Technology, Inc. is a leading cloud-based digital banking solutions provider for financial institutions in the United States that enables clients to grow confidently, adapt quickly and build thriving digital communities. The Alkami Platform is the digital banking and fraud mitigation platform of choice for over 280 financial institutions. Alkami’s investments have resulted in a premium platform that has enabled it to replace older, larger and better-funded incumbents and provide clients with world-class experiences reflecting their individual digital strategies.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking” statements relating to Alkami Technology, Inc.’s strategy, goals, future focus areas, and expected, possible or assumed future results, including its future cash flows and its financial outlook for the fourth quarter ending December 31, 2021 and for the full year ending December 31, 2021. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “expects,” “believes,” “plans,” or similar expressions and the negatives of those terms. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements, expressed or implied by the forward-looking statements, including the uncertainty associated with the potential impacts of the COVID-19 pandemic on our business, financial condition, and results of operations. We may be required to revise the results contained herein upon finalizing our review of our quarterly results, which could cause or contribute to such differences. Factors that may materially affect such forward-looking statements include: Our limited operating history and history of operating losses; our ability to manage future growth; our ability to attract new clients and expand existing clients’ use of our solutions; our ability to maintain, protect and enhance our brand; our ability to accurately predict the long-term rate of client subscription renewals or adoption of our solutions; our reliance on third-party software, content and services; our ability to effectively integrate our solutions with other systems used by our clients; intense competition in our industry; any downturn, consolidation or decrease in technology spend in the financial services industry; our ability and the ability of third parties on which we rely to prevent and identify breaches of security measures and resulting disruptions of our systems or operations and unauthorized access to client customer and other data; our ability to successfully integrate acquired companies or businesses; our ability to comply with regulatory and legal requirements and developments; our ability to attract and retain key employees; the political, economic and competitive conditions in the markets and jurisdictions where we operate; our ability to maintain, develop and protect our intellectual property; our ability to respond to evolving technological requirements to develop or acquire new and enhanced products that achieve market acceptance in a timely manner; and our ability to estimate our expenses, future revenues, capital requirements, our needs for additional financing and our ability to obtain additional capital. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Explanation of Non-GAAP Financial Measures

The company reports its financial results in accordance with accounting principles generally accepted in the United States of America, or GAAP. However, the company believes that, in order to properly understand its short-term and long-term financial, operational and strategic trends, it may be helpful for investors to exclude certain non-cash or non-recurring items when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in both frequency and impact on continuing operations. The company also uses results of operations excluding such items to evaluate the operating performance of Alkami and compare it against prior periods, make operating decisions, determine executive compensation, and serve as a basis for long-term strategic planning. These non-GAAP financial measures provide the company with additional means to understand and evaluate the operating results and trends in its ongoing business by eliminating certain non-cash expenses and other items that Alkami believes might otherwise make comparisons of its ongoing business with prior periods more difficult, obscure trends in ongoing operations, reduce management’s ability to make useful forecasts, or obscure the ability to evaluate the effectiveness of certain business strategies and management incentive structures. In addition, the company also believes that investors and financial analysts find this information to be helpful in analyzing the company’s financial and operational performance and comparing this performance to the company’s peers and competitors.

The company defines “Annual Recurring Revenue (ARR)” by aggregating annualized recurring revenue related to SaaS subscription services recognized in the last month of the reporting period as well as the next 12 months of expected implementation services revenues for all clients on the platform in the last month of the reporting period. We believe ARR provides important information about our future revenue potential, our ability to acquire new clients, and our ability to maintain and expand our relationship with existing clients.

The company defines “Registered Users” as an individual or business related to an account holder of an FI client on our digital banking platform who has registered to use one or more of our solutions and has current access to use those solutions as of the last day of the reporting period presented. We price our digital banking platform based on the number of registered users, so as the number of registered users of our digital banking platform increases, our ARR grows. We believe growth in the number of registered users provides important information about our ability to expand market adoption of our digital banking platform and its associated software products, and therefore to grow revenues over time.

The company defines “Revenue per Registered User (RPU)” by dividing ARR for the reporting period by the number of registered users as of the last day of the reporting period. We believe RPU provides important information about our ability to grow the number of software products adopted by new clients over time, as well as our ability to expand the number of software products that our existing clients add to their contracts with us over time.

