GlobeNewswire Inc | Aug 4, 2021 04:01PM EDT

August 04, 2021

PLANO, Texas, Aug. 04, 2021 (GLOBE NEWSWIRE) -- Alkami Technology, Inc. (Alkami), a leading cloud-based digital banking solutions provider for U.S.-based financial institutions, announced today results for its second quarter ending June 30, 2021.

Second Quarter 2021 Financial Highlights

-- GAAP total revenues of $36.7 million, an increase of 38% year-over-year; -- GAAP gross margin of 55.9%, an expansion of over 550 basis points year-over-year; -- Non-GAAP gross margin of 57.5%, an expansion of over 680 basis points year-over-year; -- GAAP net loss of ($11.4) million compared to a net loss of ($7.3) million in the prior year quarter; and -- Adjusted EBITDA loss of ($5.4) million compared to a loss of ($6.0) million in the prior year quarter.

Comments on the News

Second quarter financial results were strong and validate our teams dedication to the goal of being the best-of-breed digital banking platform for our industry, said Mike Hansen, Chief Executive Officer. We introduced new features and functionality as part of two code releases during the quarter that focused on our key innovation areas of UI/UX, business banking, open platform capabilities and data solutions. We believe a relentless focus on innovation will drive client demand and revenue growth over the long term. We believe this focus, in part, enabled us to secure three new key banks during July.

Second quarter financial results were above our expectations, said Bryan Hill, Chief Financial Officer. We added over 740,000 digital banking users to our platform during the second quarter, exited the quarter with 10.7 million digital banking users on our platform, annual recurring revenue of $144.7 million and revenue per user of $13.48. We expect to continue to invest in our go-to-market capabilities as well as innovation to drive revenue growth over the long term as we march towards profitability.

2021 Financial Outlook

Alkamis financial outlook is based on current expectations. The following statements are forward-looking and actual results could differ materially depending on market conditions and the factors set forth under Cautionary Statement Regarding Forward-Looking Statements.

Alkami management expects to achieve the following results during the third quarter ending September 30, 2021:

-- GAAP total revenue is expected to be in the range of $38.0 million to $39.0 million; -- Adjusted EBITDA loss is expected to be in the range of ($7.5) million to ($6.5) million.

Alkami management expects to achieve the following results during the calendar year ending December 31, 2021:

-- GAAP total revenue is expected to be in the range of $148.0 million to $151.0 million; -- Adjusted EBITDA loss is expected to be in the range of ($24.5) million to ($22.5) million.

Conference Call Information

The Company will host a conference call at 5:00 p.m. ET today to discuss its financial results with investors. A live webcast of the event will be available on the Alkami investor relations website at investors.alkami.com. In addition, a live dial-in will be available domestically at 800-708-4540 and internationally at 847-619-6937 using passcode 50201363. A replay will be available on the News & Events page of the Alkami investor relations website.

About Alkami

Alkami Technology, Inc. is a leading cloud-based digital banking solutions provider for financial institutions in the United States that enables clients to grow confidently, adapt quickly and build thriving digital communities. The Alkami Platform is the digital banking and fraud mitigation platform of choice for over 260 financial institutions. Alkami's investments have resulted in a premium platform that has enabled it to replace older, larger and better-funded incumbents and provide clients with world-class experiences reflecting their individual digital strategies.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements relating to Alkami Technology, Inc.s strategy, goals, future focus areas, and expected, possible or assumed future results, including its future cash flows and its financial outlook for the third quarter ending September 30, 2021 and for the full year ending December 31, 2021. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as expects, believes, plans, or similar expressions and the negatives of those terms. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements, expressed or implied by the forward-looking statements, including the uncertainty associated with the potential impacts of the COVID-19 pandemic on our business, financial condition, and results of operations. We may be required to revise the results contained herein upon finalizing our review of our quarterly results, which could cause or contribute to such differences. Factors that may materially affect such forward-looking statements include: Our limited operating history and history of operating losses; our ability to manage future growth; our ability to attract new clients and expand existing clients use of our solutions; our ability to maintain, protect and enhance our brand; our ability to accurately predict the long-term rate of client subscription renewals or adoption of our solutions; our reliance on third-party software, content and services; our ability to effectively integrate our solutions with other systems used by our clients; intense competition in our industry; any downturn, consolidation or decrease in technology spend in the financial services industry; our ability and the ability of third parties on which we rely to prevent and identify breaches of security measures and resulting disruptions of our systems or operations and unauthorized access to client customer and other data; our ability to successfully integrate acquired companies or businesses; our ability to comply with regulatory and legal requirements and developments; our ability to attract and retain key employees; the political, economic and competitive conditions in the markets and jurisdictions where we operate; our ability to maintain, develop and protect our intellectual property; our ability to respond to evolving technological requirements and to develop or acquire new and enhanced products that achieve market acceptance in a timely manner; and our ability to estimate our expenses, future revenues, capital requirements, our needs for additional financing and our ability to obtain additional capital. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Explanation of Non-GAAP Financial Measures

