Earnings call transcript: Alkami Technology Q3 2025 misses earnings expectations

Alkami Technology Inc. reported its Q3 2025 earnings, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of -$0.14, falling short of the expected $0.12, marking a surprise of -216.67%. Revenue came in at $113 million, slightly below the forecast of $113.58 million. Following these results, Alkami’s stock dropped 2.66% in aftermarket trading, closing at $22.30.

Key Takeaways

• Alkami’s Q3 EPS of -$0.14 missed the forecast by a wide margin.
• Revenue grew 31.5% year-over-year to $113 million, though slightly below expectations.
• The company’s stock fell 2.66% in aftermarket trading post-announcement.
• Adjusted EBITDA doubled from the previous year to $16 million.
• Alkami is focusing on product innovations and expanding its client base.

Company Performance

Alkami Technology showed strong year-over-year growth, with total revenue increasing by 31.5% and organic growth exceeding 20%. Despite the earnings miss, the company achieved a significant improvement in adjusted EBITDA, which rose to $16 million from $8.3 million a year ago. Subscription revenue, which accounts for 96% of total revenue, also saw a 31.5% increase. The company’s annual recurring revenue reached $449 million, up 31% from the previous year.

Financial Highlights

• Revenue: $113 million, a 31.5% increase year-over-year.
• Earnings per share: -$0.14, missing the forecast of $0.12.
• Adjusted EBITDA: $16 million, doubling from the previous year.
• Gross margin: 63.7%, a 100 basis point expansion year-over-year.

Earnings vs. Forecast

Alkami’s actual EPS of -$0.14 fell significantly short of the forecasted $0.12, resulting in a negative surprise of 216.67%. This marked a notable deviation from expectations, as previous quarters did not experience such a substantial miss. Revenue, although up year-over-year, was slightly below the forecasted $113.58 million, showing a minor surprise of -0.55%.

Market Reaction

In response to the earnings announcement, Alkami’s stock declined by 2.66% in aftermarket trading, closing at $22.30. This movement reflects investor disappointment with the earnings miss, despite the company’s strong revenue growth and improved EBITDA. The stock is currently trading closer to its 52-week low of $19.94, indicating a challenging period for the company in the market.

Outlook & Guidance

Looking ahead, Alkami has provided guidance for Q4 2025, expecting revenue between $119.6 million and $121.1 million. For the full year 2025, the company projects revenue of $442.5 million to $444 million and adjusted EBITDA of $56 million to $57 million. The company aims for 22-23% live annual recurring revenue growth by the end of the year, with continued emphasis on cross-selling and platform integration.

Executive Commentary

CEO Alex Shootman emphasized the company’s growth potential, stating, "We still have quite a bit of market that we can sell into and continue to grow." CFO Bryan Hill highlighted the scale of operations, noting, "This is a scale game. You can’t perform at this level unless you’ve scaled your business to a point where you’re over 20 million digital users."

Risks and Challenges

• Earnings volatility: The significant EPS miss raises concerns about future earnings stability.
• Market competition: With less than 30% of digital users on contemporary platforms, competition remains fierce.
• Economic conditions: Broader economic pressures could impact client spending on digital solutions.
• Implementation challenges: Scaling global operations, especially in India, may present logistical hurdles.
• Product integration: Ensuring seamless integration across new and existing platforms is crucial for client retention.

Q&A

During the earnings call, analysts inquired about the implementation of AI in financial institutions, improvements in implementation methodologies, and the benefits of the Mantle acquisition. The company addressed these queries, highlighting their strategic focus on enhancing product offerings and operational efficiencies.

Full transcript - Alkami Technology Inc (ALKT) Q3 2025:

Operator: Hello and welcome to Alkami Technology Inc.’s Third Quarter 2025 Financial Results Conference Call. My name is Andrew, and I will be your operator for today’s call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, October 30, 2025. I would now like to turn the call over to Steve Calk. Steve, you may begin.

Steve Calk, Unspecified, Alkami Technology: Thank you, Operator. With me on today’s call are Alex Shootman, Chief Executive Officer, and Bryan Hill, Chief Financial Officer. During today’s call, we may make forward-looking statements about guidance and other matters regarding our future performance. These statements are based on management’s current views and expectations and are subject to various risks and uncertainties. Our actual results may be materially different. For a summary of risk factors associated with our forward-looking statements, please refer to today’s press release and the sections in our latest 10-K entitled Risk Factors and Forward-Looking Statements. Statements made during the call are being made as of today, and we undertake no obligation to update or revise these statements. Unless otherwise stated, financial measures discussed on this call will be on a non-GAAP basis. We believe these measures are useful to investors in the understanding of our financial results.

