ALKAMI TECHNOLOGY, INC. Q4 FY2024 earnings call

• Q4 2024 and full-year 2024 financial results: revenue growth, adjusted EBITDA, and operating cash flow improvement.
• Progress on five-point plan: success in bank and credit union markets, increased add-on sales, platform investments improving quality/resiliency/scalability, talent retention improvement, and acquisition strategy.
• Acquisition of MANTL: MANTL offers a premier SaaS solution for onboarding and account opening, complements Alkami's platform, and unlocks TAM by creating a competitive advantage through integrated solutions.

In the fourth quarter of 2024, Alkami grew revenue by 26% and generated over $10 million in adjusted EBITDA. For the full year 2024, revenue growth was 26%, adjusted EBITDA margin expanded by 900 basis points, and operating cash flow improved by over $36 million. Subscription revenue in Q4 2024 was 96% of total revenue, growing 25% year-over-year. RPU was $17.81, up 7% from the prior year. Non-GAAP gross margin in Q4 2024 was 63.1%, with a goal of reaching 65% by 2026. The remaining performance obligation was just under $1.4 billion, 3.8 times ARR and up 20% year-over-year.

• First quarter 2025 revenue guidance: $93.5M - $95M (23%-25% growth). Adjusted EBITDA guidance: $9.5M - $10.5M.
• Full year 2025 revenue guidance: $440M - $445M (32%-33% growth). Adjusted EBITDA guidance: $47M - $51M. MANTL acquisition included in guidance with $30M revenue contribution in 2025 and EBITDA loss of $5M, but accretive to adjusted EBITDA in 2026.
• MANTL expected to exit 2025 with ~$60M ARR under contract, growing over 30%.

• Risks associated with forward-looking statements, including actual results differing from expectations.
• Integration risks related to the MANTL acquisition, such as successfully integrating MANTL's operations and products into Alkami's business.
• Market competition risks, including competing offerings in the digital banking and account opening space.

Q: How does MANTL compare with Alkami's existing account opening solutions and potential cross-sell impact?

A: Alkami's current account opening solution is digital only for a few deposit types, while MANTL supports multiple channels (digital, call centers, branch, relationship managers) and various account types. Cross-sell opportunity exists due to complementary client bases with minimal overlap.

Q: What is embedded in the 2025 outlook between user growth and ARPU expansion, considering M&A activity?

A: Organic user growth expected in 14%-15% range, ARPU expansion in 6%-8% range. MANTL acquisition adds ~8 million users with $5-$6 ARPU, complementing Alkami's existing user base.

Q: Competitive environment for MANTL and cross-sell opportunity?

A: Competitors include outdated core providers, smaller players, and custom software. MANTL's superior outcomes in account opening time and automated decisions create a competitive edge, with cross-sell potential into Alkami's client base.

Q: Background to the MANTL deal, including when it was first met and process?

A: Alkami and MANTL have known each other since 2019. The deal evolved through understanding culture, people, and market needs, with input from the Customer Advisory Board leading to the acquisition.

Q: Impact of MANTL's bank presence on the acquisition and cross-sell?

A: MANTL's bank presence aligns with Alkami's strategic focus on the bank market, and its business banking capabilities complement Alkami's credit union install base, with minimal overlap in customer bases for cross-sell opportunities.

Q: Cross-selling Alkami Platform into MANTL's customers and comfort over incremental success?

A: MANTL's customer base is similar to Alkami's in financial institution size (assets $500M-$10B), with no reason to expect inability to cross-sell Alkami's Digital Banking Platform into MANTL's base or vice versa.

Q: Renewal pull-forward impact on 2025 growth and cross-sell expansion?

A: Client sales team continues to cross-sell effectively regardless of renewal timing, with a strong ability to cross-sell into clients at various stages of their contract.

Q: Longer term gross profit margin trajectory and MANTL's impact?

A: Alkami's core business aims for 65% gross margin by 2026. MANTL is expected to be accretive to gross margin, with MANTL having around a 75% gross margin and aligning with Alkami's OpEx categories.

Q: Cross-sell displacement and MANTL's impact on existing customer technologies?

A: Existing customers use various technologies (legacy core, third-party products, custom software). MANTL's streamlined process and user experience offer a superior alternative, with Alkami's client sales team aiming to cross-sell MANTL's product to all customers.

Q: Impact of MANTL acquisition on existing relationships and churn?

A: Alkami aims to continue MANTL's success in all markets served, with no intent to truncate their success. Integration will focus on leveraging product synergies for enhanced client value.