The company defines “Non-GAAP Cost of Revenues” as cost of revenues, excluding (1) amortization of intangible assets and (2) stock-based compensation expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.

The company defines “Non-GAAP Gross Margin” as gross profit, plus (1) amortization of intangible assets and (2) stock-based compensation expense, all divided by revenue. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.

The company defines “Non-GAAP Product Development Expense” as product development expense, excluding (1) amortization of intangible assets and (2) stock-based compensation expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ongoing expenditures related to product innovation.

The company defines “Non-GAAP Sales and Marketing Expense” as sales and marketing expense, excluding (1) amortization of intangible assets and (2) stock-based compensation expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ongoing expenditures related to its sales and marketing strategies.

The company defines “Non-GAAP General and Administrative Expense” as general and administrative expense, excluding (1) amortization of intangible assets, (2) stock-based compensation expense, (3) acquisition-related expenses, and (4) tender offer-related costs. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s underlying expense structure to support corporate activities and processes.

The company defines “Non-GAAP Net Income (Loss)” as net income, plus (1) convertible preferred stock deemed and accrued dividends, (2) (gain) loss on financial instruments, (3) amortization of intangible assets, (4) stock-based compensation expense, (5) acquisition-related expenses, and (6) tender offer-related costs. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s ability to generate income from ongoing business operations.

The company defines “Adjusted EBITDA” as net loss before provision for income taxes, plus (1) (gain) loss on financial instruments, (2) interest (income) expense, net, (3) amortization of intangible assets, (4) depreciation, (5) stock-based compensation expense, (6) acquisition-related costs. The company believes adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations.

ALKAMI TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(UNAUDITED)
  September 30,   December 31,
  2021   2020
Assets      
Current assets      
Cash and cash equivalents $ 314,402     $ 166,790  
Accounts receivable, net 20,281     14,103  
Deferred implementation costs, current 5,736     4,745  
Prepaid expenses and other current assets 10,399     7,598  
Total current assets 350,818     193,236  
Property and equipment, net 10,891     10,461  
Deferred implementation costs, net of current portion 15,478     14,858  
Intangibles, net 11,309     8,266  
Goodwill 48,391     16,218  
Other assets 4,905     6,127  
Total assets $ 441,792     $ 249,166  
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)      
Current liabilities      
Current portion of long-term debt $ 1,250     $ 313  
Accounts payable 2,538     360  
Accrued liabilities 24,732     13,099  
Deferred rent and tenant allowance, current 691     596  
Deferred revenues, current portion 6,893     6,116  
Total current liabilities 36,104     20,484  
Long-term debt, net 23,668     24,566  
Warrant liability     2,692  
Deferred revenues, net of current portion 13,234     14,424  
Deferred rent and tenant allowance, net of current portion 5,375     5,867  
Other non-current liabilities 17,893     1,393  
Total liabilities 96,274     69,426  
Redeemable Convertible Preferred Stock      
Redeemable convertible preferred stock, $0.001 par, 0 and 72,799,602 shares authorized and 0 and 72,225,916 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively     443,263  
Stockholders’ Equity (Deficit)      
Preferred stock, $0.001 par, 10,000,000 and 0 shares authorized and 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively      
Common stock, $0.001 par, 500,000,000 and 101,671,156 shares authorized and 88,147,853 and 4,909,529 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 88     5  
Additional paid-in capital 645,934      
Accumulated deficit (300,504 )   (263,528 )
Total stockholders’ equity (deficit) 345,518     (263,523 )
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) $ 441,792     $ 249,166  
       
ALKAMI TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(UNAUDITED)
  Three months ended September 30,   Nine months ended September 30,
  2021   2020   2021   2020
Revenues $ 39,761     $ 28,941     $ 109,724     $ 78,817  
Cost of revenues 17,387     13,776     49,064     38,914  
Gross profit 22,374     15,165     60,660     39,903  
Operating expenses:              
Research and development 12,877     9,898     35,897     29,367  
Sales and marketing 7,309     3,998     18,132     12,548  
General and administrative 13,330     7,859     36,525     21,868  
Total operating expenses 33,516     21,755     90,554     63,783  
Loss from operations (11,142 )   (6,590 )   (29,894 )   (23,880 )
Non-operating income (expense):              
Interest income 223     8     364     46  
Interest expense (300 )   (22 )   (908 )   (225 )
Loss on financial instruments     (14,743 )   (3,035 )   (14,810 )
Loss before income taxes (11,219 )   (21,347 )   (33,473 )   (38,869 )
Provision for income taxes              
Net loss $ (11,219 )   $ (21,347 )   $ (33,473 )   $ (38,869 )
Less: cumulative dividends and adjustments to redeemable convertible preferred stock     (4,459 )   (277 )   (5,013 )
Net loss attributable to common stockholders: $ (11,219 )   $ (25,806 )   $ (33,750 )   $ (43,882 )
Net loss per share attributable to common stockholders:              
Basic and diluted $ (0.13 )   $ (5.34 )   $ (0.60 )   $ (9.38 )
Weighted average number of shares of common stock outstanding:              
Basic and diluted 87,641,416     4,833,079     56,320,288     4,679,933  
                       