A reconciliation of the comparable GAAP financial measures can be found in our earnings press release and in our filings with the SEC. I’d like to turn the call over to Alex.

Alex Shootman, Chief Executive Officer, Alkami Technology: Good afternoon. Thank you all for joining us. I am pleased to report that Alkami continued to deliver strong revenue and profit results in the third quarter of 2025, which I plan to discuss. First, I’d like to announce that Alkami has selected a new Chief Financial Officer to succeed Bryan Hill, who previously announced his intention to retire. As discussed earlier this year, Alkami entered into an agreement with Bryan in which he will be available in a consulting role to the company for some time in the future. Alkami’s new CFO is Cassandra Hudson. Cassandra brings to Alkami over 20 years of experience building, leading, and advising companies through rapid growth, capital market transactions, international expansion, and M&A activity. Most recently, she served as CFO of StackAdapt, a leading advertising and marketing technology company.

Prior to that, she was CFO of EngageSmart, where she guided the company through a successful IPO and drove meaningful growth in both revenue and profitability. Earlier in her career, she spent 12 years at Carbonite in a series of finance leadership roles, ultimately serving as Chief Accounting Officer and Vice President of Finance. Cassandra comes on board next week, and I’m looking forward to the investment community spending time with her in the coming quarters. I’m grateful that Cassandra said yes to Alkami and excited to have her on our executive team. Turning to our business results, in the third quarter of 2025, Alkami grew revenue over 31%, increased adjusted EBITDA to $16 million, and exited the quarter with 21.6 million registered users on the Alkami platform, up 2.1 million from the prior year quarter. Q3 2025 was also a strong sales quarter, equal to our best Q3 ever.

We added 10 new clients on our digital banking platform, six credit unions, and four banks. One of these clients is the largest new logo transaction in our history. Including this client, Alkami now serves five of the top 20 credit unions in the United States. On a year-to-date basis, our new logo performance is consistent with the last four years. Our sales pipeline for Q4 and 2026 is also in line with recent years. Looking further into the future, out of the top 2,500 FIs, excluding mega banks and super regionals, there are still over 900 credit unions and nearly 1,000 banks that are not on a modern platform like Alkami. For these reasons, we remain bullish about the growth opportunity ahead of us. Our Mantle business also delivered a strong new logo sales quarter with 29 new Mantle clients, 15 of which are new to Alkami.

Our cross-sale efforts are beginning to materialize, as year-to-date, Mantle has added 68 new logos, including 29 that are existing Alkami clients. As I mentioned in a previous call, we now have two strategic platforms in which we can initiate a relationship with a financial institution. Year-to-date, the company has signed 23 new logos with our digital banking platform. In the same period, 39 new logo relationships have been created with the onboarding platform in FIs that do not have Alkami digital banking. Together, that is over 60 new platform client relationships with whom we can expand over time. From a qualitative perspective, we continue to see positive market reaction to the combination of Alkami and Mantle. In a mid-year survey, 80% of bank and credit union leaders in our target market said the Mantle acquisition will have a positive impact on Alkami.

Our prospects appreciate that if you want to attract deposits, acquire new account holders, increase engagement, and improve operational efficiency, you need Alkami’s digital sales and service platform, which is the combination of our digital banking, onboarding and account opening, and data and marketing technologies. We had six renewals in the third quarter, and we had an amazing quarter in terms of online banking implementations. In Q3 2025, we brought 13 new clients onto our digital banking platform, the most in a single quarter in our history. Six of the 13 are banks, and year-to-date, through October, we’ve implemented 14 banks, of which eight are integrated to the core system that represents our largest market opportunity. Mantle also had a strong implementation quarter, bringing 15 clients onto our onboarding and account opening platform, which was as many as we implemented in the entire first half of 2025.

If you combine institutions that are live on either our digital banking platform or our onboarding and account opening platform, we now serve 413 financial institutions, of which 124 are banks and 289 are credit unions. We also had an exciting quarter in terms of product progress. The design work of our digital sales and service platform, which once again is the integration of digital banking, onboarding and account opening, and data and marketing, is complete. We’ve assigned a dedicated engineering team to the build effort and expect to show product to our clients at our spring customer conference. This effort can impact future growth as we now have 17 clients under contract for all three technologies, and delivering the planned product integration can generate a 30% uplift to our new logo ARR.

We also released our new money movement hub, have our one-click SDK deployment in beta, and we showed our client community a prototype of an agentic code creator that builds tailored products for an FI. We released two new features for treasury management, and last week added an additional six treasury management features to our beta client community. In onboarding and account opening, we are accelerating in-branch product adoption, have continued momentum on account maintenance, and our Pioneer Loan Platform client originated over $4 million in loans in their first six months of product usage. From a partner perspective, we created a new development team dedicated to our partner ecosystem, which will double the number of partners we can onboard each year. This will create future growth potential and improve customer satisfaction by giving our clients more capabilities for their account holders.

