ALKT — Alkami Technology, Inc.

Summary of Alkami's Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $126.1 million, up 29% year-over-year.
• Adjusted EBITDA: $22.3 million, representing a margin of 17.7%, with a year-over-year expansion of approximately 540 basis points.
• Annual Recurring Revenue (ARR): Increased by 22% to $494 million, with $71 million in backlog pending implementation.
• Subscription Revenue: Grew by 30%, constituting 96% of total revenue.
• Gross Margin: Non-GAAP gross margin was 64.4%, stable year-over-year.
• Cash Position: Ended the quarter with $77.6 million in cash and marketable securities.

2. Strategic Updates and Business Highlights

• Closed 6 new digital banking relationships, including 2 banks and 3 Digital Sales & Service Platform (DSSP) clients.
• Launched Alkami Engage, a product designed to capture real-time user interaction data.
• The MANTL acquisition has been successful, with 61 new clients added since early 2025, enhancing cross-selling opportunities.
• DSSP clients have increased from 11 to 48, demonstrating strong adoption and higher average revenue per user (ARPU) by 30% compared to traditional offerings.
• The company is evolving from a "system of record" to a "system of action," leveraging AI to enhance customer engagement and predictive capabilities.

3. Forward Guidance and Outlook

• Q2 2026 Revenue Guidance: Expected to be between $128 million and $129 million, reflecting growth of 14.2% to 15.1%.
• Full Year 2026 Revenue Guidance: Anticipated between $527.1 million and $530.9 million, representing growth of 18.8% to 19.7%.
• Adjusted EBITDA for Full Year: Expected between $94.9 million and $97.9 million, with a margin of approximately 18.2%.
• The company expects to achieve Rule of 45 by 2030, with a gradual increase in new logo wins and continued expansion within existing clients.

4. Bad News, Challenges, or Points of Concern

• Termination Fee Impact: The second quarter is anticipated to face a headwind from a sizable termination fee recognized in Q2 2025, impacting year-over-year growth comparisons.
• Cost Pressures: Higher database technology costs were noted, although these are expected to decline by the end of 2026.
• Ongoing Legal Expenses: Shareholder-related expenses were $2.8 million over the past two quarters, with expectations of moderation but continued costs.
• Churn Rates: While churn remains low, the company expects to lose four digital banking clients in 2026, which could impact growth.

5. Notable Q&A Insights

• Customer Sentiment on AI: Customers are increasingly interested in AI capabilities for personalization and operational efficiency, with no clients expressing a desire to build their own platforms.
• Sales Cycle Dynamics: The sales cycle for converting banks from legacy systems is still influenced by long-term contracts, but there is growing willingness among banks to separate online banking from core providers.
• DSSP Adoption: The integration of DSSP is expected to enhance client conversion rates, with the potential for shorter sales cycles as clients see the value in the new platform.
• Future Product Development: The company is exploring various commercial models for new AI capabilities, focusing on how to monetize these effectively while ensuring customer ease of adoption.

Overall, Alkami's Q1 2026 results reflect strong growth and strategic positioning in the digital banking sector, despite some headwinds and ongoing challenges. The company is optimistic about future growth driven by its innovative product offerings and market demand.