The company reports its financial results in accordance with accounting principles generally accepted in the United States of America, or GAAP. However, the company believes that, in order to properly understand its short-term and long-term financial, operational and strategic trends, it may be helpful for investors to exclude certain non-cash or non-recurring items when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in both frequency and impact on continuing operations. The company also uses results of operations excluding such items to evaluate the operating performance of Alkami and compare it against prior periods, make operating decisions, determine executive compensation, and serve as a basis for long-term strategic planning. These non-GAAP financial measures provide the company with additional means to understand and evaluate the operating results and trends in its ongoing business by eliminating certain non-cash expenses and other items that Alkami believes might otherwise make comparisons of its ongoing business with prior periods more difficult, obscure trends in ongoing operations, reduce managements ability to make useful forecasts, or obscure the ability to evaluate the effectiveness of certain business strategies and management incentive structures. In addition, the company also believes that investors and financial analysts find this information to be helpful in analyzing the companys financial and operational performance and comparing this performance to the companys peers and competitors.

The company defines Annual Recurring Revenue (ARR) by aggregating annualized recurring revenue related to SaaS subscription services recognized in the last month of the reporting period as well as the next 12 months of expected implementation services revenues for all clients on the platform in the last month of the reporting period. We believe ARR provides important information about our future revenue potential, our ability to acquire new clients, and our ability to maintain and expand our relationship with existing clients.

The company defines Registered Users as an individual or business related to an account holder of an FI client on our digital banking platform who has registered to use one or more of our solutions and has current access to use those solutions as of the last day of the reporting period presented. We price our digital banking platform based on the number of registered users, so as the number of registered users of our digital banking platform increases, our ARR grows. We believe growth in the number of registered users provides important information about our ability to expand market adoption of our digital banking platform and its associated software products, and therefore to grow revenues over time.

The company defines Revenue per Registered User (RPU) by dividing ARRas of the last day of the reporting period by the number of registered users as of the last day of the reporting period. We believe RPU provides important information about our ability to grow the number of software products adopted by new clients over time, as well as our ability to expand the number of software products that our existing clients add to their contracts with us over time.

The company defines Non-GAAP Cost of Revenues as cost of revenues, excluding (1) amortization of intangible assets and (2) stock-based compensation expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the companys financial and operational performance, comparing this performance to the companys peers and competitors, and understanding the companys ability to generate income from ongoing business operations.

The company defines Non-GAAP Gross Margin as gross profit, plus (1) amortization of intangible assets and (2) stock-based compensation expense, all divided by revenue. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the companys financial and operational performance, comparing this performance to the companys peers and competitors, and understanding the companys ability to generate income from ongoing business operations.

The company defines Non-GAAP Research and Development Expense as research and development expense, excluding (1) amortization of intangible assets and (2) stock-based compensation expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the companys financial and operational performance, comparing this performance to the companys peers and competitors, and understanding the companys ongoing expenditures related to product innovation.

The company defines Non-GAAP Sales and Marketing Expense as sales and marketing expense, excluding (1) amortization of intangible assets and (2) stock-based compensation expense. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the companys financial and operational performance, comparing this performance to the companys peers and competitors, and understanding the companys ongoing expenditures related to its sales and marketing strategies.

