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, driven by a 30% increase in subscription revenue.
• 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.
• Gross Margin: Non-GAAP gross margin was 64.4%, stable year-over-year.
• Client Base: 307 clients and 23 million registered users, a 12% increase in users year-over-year.

2. Strategic Updates and Business Highlights

• New Client Acquisition: Closed 6 new digital banking relationships, slightly above the historical average.
• Product Development: Launched integrated capabilities for the Digital Sales & Service Platform (DSSP) and introduced Alkami Engage, enhancing customer engagement and data utilization.
• MANTL Acquisition: The acquisition is performing well, contributing significantly to new client additions and cross-selling opportunities, with 61 new clients added since the acquisition.
• Client Retention: High retention rates, with churn rates below 1% annually for digital banking ARR.

3. Forward Guidance and Outlook

• Q2 2026 Revenue Guidance: Expected to be between $128 million and $129 million, reflecting a growth rate of 14.2% to 15.1%.
• Full Year 2026 Revenue Guidance: Projected 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 margins improving to 18.2%.
• Long-Term Model: Anticipates achieving Rule of 45 by 2030, with a gradual increase in new logo wins and continued growth from existing clients.

4. Bad News, Challenges, or Points of Concern

• Termination Fee Impact: A significant termination fee recognized in Q2 2025 will create a headwind of approximately 3 percentage points to year-over-year growth in Q2 2026.
• Cost Pressures: Higher database technology costs are impacting gross margins, although these are expected to decline by the end of 2026.
• Market Dynamics: Client decision cycles are lengthy due to long-term contracts with legacy systems, which may limit rapid growth in new client acquisitions.

5. Notable Q&A Insights

• Customer Sentiment: There is strong demand for digital transformation among banks and credit unions, with clients increasingly willing to separate online banking from core providers.
• Sales Cycle Dynamics: The sales cycle for DSSP clients is expected to remain stable, with potential for shorter cycles as clients recognize the value of integrated solutions.
• AI Integration: Clients are eager to leverage AI capabilities for personalization and operational efficiency, with ongoing discussions about how to monetize these features effectively.
• Operational Improvements: Alkami is focused on enhancing the speed and efficiency of its software development processes, which is expected to drive future productivity gains.

Overall, Alkami's Q1 2026 results reflect strong growth and strategic advancements, though challenges related to market dynamics and cost pressures remain. The company is optimistic about its long-term growth trajectory and the integration of new technologies.