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Alkami Announces Second Quarter 2021 Financial Results
Source: Nasdaq GlobeNewswire / 04 Aug 2021 16:01:01 America/New_York
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 team’s 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
Alkami’s 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 management’s 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 company’s financial and operational performance and comparing this performance to the company’s 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 ARR as 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 company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s 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 company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s 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 company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s 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 company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s 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 company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s 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 company’s financial and operational performance, comparing this performance to the company’s peers and competitors, and understanding the company’s 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 2020 Assets 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 portion 15,219 14,858 Intangibles, 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 portion 5,553 5,867 Other 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 72,225,916 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively - 443,263 Stockholders’ Equity (Deficit) Preferred stock, $0.001 par, 10,000,000 and 0 shares authorized and 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively - - Common stock, $0.001 par, 500,000,000 and 101,671,156 shares authorized and 87,186,730 and 4,909,529 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 87 5 Additional paid-in capital 640,456 - Accumulated deficit (289,285 ) (263,528 ) Total stockholders’ equity (deficit) 351,258 (263,523 ) Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) $ 424,742 $ 249,166 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 2020 Revenues $ 36,701 $ 26,666 $ 69,963 $ 49,876 Cost of revenues 16,180 13,236 31,677 25,138 Gross profit 20,521 13,430 38,286 24,738 Operating expenses: Research and development 12,107 9,780 23,020 19,469 Sales and marketing 5,417 3,910 10,823 8,550 General and administrative 12,810 6,850 23,195 14,008 Total operating expenses 30,334 20,540 57,038 42,027 Loss from operations (9,813 ) (7,110 ) (18,752 ) (17,289 ) Non-operating income (expense): Interest income 127 8 141 37 Interest expense (298 ) (99 ) (608 ) (203 ) Loss on financial instruments (1,391 ) (66 ) (3,035 ) (67 ) Loss before income taxes (11,375 ) (7,267 ) (22,254 ) (17,522 ) Provision for income taxes - - - - Net loss $ (11,375 ) $ (7,267 ) $ (22,254 ) $ (17,522 ) Less: cumulative dividends and adjustments to redeemable convertible preferred stock - (277 ) (277 ) (554 ) Net loss attributable to common stockholders: $ (11,375 ) $ (7,544 ) $ (22,531 ) $ (18,076 ) Net loss per share attributable to common stockholders: Basic and diluted $ (0.15 ) $ (1.63 ) $ (0.56 ) $ (3.93 ) Weighted average number of shares of common stock outstanding: Basic and diluted 74,831,512 4,635,852 40,399,138 4,602,436 ALKAMI TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (UNAUDITED) Six months ended June 30, 2021 2020 Cash 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 issuance costs - 24,879 Deferred IPO issuance costs paid (3,857 ) - Payments on capital lease obligations - (11 ) Repurchase of common stock (3,497 ) - Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions 192,810 - Payment of Series B dividend (4,969 ) - Net cash provided by financing activities 185,422 24,966 Net increase in cash and cash equivalents and restricted cash 171,688 3,567 Cash and cash equivalents and restricted cash, beginning of period 171,663 11,982 Cash and cash equivalents and restricted cash, end of period $ 343,351 $ 15,549 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 2020 GAAP total revenues $ 36,701 $ 26,666 $ 69,963 $ 49,876 Annual Recurring