The company defines Non-GAAP General and Administrative Expense as general and administrative expense, excluding (1) amortization of intangible assets, (2) stock-based compensation expense, and (3) acquisition-related expenses. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the companys financial and operational performance, comparing this performance to the companys peers and competitors, and understanding the companys underlying expense structure to support corporate activities and processes.

The company defines Non-GAAP Net Loss as net loss attributable to common stockholders, plus (1) convertible preferred stock deemed and accrued dividends, (2) loss on financial instruments, (3) amortization of intangible assets, (4) stock-based compensation expense, and (5) acquisition-related expenses. The company believes that investors and financial analysts find this non-GAAP financial measure to be useful in analyzing the companys financial and operational performance, comparing this performance to the companys peers and competitors, and understanding the companys ability to generate income from ongoing business operations.

The company defines Adjusted EBITDA as net loss before provision for income taxes, plus (1) loss on financial instruments, (2) interest expense, net, (3) amortization of intangible assets, (4) depreciation, (5) stock-based compensation expense, and (6) acquisition-related costs. The company believes adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations.

ALKAMI TECHNOLOGY, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except share and per share data)(UNAUDITED) June 30, December 31, 2021 2020Assets Current assets Cash and cash equivalents $ 338,477 $ 166,790 Accounts receivable, net 15,590 14,103 Deferred implementation costs, current 5,434 4,745 Prepaid expenses and other current assets 8,693 7,598 Total current assets 368,194 193,236 Property and equipment, net 10,418 10,461 Deferred implementation costs, net of current 15,219 14,858 portionIntangibles, net 7,848 8,266 Goodwill 16,542 16,218 Other assets 6,521 6,127 Total assets $ 424,742 $ 249,166 Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)Current liabilities Current portion of long-term debt $ 938 $ 313 Accounts payable 2,575 360 Accrued liabilities 18,746 13,099 Deferred rent and tenant allowance, current 676 596 Deferred revenues, current portion 6,618 6,116 Total current liabilities 29,553 20,484 Long-term debt, net 23,967 24,566 Warrant liability - 2,692 Deferred revenues, net of current portion 13,018 14,424 Deferred rent and tenant allowance, net of current 5,553 5,867 portionOther non-current liabilities 1,393 1,393 Total liabilities 73,484 69,426 Redeemable Convertible Preferred Stock Redeemable convertible preferred stock, $0.001 par,0 and 72,799,602 shares authorized and 0 and - 443,263 72,225,916 shares issued and outstanding as of June30, 2021 and December 31, 2020, respectivelyStockholders? Equity (Deficit) Preferred stock, $0.001 par, 10,000,000 and 0shares authorized and 0 shares issued and - - outstanding as of June 30, 2021 and December 31,2020, respectivelyCommon stock, $0.001 par, 500,000,000 and101,671,156 shares authorized and 87,186,730 and 87 5 4,909,529 shares issued and outstanding as of June30, 2021 and December 31, 2020, respectivelyAdditional paid-in capital 640,456 - Accumulated deficit (289,285 ) (263,528 )Total stockholders? equity (deficit) 351,258 (263,523 )Total liabilities, redeemable convertible preferred $ 424,742 $ 249,166 stock and stockholders' equity (deficit)

ALKAMI TECHNOLOGY, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share and per share data)(UNAUDITED) Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020Revenues $ 36,701 $ 26,666 $ 69,963 $ 49,876 Cost of 16,180 13,236 31,677 25,138 revenuesGross profit 20,521 13,430 38,286 24,738 Operating expenses:Research and 12,107 9,780 23,020 19,469 developmentSales and 5,417 3,910 10,823 8,550 marketingGeneral and 12,810 6,850 23,195 14,008 administrativeTotaloperating 30,334 20,540 57,038 42,027 expensesLoss from (9,813 ) (7,110 ) (18,752 ) (17,289 )operationsNon-operatingincome (expense):Interest 127 8 141 37 incomeInterest (298 ) (99 ) (608 ) (203 )expenseLoss onfinancial (1,391 ) (66 ) (3,035 ) (67 )instrumentsLoss before (11,375 ) (7,267 ) (22,254 ) (17,522 )income taxesProvision for - - - - income taxesNet loss $ (11,375 ) $ (7,267 ) $ (22,254 ) $ (17,522 )Less:cumulativedividends andadjustments to - (277 ) (277 ) (554 )redeemableconvertiblepreferredstockNet lossattributable $ (11,375 ) $ (7,544 ) $ (22,531 ) $ (18,076 )to commonstockholders:Net loss pershareattributable to commonstockholders:Basic and $ (0.15 ) $ (1.63 ) $ (0.56 ) $ (3.93 )dilutedWeightedaverage numberof shares of common stockoutstanding:Basic and 74,831,512 4,635,852 40,399,138 4,602,436 diluted