In closing, I am proud of the more than 1,000 Alchemists who achieved another strong quarter of results for our clients and our investors. As we finish 2025, I’m excited about our continued innovation and execution, a resilient, growing market, and a business model with several growth levers. I’ll now hand the call to Bryan to discuss our financial results.

Operator: All right. Thanks, Alex. Let’s do this one last time, shall we? Good afternoon, everyone. In the third quarter of 2025, we achieved total revenue of $113 million, representing year-over-year growth of 31.5% and organic growth exceeding 20%. We continue to improve adjusted EBITDA to $16 million, compared to $8.3 million in the year-ago quarter, further underscoring the operating leverage of our financial model. Subscription revenue grew 31.5% in the third quarter and represented 96% of total revenue. We increased ARR over 31% and exited the quarter at $449 million. We currently have approximately $67 million of ARR and backlog for implementation, the majority of which will occur over the next 12 months. Included in our backlog are 37 new digital banking clients representing 1.7 million digital users.

We exited the quarter with 291 live clients and 21.6 million registered users on our digital banking platform, representing registered user growth of approximately 2.1 million, or 11% compared to last year. Over the last 12 months, we implemented 32 financial institutions. Because of the long-term nature of our contracts, we had three to four quarters of visibility into upcoming client attrition. In the last three quarters of 2025, three clients left our platform, representing less than 1% of ARR, and two clients were merged with existing Alkami clients. Over the long term, we modeled digital banking ARR churn at 2% to 3% per year, which we have historically outperformed. We ended the quarter with an RPU of $20.83, up 19% compared to a year ago, driven by the acquisition of Mantle and add-on sales success. Excluding Mantle, RPU increased 7% over the prior year.

We continue to see broad-based demand across our product portfolio. This is reflected in our sales pipeline, new client wins, client renewal success, our ability to cross-sell new products into our installed base, and now the rate at which we are seeing the market adopt Mantle and our data and marketing analytics solutions. In the third quarter, we signed 10 new digital banking platform clients and renewed six existing clients, representing 16 total digital banking contract signings. One new client win during the quarter was a top 20 credit union, representing 450,000 digital users. We expect 25 to 30 renewals in 2025. Mantle added 29 new clients in the third quarter, including 15 that are Alkami digital banking clients. We now have 44 clients under contract that subscribe to both the Alkami digital banking platform and the Mantle onboarding/account opening solution.

Our add-on sales continue to increase as a percentage of total sales. Our add-on sales effort, excluding Mantle direct sales, represented just under 50% of new sales for the year, four percentage points better than the same period in 2024. Our remaining performance obligation was approximately $1.6 billion, representing 3.6 times our ARR and up 25% compared to a year ago. Now turning to gross margin. For the third quarter of 2025, we delivered a non-GAAP gross margin of 63.7%, representing nearly 100 basis points of expansion compared to the prior year. We achieved gross margin expansion through continued improvement in our hosting cost efficiency, as well as operating leverage across our post-sale operations. For the first nine months of 2025, gross margin was 64.4%. Moving to operating expenses.

For the third quarter of 2025, operating expense of $56.4 million, or 50% of revenue, represented year-over-year operating leverage of approximately 360 basis points. We primarily drove operating leverage across R&D and G&A, where we continue to realize operational scale. We’re on track for adding engineering talent at our global capability center located close to New Delhi in India’s National Capital Region. We now have over 110 Alchemists at this facility, with an expectation of approximately 150 as we exit 2025. Related to sales and marketing expense, we continue to achieve a high level of sales team productivity and go-to-market efficiency, ranking among the very best in SaaS. Sales and marketing is expected to be approximately 15% of revenue for 2025. Our adjusted EBITDA in the third quarter was $16 million, $2 million better than the high end of our expectations and representing an adjusted EBITDA margin of 14.1%.

Turning to our balance sheet, we ended the quarter with $91 million of cash and marketable securities. During the third quarter, we used a portion of our cash to reduce our revolver by $25 million, bringing our current balance to $25 million. For the first nine months of 2025, operating cash flow was $26 million, which is net of one-time acquisition items of $7 million. Excluding these one-time items, this is over two and a half times the operating cash flow of $13 million in the year-ago period. Now turning to guidance. For the fourth quarter of 2025, we are providing guidance for revenue in the range of $119.6 million to $121.1 million. At the midpoint, this represents organic growth at 22%, 200 basis points higher than Q3’s organic growth. For adjusted EBITDA, we are providing fourth quarter guidance in the range of $16.1 million to $17.1 million.