Revenue (ARR) $ 144,685 $ 105,001 $ 144,685 $ 105,001 Registered Users 10,730 8,304 10,730 8,304 Revenue per Registered User (RPU) $ 13.48 $ 12.64 $ 13.48 $ 12.64 Non-GAAP Cost of Revenues Set 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 2020 GAAP cost of revenues $ 16,180 $ 13,236 $ 31,677 $ 25,138 Amortization of intangible assets (118 ) - (236 ) - Stock-based compensation expense (465 ) (88 ) (698 ) (180 ) Non-GAAP cost of revenues $ 15,597 $ 13,148 $ 30,743 $ 24,958 Non-GAAP Gross Margin Set 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 2020 GAAP gross margin 55.9 % 50.4 % 54.7 % 49.6 % Amortization of intangible assets 0.3 % - % 0.3 % - % Stock-based compensation expense 1.3 % 0.3 % 1.0 % 0.4 % Non-GAAP gross margin 57.5 % 50.7 % 56.0 % 50.0 % Non-GAAP Research and Development Expense Set forth below is a presentation of the company's "Non-GAAP Research and Development Expense." Please reference the "Explanation of Non-GAAP Measures" section. Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 GAAP research and development expense $ 12,107 $ 9,780 $ 23,020 $ 19,469 Amortization of intangible assets - - - - Stock-based compensation expense (702 ) (101 ) (1,001 ) (206 ) Non-GAAP research and development expense $ 11,405 $ 9,679 $ 22,019 $ 19,263 Non-GAAP Sales and Marketing Expense Set forth below is a presentation of the company's "Non-GAAP Sales and Marketing Expense." Please reference the "Explanation of Non-GAAP Measures" section. Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 GAAP sales and marketing expense $ 5,417 $ 3,910 $ 10,823 $ 8,550 Amortization of intangible assets (91 ) - (182 ) - Stock-based compensation expense (241 ) (33 ) (344 ) (66 ) Non-GAAP sales and marketing expense $ 5,085 $ 3,877 $ 10,297 $ 8,484 Non-GAAP General and Administrative Expense Set forth below is a presentation of the company's "Non-GAAP General and Administrative Expense." Please reference the "Explanation of Non-GAAP Measures" section. Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 GAAP general and administrative expense $ 12,810 $ 6,850 $ 23,195 $ 14,008 Amortization of intangible assets - - - - Stock-based compensation expense (1,615 ) (228 ) (2,398 ) (457 ) Acquisition-related expenses (625 ) - (1,263 ) - Non-GAAP general and administrative expense $ 10,570 $ 6,622 $ 19,534 $ 13,551 Non-GAAP Net Loss Set forth below is a presentation of the company's "Non-GAAP Net Loss." Please reference the "Explanation of Non-GAAP Measures" section. Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 GAAP net loss attributable to common stockholders $ (11,375 ) $ (7,544 ) $ (22,531 ) $ (18,076 ) Convertible preferred stock deemed and accrued dividends - 277 277 554 Loss on financial instruments 1,391 66 3,035 67 Amortization of intangible assets 209 - 418 - Stock-based compensation expense 3,023 450 4,441 909 Acquisition-related expenses 625 - 1,263 - Non-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." Please reference the "Explanation of Non-GAAP Measures" section. Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 GAAP net loss $ (11,375 ) $ (7,267 ) $ (22,254 ) $ (17,522 ) Provision for income taxes - - - - Loss on financial instruments 1,391 66 3,035 67 Interest expense, net 170 90 466 165 Amortization of intangible assets 209 - 418 - Depreciation 587 665 1,164 1,317 Stock-based compensation expense 3,023 450 4,441 909 Acquisition-related expenses 625 - 1,263 - Adjusted EBITDA $ (5,370 ) $ (5,996 ) $ (11,467 ) $ (15,064 ) Adjusted EBITDA Guidance Set forth below is a presentation of the company's "Adjusted EBITDA" for the three months ending September 30, 2021, and the twelve months ending December 31, 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 High GAAP net loss $ (12,655 ) $ (11,410 ) $ (45,510 ) $ (42,935 ) Provision for income taxes - - - - Loss on financial instruments - - 3,035 3,035 Interest expense, net 110 95 725 600 Amortization of intangible assets 220 190 750 900 Depreciation 850 750 3,000 2,700 Stock-based compensation expense 3,350 3,250 11,000 10,700 Acquisition-related expenses 625 625 2,500 2,500 Adjusted EBITDA $ (7,500 ) $ (6,500 ) $ (24,500 ) $ (22,500 ) Investor Relations Contact
Rhett Butler
ir@alkami.comMedia Relations Contacts
Jennifer Cortez
jennifer.cortez@alkami.comAndrea Ryan
andrea@outlookmarketingsrv.com