ALKAMI TECHNOLOGY, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(UNAUDITED) Six months ended June 30, 2021 2020Cash flows from operating activities: Net loss $ (22,254 ) $ (17,522 )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization expense 1,582 1,317 Stock-based compensation expense 4,441 909 Amortization of debt issuance costs 26 38 Loss on financial instruments 3,035 67 Changes in operating assets and liabilities: Accounts receivable (1,487 ) (3,083 )Prepaid expenses and other current assets (3,319 ) (1,577 )Accounts payable and accrued liabilities 7,851 859 Deferred implementation costs (1,051 ) (1,474 )Deferred rent and tenant allowances (233 ) 279 Deferred revenues (879 ) 191 Net cash used in operating activities (12,288 ) (19,996 )Cash flows from investing activities: Purchases of property and equipment (477 ) (1,403 )Capitalized software development costs (643 ) - Acquisition of business (326 ) - Net cash used in investing activities (1,446 ) (1,403 )Cash flows from financing activities: Borrowings on line of credit - 13,000 Payments on line of credit - (13,000 )Proceeds from stock option exercises 4,935 98 Proceeds on sales of preferred stock, net of - 24,879 issuance costsDeferred IPO issuance costs paid (3,857 ) - Payments on capital lease obligations - (11 )Repurchase of common stock (3,497 ) - Proceeds from issuance of common stock uponinitial public offering, net of underwriting 192,810 - discounts and commissionsPayment of Series B dividend (4,969 ) - Net cash provided by financing activities 185,422 24,966 Net increase in cash and cash equivalents and 171,688 3,567 restricted cashCash and cash equivalents and restricted cash, 171,663 11,982 beginning of periodCash and cash equivalents and restricted cash, $ 343,351 $ 15,549 end of period

ALKAMI TECHNOLOGY, INC.RECONCILIATION OF GAAP TO NON-GAAP MEASURES(In thousands, except per share data)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020GAAP total revenues $ 36,701 $ 26,666 $ 69,963 $ 49,876 Annual Recurring $ 144,685 $ 105,001 $ 144,685 $ 105,001 Revenue (ARR)Registered Users 10,730 8,304 10,730 8,304 Revenue perRegistered User $ 13.48 $ 12.64 $ 13.48 $ 12.64 (RPU) Non-GAAP Cost of RevenuesSet forth below is a presentation of the company's "Non-GAAP Cost of Revenues."Please reference the "Explanation of Non-GAAP Measures" section.

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020GAAP cost of $ 16,180 $ 13,236 $ 31,677 $ 25,138 revenuesAmortization of (118 ) - (236 ) - intangible assetsStock-basedcompensation (465 ) (88 ) (698 ) (180 )expenseNon-GAAP cost of $ 15,597 $ 13,148 $ 30,743 $ 24,958 revenues Non-GAAP Gross MarginSet forth below is a presentation of the company's "Non-GAAP Gross Margin."Please reference the "Explanation of Non-GAAP Measures" section.

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020GAAP gross margin 55.9 % 50.4 % 54.7 % 49.6 %Amortization of 0.3 % - % 0.3 % - %intangible assetsStock-basedcompensation 1.3 % 0.3 % 1.0 % 0.4 %expenseNon-GAAP gross 57.5 % 50.7 % 56.0 % 50.0 %margin Non-GAAP Researchand Development ExpenseSet forth below is a presentation of the company's "Non-GAAP Research andDevelopment Expense." Please reference the "Explanation of Non-GAAP Measures"section.