For the full year of 2025, we are providing guidance for revenue in the range of $442.5 million to $444 million. We are also providing full-year adjusted EBITDA guidance of $56 million to $57 million, representing a raise of just under $4 million above the mid point of our previous full-year guide. In conclusion, we are pleased with our continued revenue growth and margin expansion. We remain positive about the demand environment and our continuing ability to acquire, grow, and retain our clients. This gives us confidence in our ability to achieve our long-term financial objectives and drive shareholder value. Now, on a personal note, it has been a great honor to serve as Alkami CFO for the past six and a half years and to steward the company as we expanded revenue 500% and increased profitability over $95 million since 2019.

We also engaged in multiple capital raises and acquisitions and built one of the best teams in digital banking. I want to thank our shareholders and our clients, and especially our team, for helping make this a reality. I’m excited to see what Alkami can do in the coming years. With that, I’ll now hand the call to the operator to take your questions.

Steve Calk, Unspecified, Alkami Technology: Thank you. Ladies and gentlemen, we’ll now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question is from Andrew Schmidt from KeyBank Capital Markets. Please go ahead.

Alex Shootman, Chief Executive Officer, Alkami Technology: Your final call here at Alkami, Bryan. Congratulations on the transition. It was great working with you from the IPO up until today. Congrats.

Operator: Yeah, great working with you, Andrew.

Alex Shootman, Chief Executive Officer, Alkami Technology: I wanted to just maybe go back to what you said, Bryan, on the organic growth for the fourth quarter. Obviously, we saw the revenue growth, the outlook come down just a little bit. I think you mentioned that organic growth is actually accelerating. Maybe you can dig into that a little bit, maybe something that’s inorganic or Mantle-related that’s affecting the outlook. That would be a good place to start. Thanks so much.

Operator: No, that’s a great question. First, I’m very proud that 19 quarters consecutive at Alkami as a public company, we’ve either met or exceeded both our revenue and adjusted EBITDA guidance. That’s a mark that many companies cannot say. As we think about our transition of revenue growth from Q3 to Q4, we’ve said this many times, but the timing of implementations during the year makes a big difference on any one quarter’s year-over-year growth. As an example, if you compare the first nine months of new logo implementations in 2025 to 2024, we actually had approximately 100,000 more in the first nine months of 2024. When you look ahead to Q4, in 2025, Q4 is really our greatest implementation quarter. We’re going to have close to 350,000 more users that we implement in Q4 this year versus last year.

That transition provides us the step up in organic revenue growth in Q4, both on the top line for revenue, but also for ARR.

Alex Shootman, Chief Executive Officer, Alkami Technology: To add to that, the schedule of when we’re doing the implementations depends a lot on when the customer wants to do the implementations.

Operator: That’s right.

Alex Shootman, Chief Executive Officer, Alkami Technology: Right? That creates, as you said, Bryan, sometimes those dislocations between the quarterly compares.

Operator: That’s right.

Alex Shootman, Chief Executive Officer, Alkami Technology: Got it. Implementation schedule, but underlying organic growth is healthy and accelerating. Understood. Maybe just a quick question on the competitive environment. Obviously, a well-documented transition from a large core provider announced this week. Wondering if, I know, understand they’re more on the core side, but if you see any benefit from that, just in terms of folks coming to you and maybe just reevaluating the tech stack in general, looking for advanced digital banking tools, et cetera. Just curious if that’s a benefit for you. If you have any other comments on the overall environment that you want to share, that’d be helpful. Thank you.

Yeah. I don’t think for us any particular company’s results in a quarter make a difference in the buying behavior necessarily. What we do see in the bank market, and we’ve talked about this before, the credit union market has historically been a best-of-breed market. It’s a buyer who is used to combining a digital banking platform that’s different than their core provider. The community bank market has not been that kind of market. The community bank market was a market that very much bought digital banking from its core provider.

Andrew, that’s the biggest thing that we’re seeing change is the opening of momentum of people saying, "I’m going to actually have a different digital banking application than my core provider." That’s why it’s so important what I shared in my opening remarks of, "Look, since the beginning of the year, we have brought 14 banks live, and eight of them are on a core that we consider to be our largest market opportunity." In summary, no particular quarterly result changes the customer’s buying behavior. The most important thing that we’re seeing in the community bank market is the beginning of the willingness to buy best-of-breed instead of suite.

