ALKT — Alkami Technology, Inc.

Summary of Alkami Technology Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $129.8 million, up 15.9% year-over-year.
• Subscription Revenue: Grew 16.2%, representing 95% of total revenue.
• Annual Recurring Revenue (ARR): Increased by 21% to $512 million, surpassing the $500 million mark.
• Adjusted EBITDA: $19.4 million, with a margin of 14.9%, reflecting a 430 basis points year-over-year expansion.
• Operating Cash Flow: Improved to $22 million from $1.2 million in the prior year.
• Gross Margin: 63% for Q2, with expectations to reach 65% by year-end.
• Average Revenue Per User (ARPU): Increased to $21.69, up 7% year-over-year.

2. Strategic Updates and Business Highlights

• Alkami signed 5 new digital banking relationships and added 8 clients for its MANTL and Data & Marketing services.
• The Digital Sales & Service Platform (DSSP) has gained traction, with 55 clients now using all three DSSP products.
• The company has made significant progress in the bank market, increasing awareness and consideration among banks.
• Implementation times for banks have improved from over 13 months to less than 11 months.
• The company is focusing on expanding treasury management capabilities and integrating AI into its offerings.

3. Forward Guidance and Outlook

• Q3 2026 Revenue Guidance: Expected between $132.7 million and $134.2 million, representing growth of 17.5% to 18.9%.
• Full-Year Revenue Guidance: Projected between $528 million and $531 million, reflecting growth of 19% to 19.7%.
• Adjusted EBITDA for Full-Year: Expected between $96 million and $98 million, with an 18.3% margin at the midpoint.
• The company aims to reach its long-term targets of $500 million in revenue and $100 million in adjusted EBITDA by the end of 2026.

4. Bad News, Challenges, or Points of Concern

• Gross Margin Fluctuations: A decline in gross margin to 63% in Q2 due to lower termination fee revenue, with expectations for improvement in the second half of the year.
• ARPU Growth: Year-over-year ARPU growth slowed to 7% from 9% in Q1, prompting a more conservative outlook for ARPU expansion in 2026.
• Implementation Challenges: While improvements have been made, digital banking implementations remain lengthy, and the company is working to leverage AI to expedite this process.
• Competitive Pressures: The market remains competitive, particularly in the credit union space, with several strong players vying for market share.

5. Notable Q&A Insights

• Management does not anticipate harder comparisons in the back half of 2026 due to the timing of customer onboarding and backlog.
• AI has already improved operational efficiencies, reducing customer experience costs as a percentage of revenue.
• The lending platform is being developed to enhance customer experience and compete with larger banks.
• There is a focus on maintaining a balanced capital allocation strategy, which includes share repurchases, debt reduction, and selective acquisitions.
• Management expressed confidence in the bank market's growth potential, emphasizing the importance of operationalizing and scaling successful strategies.

Overall, Alkami Technology demonstrated solid growth in Q2 2026, with a positive outlook for the remainder of the year, despite facing some challenges in gross margin and competitive pressures. The strategic focus on expanding client relationships and enhancing product offerings, particularly through DSSP and AI integration, positions the company for continued growth.