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020GAAP research and $ 12,107 $ 9,780 $ 23,020 $ 19,469 development expenseAmortization of - - - - intangible assetsStock-basedcompensation (702 ) (101 ) (1,001 ) (206 )expenseNon-GAAP researchand development $ 11,405 $ 9,679 $ 22,019 $ 19,263 expense Non-GAAP Sales and Marketing ExpenseSet forth below is a presentation of the company's "Non-GAAP Sales andMarketing Expense." Please reference the "Explanation of Non-GAAP Measures"section.

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020GAAP sales and $ 5,417 $ 3,910 $ 10,823 $ 8,550 marketing expenseAmortization of (91 ) - (182 ) - intangible assetsStock-basedcompensation (241 ) (33 ) (344 ) (66 )expenseNon-GAAP sales and $ 5,085 $ 3,877 $ 10,297 $ 8,484 marketing expense Non-GAAP Generaland Administrative ExpenseSet forth below is a presentation of the company's "Non-GAAP General andAdministrative Expense." Please reference the "Explanation of Non-GAAPMeasures" section.

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020GAAP general andadministrative $ 12,810 $ 6,850 $ 23,195 $ 14,008 expenseAmortization of - - - - intangible assetsStock-basedcompensation (1,615 ) (228 ) (2,398 ) (457 )expenseAcquisition-related (625 ) - (1,263 ) - expensesNon-GAAP generaland administrative $ 10,570 $ 6,622 $ 19,534 $ 13,551 expense Non-GAAP Net Loss Set forth below is a presentation of the company's "Non-GAAP Net Loss." Pleasereference the "Explanation of Non-GAAP Measures" section.

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020GAAP net lossattributable to $ (11,375 ) $ (7,544 ) $ (22,531 ) $ (18,076 )common stockholdersConvertiblepreferred stock - 277 277 554 deemed and accrueddividendsLoss on financial 1,391 66 3,035 67 instrumentsAmortization of 209 - 418 - intangible assetsStock-basedcompensation 3,023 450 4,441 909 expenseAcquisition-related 625 - 1,263 - expensesNon-GAAP net loss $ (6,127 ) $ (6,751 ) $ (13,097 ) $ (16,546 ) Adjusted EBITDA Set forth below is a presentation of the company's "Adjusted EBITDA." Pleasereference the "Explanation of Non-GAAP Measures" section.

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020GAAP net loss $ (11,375 ) $ (7,267 ) $ (22,254 ) $ (17,522 )Provision for - - - - income taxesLoss on financial 1,391 66 3,035 67 instrumentsInterest expense, 170 90 466 165 netAmortization of 209 - 418 - intangible assetsDepreciation 587 665 1,164 1,317 Stock-basedcompensation 3,023 450 4,441 909 expenseAcquisition-related 625 - 1,263 - expensesAdjusted EBITDA $ (5,370 ) $ (5,996 ) $ (11,467 ) $ (15,064 ) Adjusted EBITDA GuidanceSet forth below is a presentation of the company's "Adjusted EBITDA" for thethree months ending September 30, 2021, and the twelve months ending December31, 2021. Please reference the "Explanation of Non-GAAP Measures" section. Guidance Range for the Guidance Range for the Three Months Ending Twelve Months Ending September 30, 2021 December 31, 2021 Low High Low HighGAAP net loss $ (12,655 ) $ (11,410 ) $ (45,510 ) $ (42,935 )Provision for - - - - income taxesLoss on financial - - 3,035 3,035 instrumentsInterest expense, 110 95 725 600 netAmortization of 220 190 750 900 intangible assetsDepreciation 850 750 3,000 2,700 Stock-basedcompensation 3,350 3,250 11,000 10,700 expenseAcquisition-related 625 625 2,500 2,500 expensesAdjusted EBITDA $ (7,500 ) $ (6,500 ) $ (24,500 ) $ (22,500 )

Investor Relations ContactRhett Butlerir@alkami.com

Media Relations Contacts Jennifer Cortez jennifer.cortez@alkami.com

Andrea Ryanandrea@outlookmarketingsrv.com