Operator: Andrew, keep in mind, out of the 250 million digital users that comprise our addressable market, less than 30% of those are on a contemporary platform. The decision to switch to a contemporary platform such as Alkami, what we’ve seen through many different disruptions in this market, whether it was SVB, high interest rates, you name the issue, the demand has remained consistent through that. If a provider in the market is experiencing problems for different reasons, whatever the case may be, that doesn’t really affect the fundamental drivers of what’s causing the change. We introduce the Mantle acquisition, combine that with our digital banking platform as well as our data and marketing analytics solution, and we think that’s a game changer in the market.

As we pointed out on the call, we now have 44 shared clients with Mantle under contract, and we only had 15 when we completed the acquisition. That’s significant progress. We think that progress is going to continue as the market continues to understand the power of bringing these three primary platforms together. It’s a differentiator for them. It’s a moat and a differentiator for us.

Alex Shootman, Chief Executive Officer, Alkami Technology: Thank you both, and congrats again, Bryan.

Steve Calk, Unspecified, Alkami Technology: Your next question is from Patrick Walravens from Citizens Bank. Please go ahead.

Great. Thanks. This is Austin Colon for Patrick Walravens. Let me extend my congratulations to you, Bryan, as well on your retirement. I wanted to ask, touch on that topic of disruptions, and was just kind of wondering if you’re hearing anything out there regarding AI and the ability to use some of these tools to build potentially some digital applications. Is that something that’s resonating out there in the market at all or not so much?

Alex Shootman, Chief Executive Officer, Alkami Technology: We actually just had our customer advisory board. This is Alex. We had our customer advisory board last week for several hours, and probably half of that conversation was how they’re either using generative AI or using agents and the different use cases that they have. Every single financial institution is either using or experimenting with either agentic technology or with generative technology. None of them think about building their own software with agent technology. Their view is the level of complexity in terms of building the software, integrating that into different core technologies is not something that is on their radar screen. The thing to remember is even if six different customers have the same exact core, the age of those cores and the way that the core is designed is all six of those will be completely different implementations.

There is a lot of interest in use cases for generative AI and for agentic AI, but nobody is talking about building their own system.

Okay. If I could just follow up quickly, when you kind of look at your own digital banking solutions and those potential use cases, where are maybe some of those areas that customers would be interested in seeing elements of kind of AI or agentic workflows? Could that bolster the product set?

Yeah. First of all, we have AI in our technology today. We use AI in our data and marketing products to create precise audience segments for clients. We have AI embedded into chat products that are in our products. If you’re specifically talking about either agentic AI or generative AI, one of the things that I mentioned in the prepared remarks is that today we have a software development kit or an SDK in which a client can build functionality that extends Alkami. Today, what they have to do is they have to have a developer that builds that functionality. What we’ve done is we’ve taken all of the code that’s ever been submitted into Alkami. For example, we’ve had over almost 3 million lines of code submitted to Alkami since the beginning of this year, and that’s customers extending Alkami.

We’ve taken all of that code and we’ve been training an LLM with the code, the instructions, et cetera, and think we’ll have the ability to create a prompt-based code creator for NFI. That would be extremely attractive to an institution. The team that builds onboarding/account opening and building the loan platform and building the account management platform has built out an agent-based banker capability, if you will. For the banker who’s interacting with somebody, how can they rapidly understand everything about that client across all of the systems within the bank? To answer your question, there are dozens of use case areas where we can bring capabilities to clients that they’re excited about, and we’re excited about doing it. As I said, we’ve got two pilot projects underway that I just described.

That’s great. Thank you.

Steve Calk, Unspecified, Alkami Technology: Your next question is from Zach at Barclays. Please go ahead.

Okay. Great. Hey, Alex. Hey, Bryan. Thanks for taking my questions here. Congrats on hiring Cassandra. Bryan, tip my cap to you on your next phase.

Operator: Great. Thanks, Zach.

Absolutely. Alex, maybe for you. It sounded like the selling activity in the quarter was really strong, but maybe some of the implementations are a bit more Q4-weighted than at least we were thinking. If you look back at the last few years, it’s been that third quarter that’s been the strongest quarter in terms of adding new users to the platform. Was maybe some of the push from Q3 or the timing from Q3 to Q4 because there’s just maybe a couple, few customers, or is there maybe some shifting seasonality that you’re starting to notice in the business?

Alex Shootman, Chief Executive Officer, Alkami Technology: If I separate it between signing and implementing, if I could talk about those two separately, I’ll start with implementing. There is a small amount of seasonality in terms of implementing. When we are talking to a client about the implementation schedule, when you think about the rhythm of their year, they would prefer to implement sometime in late Q1 into early Q2, or after Labor Day and before Thanksgiving. If you just thought purely of the seasonality of their business, there is some preference that the clients have in terms of the time of year that they want to implement. If I just look back over the last four or five years of all the implementations that we’ve done, there is a little bit more that happens in Q2 and a little bit more that happens between Labor Day and Thanksgiving.