ALKAMI TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(UNAUDITED)
  Nine months ended September 30,
  2021   2020
Cash flows from operating activities:  
Net loss $ (33,473 )   $ (38,869 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization expense 2,384     1,970  
Stock-based compensation expense 7,793     1,348  
Amortization of debt issuance costs 39     39  
Loss on financial instruments 3,035     14,810  
Changes in operating assets and liabilities:      
Accounts receivable (5,741 )   (2,565 )
Prepaid expenses and other current assets (689 )   (1,711 )
Accounts payable and accrued liabilities 12,758     4,107  
Deferred implementation costs (1,612 )   (2,158 )
Deferred rent and tenant allowances (397 )   213  
Deferred revenues (899 )   (306 )
Net cash used in operating activities (16,802 )   (23,122 )
Cash flows from investing activities:      
Purchases of property and equipment (870 )   (1,478 )
Capitalized software development costs (1,275 )    
Acquisition of business (18,326 )    
Net cash used in investing activities (20,471 )   (1,478 )
Cash flows from financing activities:      
Borrowings on line of credit     13,000  
Payments on line of credit     (13,000 )
Proceeds from stock option exercises 6,417     241  
Proceeds from warrant exercises 645      
Proceeds on sales of preferred stock, net of issuance costs     218,040  
Deferred IPO issuance costs paid (4,520 )    
Payments on capital lease obligations     (11 )
Repurchase of common stock (3,497 )    
Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions 192,810      
Payment of Series B dividend (4,969 )    
Net cash provided by financing activities 186,886     218,270  
Net increase in cash and cash equivalents and restricted cash 149,613     193,670  
Cash and cash equivalents and restricted cash, beginning of period 171,663     11,982  
Cash and cash equivalents and restricted cash, end of period $ 321,276     $ 205,652  
       
ALKAMI TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands, except per share data)
(Unaudited)
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2021   2020   2021   2020
GAAP total revenues $ 39,761     $ 28,941     $ 109,724     $ 78,817  
               
Annual Recurring Revenue (ARR) $ 154,805     $ 113,916     $ 154,805     $ 113,916  
Registered Users 11,408     9,048     11,408     $ 9,048  
Revenue per Registered User (RPU) $ 13.57     $ 12.59     $ 13.57     $ 12.59  
               
Non-GAAP Cost of Revenues          
Set forth below is a presentation of the company’s “Non-GAAP Cost of Revenues.” Please reference the “Explanation of Non-GAAP Measures” section.
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2021   2020   2021   2020
GAAP cost of revenues $ 17,387     $ 13,776     $ 49,064     $ 38,914  
Amortization of intangible assets (117 )       (353 )    
Stock-based compensation expense (544 )   (84 )   (1,242 )   (264 )
Non-GAAP cost of revenues $ 16,726     $ 13,692     $ 47,469     $ 38,650  
               
Non-GAAP Gross Margin          
Set forth below is a presentation of the company’s “Non-GAAP Gross Margin.” Please reference the “Explanation of Non-GAAP Measures” section.
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2021   2020   2021   2020
GAAP gross margin 56.3 %   52.4 %   55.3 %   50.6 %
Amortization of intangible assets 0.2 %   %   0.3 %   %
Stock-based compensation expense 1.4 %   0.3 %   1.1 %   0.3 %
Non-GAAP gross margin 57.9 %   52.7 %   56.7 %   50.9 %
               
