ALKT — Alkami Technology, Inc.

Summary of Alkami Technology Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 2025 Performance: Revenue reached $120.8 million, a 35% increase year-over-year. Adjusted EBITDA was $19.1 million, with a margin of 15.8%.
• Full Year 2025 Performance: Total revenue was $443.6 million, up 33% year-over-year. Adjusted EBITDA more than doubled to $59.1 million, with an adjusted EBITDA margin of 13.3%.
• Annual Recurring Revenue (ARR): Exited Q4 with $480 million in ARR, a 35% increase. Approximately $71 million of ARR is in backlog pending implementation.
• Gross Margin: Q4 non-GAAP gross margin was 63.4%, up 30 basis points year-over-year. Full-year gross margin was 64.1%, expanding nearly 140 basis points.

2. Strategic Updates and Business Highlights

• Client Growth: Added 16 new digital banking clients and 33 new MANTL clients in Q4. For 2025, Alkami achieved 39 new clients, matching its historical best.
• MANTL Integration: The integration of MANTL has accelerated performance, with 161 clients now live on the MANTL origination platform, and a record revenue activation quarter in Q4.
• Digital Sales and Service Platform (DSSP): The DSSP strategy is enhancing win rates, with 58% of new digital banking deals resulting in DSSP clients. The platform integrates digital banking, account origination, and data marketing.
• AI Initiatives: Alkami is leveraging AI to enhance product offerings and operational efficiency, with promising early results in development productivity and customer support.

3. Forward Guidance and Outlook

• Q1 2026 Guidance: Expected revenue between $124.7 million and $125.7 million (growth of 27.5% to 28.5%) and adjusted EBITDA of $21.1 million to $21.9 million.
• Full Year 2026 Guidance: Anticipated revenue of $525.5 million to $530.5 million (growth of 18.5% to 19.6%) and adjusted EBITDA of $93.5 million to $97.5 million.
• Long-Term Outlook: Alkami aims to achieve a Rule of 45 by 2030, with expectations for continued revenue growth driven by new client acquisitions and cross-selling initiatives.

4. Bad News, Challenges, or Points of Concern

• Implementation Delays: The integration of DSSP may lead to longer implementation cycles, shifting some revenue recognition into future quarters.
• Increased Costs: Higher database technology costs have impacted margins, with a temporary increase noted in Q4.
• Termination Fee Decline: A projected 75% decline in termination fee revenue will negatively affect reported growth in 2026.
• Market Dynamics: The market for digital banking solutions remains competitive, with a need to differentiate from legacy systems and other modern providers.

5. Notable Q&A Insights

• ARR Growth: Analysts inquired about organic ARR growth, with estimates suggesting around 24% when accounting for MANTL's contribution.
• Client Behavior: There was discussion on buyer urgency and market dynamics, with management noting a slight dip in market "jump balls" in 2024 but a recovery in 2025.
• Cross-Sell Activity: The integration of MANTL has led to increased cross-sell opportunities, with significant growth in clients adopting multiple products.
• Capital Allocation: Management emphasized a focus on paying down debt and assessing opportunistic M&A, with no immediate changes to capital allocation strategies.

Overall, Alkami Technology reported strong financial performance in 2025, driven by client growth and strategic initiatives, while also facing challenges related to implementation timelines and increased operational costs. The company remains optimistic about its growth trajectory and market position moving forward.