That tends to be what I would say is some type of seasonality. Nothing in terms of online banking happens over the Christmas holiday, right? That’s when everybody has to be able to access their digital banking. We really don’t experience any implied seasonality from a bookings perspective, right? A lot of that just depends upon historically when did the client’s contract end, when do they need to get a contract signed so that they can get the implementation scheduled. I don’t really see a lot of seasonality necessarily in terms of signings. There’s some customer behavior in terms of the implementations.

Got it. That’s super clear. Bryan, maybe for my follow-up for you, I just want to—just around the same topic—I just want to make sure I understand how the timing of implementations maybe impacts the revenue guide. It’s very small. It sounds like because these implementations are maybe happening, again, maybe a quarter later than what we were expecting, that’s one less quarter of revenue for the full year. It sounds like from an ARR perspective, we still get the ARR that we were expecting by the end of the year, kind of in line with what we were originally expecting. We get a quarter less of revenue for the year. From an ARR perspective, it really shouldn’t change that view. Is that the right way to think about it?

Operator: No, that is the right way to think about it, Zach. You can have ebb and flow during the year in terms of implementation dates, pushing back, moving forward. That can impact your revenue. The key takeaway is we’re going to have a step up to 22% to 23% in live ARR growth as we exit the year, which is in line with our expectations at the beginning of the year. The comment I was making in responding to Andrew was really a year-over-year comparison. Let’s separate that from when you have one quarter of visibility, what can happen in a quarter. When you look at Q3, we had some new client implementations shift out during the quarter, which can have an impact on end-quarter revenue. We had 13 implementations for new clients on online banking in Q3 of this year, which is our highest.

We had some resource reallocation that occurred to those new online banking client implementations, and that had some marginal impact on add-on sale implementation. The good news is we go into Q4 and we have $67 million of ARR in the backlog. A lot of that is add-on sales and Mantle, and much of that backlog associated with those lines of businesses will implement in the fourth quarter, further driving us to hit the step up in live ARR growth in the quarter. That’s a lot of different moving parts, but I wanted to provide you a perspective that there are several different levers here that we can push. The end result is where does live ARR end and how does that compare on a year-on-year basis?

Absolutely. Very clear. Thank you, guys.

Steve Calk, Unspecified, Alkami Technology: Your next question is from Jacob Stephan from Lake Street Capital Markets. Please go ahead.

Hey, guys. Appreciate you taking the questions. I’ll echo the congratulations to Bryan as well. It’s been a pleasure working with you. You made an interesting comment about 900 middle-market institutions that are not on a modern platform yet. If I recall, you have always kind of said there’s about 2,000. Just curious, maybe you could help us think through the segments of the remaining 900. Are we through a lot of the low-hanging fruit and people that are ready to switch immediately? Maybe now we’re starting to work into longer sales cycles? Maybe just help us think through some of that commentary.

Alex Shootman, Chief Executive Officer, Alkami Technology: Yeah. Let me make sure that we’ve got the specifics correct. What I said is of the top 2,500 FIs, excluding mega banks and super regionals, there are still over 900 credit unions and nearly 1,000 banks that are not on a modern platform like Alkami, right? As we’ve always said, all these clients are on multi-year contracts. That means a portion of them come up every year to make a decision. Some of them decide to make a change, and some of them decide to stay with their incumbent provider. The main takeaway for us is we’ve got, Bryan, how many live online banking?

Operator: 291.

Alex Shootman, Chief Executive Officer, Alkami Technology: Yeah. We’ve got 291 live online banking customers, and we still have a lot of runway in this market from a digital transformation perspective. That 2,500 is our target market. The main point I’d like you to take away from it is, within our target market, even given the size that Alkami is today at almost $0.5 billion of revenue, we still have quite a bit of market that we can sell into and continue to grow.

Got it. Okay. That’s helpful. Maybe just touching on gross margin here. I think in Q2, it looked like we were trending well above kind of the 2026 framework, 65%. We did see a sequential step down, and you guys are obviously seeing some nice operating leverage. Maybe help us think through some of the gross margin pressures in Q3. Is this strictly Mantle, increased cloud costs, or just kind of drill down on that?

Operator: No, it’s really related to some of the third-party IP that we sell through our platform. Some of the excess fees associated with those sets of products were lower than what we had originally anticipated in the quarter, and that had the effect of driving down gross margin. That’s the main impact sequentially. Year over year, we still expanded gross margin 100 basis points. We’ll exit the year just under 65% gross margin for the full year. We feel really good about where we could actually perform from a gross margin perspective in 2026.