Non-GAAP Research and Development Expense          
Set forth below is a presentation of the company’s “Non-GAAP Research and Development Expense.” Please reference the “Explanation of Non-GAAP Measures” section.
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2021   2020   2021   2020
GAAP research and development expense $ 12,877     $ 9,898     $ 35,897     $ 29,367  
Amortization of intangible assets              
Stock-based compensation expense (794 )   (97 )   (1,795 )   (303 )
Non-GAAP research and development expense $ 12,083     $ 9,801     $ 34,102     $ 29,064  
               
Non-GAAP Sales and Marketing Expense          
Set forth below is a presentation of the company’s “Non-GAAP Sales and Marketing Expense.” Please reference the “Explanation of Non-GAAP Measures” section.
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2021   2020   2021   2020
GAAP sales and marketing expense $ 7,309     $ 3,998     $ 18,132     $ 12,548  
Amortization of intangible assets (92 )       (274 )    
Stock-based compensation expense (265 )   (35 )   (609 )   (101 )
Non-GAAP sales and marketing expense $ 6,952     $ 3,963     $ 17,249     $ 12,447  
               
Non-GAAP General and Administrative Expense          
Set forth below is a presentation of the company’s “Non-GAAP General and Administrative Expense.” Please reference the “Explanation of Non-GAAP Measures” section.
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2021   2020   2021   2020
GAAP general and administrative expense $ 13,330     $ 7,860     $ 36,525     $ 21,868  
Amortization of intangible assets              
Stock-based compensation expense (1,749 )   (223 )   (4,147 )   (680 )
Acquisition-related expenses (914 )   (112 )   (2,177 )   (112 )
Non-GAAP general and administrative expense $ 10,667     $ 7,525     $ 30,201     $ 21,076  
           
Non-GAAP Net Loss          
Set forth below is a presentation of the company’s “Non-GAAP Net Loss.” Please reference the “Explanation of Non-GAAP Measures” section.
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2021   2020   2021   2020
GAAP net loss attributable to common stockholders $ (11,219 )   $ (25,806 )   $ (33,750 )   $ (43,882 )
Convertible preferred stock deemed and accrued dividends     4,459     277     5,013  
Loss on financial instruments     14,743     3,035     14,810  
Amortization of intangible assets 209         627      
Stock-based compensation expense 3,352     439     7,793     1,348  
Acquisition-related expenses 915     112     2,177     112  
Non-GAAP net loss $ (6,743 )   $ (6,053 )   $ (19,841 )   $ (22,599 )
               
Adjusted EBITDA          
Set forth below is a presentation of the company’s “Adjusted EBITDA.” Please reference the “Explanation of Non-GAAP Measures” section.
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2021   2020   2021   2020
GAAP net loss $ (11,219 )   $ (21,347 )   $ (33,473 )   $ (38,869 )
Provision for income taxes              
Loss on financial instruments     14,743     3,035     14,810  
Interest expense, net 77     14     544     179  
Amortization of intangible assets 209         627      
Depreciation 593     653     1,757     1,970  
Stock-based compensation expense 3,352     439     7,793     1,348  
Acquisition-related expenses 915     112     2,177     112  
Adjusted EBITDA $ (6,073 )   $ (5,386 )   $ (17,540 )   $ (20,450 )
               
Adjusted EBITDA Guidance          
Set forth below is a presentation of the company’s “Adjusted EBITDA” for the three months ending December 31, 2021, and the twelve months ending December 31, 2021. Please reference the “Explanation of Non-GAAP Measures” section.
           
  Guidance Range for the Guidance Range for the
  Three Months Ending Twelve Months Ending
  December 31, 2021 December 31, 2021
  Low High Low   High
GAAP net loss $ (13,535 )   $ (12,260 )   $ (46,985 )   $ (45,710 )
Provision for income taxes                      
(Gain) loss on financial instruments               3,000       3,000  
Interest income, net   50       25       595       570  
Amortization of intangible assets   210       210       840       840  
Depreciation   625       575       2,425       2,375  
Stock-based compensation expense   6,025       5,825       13,825       13,625  
Acquisition-related expenses   625       625       2,800       2,800  
Adjusted EBITDA $ (6,000 )   $ (5,000 )   $ (23,500 )   $ (22,500 )
           
           

 

Investor Relations Contact
Rhett Butler
ir@alkami.com

Media Relations Contacts
Jennifer Cortez
jennifer.cortez@alkami.com

Audrey Pennisi
audrey@outlookmarketingsrv.com

Alkami Technology Inc



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