Alex Shootman, Chief Executive Officer, Alkami Technology: Remember, when Bryan and I came out and shared with y’all a longer-term view of the business model, it would get to 65% gross margin by the end of 2026. We feel like we’re ahead of what we had planned to do.

Got it. Understood. Appreciate all the color, guys.

Steve Calk, Unspecified, Alkami Technology: Your next question is from Elyse Kanner from JPMorgan. Go ahead.

Good evening. Thank you for taking my question. First, I was hoping to ask about the record or near record number of implementations. I’m curious, what is enabling you to implement more customers in a given quarter?

Alex Shootman, Chief Executive Officer, Alkami Technology: Thanks for the question. The services team has continued to rebuild their implementation methodology. The services team and the product and engineering teams have some different ceremonies that they’ve created that allow them to collaborate on changes that they need to make. Our code is not a code where you do any custom development. You’re doing configuration in the code for the client. The teams studied their best implementations that they do. They looked at the behavior of the company and the best implementations versus the ones that took longer. They just started replicating—I don’t mean to minimize it because it was a big piece of work—they started replicating the behaviors of the best implementations. That included things like, how can we help the customers test the code?

That included things like taking over on behalf of the customer all of the third-party relationships that were going to be necessary during implementation. A lot of cycle times have been increased from a speed perspective in terms of the product, the engineering teams, and the services teams. I would just characterize it as just really good old-fashioned work that went into understanding what it takes to make a great implementation and then figuring out how to replicate that. I’m very proud of the company, very proud of the services team to be able to implement 13 clients in a quarter. We also, last week, had three clients go live in the same day. We’ve only done that one other time in our company’s history. That team is really performing well.

Operator: This is a scale game. You can’t perform at this level unless you’ve scaled your business to a point where you’re over 20 million digital users. Our ability to implement is definitely a differentiator for us in the market. I’d like to echo Alex’s compliments towards this team because if you drill down into the numbers, and Alex mentioned this in his prepared comments, we also implemented six banks during the quarter. We now have 33 banks live. 20% of the banks that we have live were implemented during the quarter that we had our highest new client implementation quarter. That says a lot to the progress that this team’s made. It also says a lot to the progress that we’re making and now how we can go to market and sell to a bank with this level of track record and success in implementing a bank financial institution.

That’s very helpful. Thank you. If I can throw in a quick follow-up, can you speak to the factors that led to your backlog ticking up in the quarter? If you can provide any color on its composition, that’d be really helpful.

We have 1.7 million digital users in our backlog now. If you look back a year ago, that number was about 1.2 million. One of the largest factors is the number of digital users that we have in backlog. It’s almost a year’s worth of digital user growth, which provides significant visibility. Mantle is contributing in a big way to our implementation backlog. When we acquired Mantle, we suggested that Mantle would reach $60 million of ARR under contract. That would include the backlog. We’re almost at that level as we cross over Q3. Mantle’s doing a very good job in selling their products direct. As we mentioned in our prepared comments, we’re doing a great job of cross-selling Mantle into either a new client win or into our installed base. We now have 44 shared clients under contract, which is 29 more than when we acquired Mantle.

The attachment rate of segment, our data and marketing analytics product, for the year, we’re attaching at a rate of 75%. If you step back from this and you go, "What’s the significance of the company being able to sell these three individual platforms into a client?" When you add segment and Mantle on a new client win or even a sell into our installed base, it increases the ARR 30%. It’s a pretty significant boost in ARR growth and ultimately subscription revenue growth.

Great. Thank you both, and congratulations, Bryan.

Thank you.

Steve Calk, Unspecified, Alkami Technology: Your next question is from Christopher Kennedy from William Blair. Please go ahead.

Thanks for taking the question, and I’ll echo it.

Operator: Hey, Chris, you cut out.

Steve Calk, Unspecified, Alkami Technology: Looks like that question was disconnected. Would you mind re-queuing, please? The next question is from Adam Hotchkiss from Goldman Sachs. Please go ahead.

Great. Thanks so much for taking the question. Bryan, great working with you. Best wishes to you going forward. I wanted to talk about, Bryan, I know we’ve talked about the high visibility into revenue you have entering any given year. Could you maybe talk a little bit about the pieces outside of that, right? Maybe some of these surprise cross-sells that you get in any given year that would ultimately lead to outperformance versus the visibility that you have in a given year. How are some of those cross-sells and upsells tracking relative to historical trends?

Operator: Our cross-sells, actually, as we mentioned on the call, as a % of our total sells, excluding Mantle to keep the comparison consistent, was just under 50% through the first nine months of this year, which was a step up from last year. Our view is we’re ahead of where we would like to be from a cross-sell perspective. Our ultimate goal was to be at 50% in 2026. Of our new client wins, 50% of those banks, 50% are credit unions. Of our total new sales, 50% derived from cross-sell activity. Mantle’s only going to accelerate that.

Okay. That’s really useful. One of the things that struck me intra-quarter was some of the Mantle announcements, like the Tactile partnership and the bulk account opening product. Can you maybe just give us some color around what Mantle provides you from an innovation perspective now that you have them under your roof? Does it allow you to accelerate and pull forward some of these innovation projects that you’ve been thinking about? Any color around that would be useful.

Alex Shootman, Chief Executive Officer, Alkami Technology: Yeah. The biggest thing that it provides us is the ability to deliver one of the most important business capabilities that a regional and community financial institution wants. Let me go back just a little bit. These institutions are institutions that have great relationships in their community. They want to grow. As with everything over the last couple of years, the digital experience makes a huge difference in terms of whether or not they’re able to grow. The experience that they’re able to create today, without something like Alkami and Mantle coming together, the experience that they’re able to create today for a new customer or member that wants to sign up or a new customer member that wants to buy a new product is not a very good experience at all.

It’s a choppy experience that goes between three or four different systems, sometimes requires a call into a call center, sometimes might even require a piece of paper to be signed. Their growth strategy depends upon having an integrated front-end experience that is seamless and intuitive. I would tell you the biggest opportunity that we have, and this is actually the work that is underway right now, where we are building the integration between the three products, between the data and marketing platform, the onboarding/account opening platform, and digital banking, is that a new customer of an institution or an existing customer of an institution who’s buying a new product, that’s a completely seamless experience with a great user experience. That is a business capability that every single one of our customers and prospects absolutely wants.

Now, beyond that, what’s great about the team that we put together with Alkami from Mantle is it is a highly innovative software product software team. They already have three or four ideas like, "How can we build out an account maintenance application?" As we talked about earlier, innovating from a loan origination platform perspective. That team has a very high velocity of new product development and a lot of creative ideas. We expect them to be adding product to the portfolio that we can monetize. We remain really excited about the acquisition that we did.

Operator: Adam, think about—it’s important what Alex just shared as it relates to where we can have innovation. There are other areas in the company where we can drive innovation. When you have a financial model that affords the visibility, such as Alkami’s, and you’re scaling your profitability at a very high rate, it provides you the luxury to pull forward some of those investments and invest in those areas while you’re still over-delivering on your commitments from a profitability perspective. I think that’s a key differentiator as you think about the investment thesis in Alkami. It’s what fuels the engine in a public company that fuels the engine of innovation but yet still allows that business to deliver on its profitability goals. That’s a balancing equation you have to walk through. Because of the visibility we have into our revenue and profitability, it provides us that luxury.

Okay. Great. Really useful. Bryan, congratulations again.

Thank you, Adam Hotchkiss.

Steve Calk, Unspecified, Alkami Technology: The next question is from Christopher Kennedy from William Blair. Please go ahead.

Good afternoon. Thanks for taking the question. I’ll just echo the comments to Bryan and Cassandra. Congratulations. It’s good to see the four new bank wins in the quarter. Can you talk about what you’re seeing there, and was it related to combining the sales forces of Alkami and Mantle?

Alex Shootman, Chief Executive Officer, Alkami Technology: Yeah. I mean, I would say the main thing that we’re seeing, remember, this is a risk-averse marketplace. They’re having to move from a suite to a best-of-breed, and they want to know that a company’s got a track record to successfully move them onto a modern digital banking platform. Our success in bringing previous clients onto the platform is creating confidence in the market. The other thing that’s happening is we’re accelerating building capabilities in our treasury management portfolio, and we’re able to meet with prospects and show them the capability that we have in treasury management, show them the advanced capability that we’re building, show them the teams that we have dedicated to building that capability, and project the rate and speed that we’re going to be adding those capabilities.

If you think about a client, right, they’re making a decision today knowing that they’re coming on the system in 9 to 12 months, and they’re evaluating, for example, the treasury management capability that we have right now. They’re evaluating the wisdom of our roadmap. Do we know what we ought to build? They’re evaluating our track record for building those features and getting them into production, and they’re making a decision on a year from now. "Is this company going to have, A, the capability to connect me with the core I have to their digital banking system? Is this company going to have the commercial, whether you call it commercial, business banking, treasury management?

Are they going to have the capabilities that I need to run my business?" What we’re seeing is that all the hard work that we’ve been doing over the last couple of years is now starting to create traction in the market where people can see that we’re bringing customers live and people can see that we’re building software. They want a modern platform, and they’re picking Alkami.

Understood. As a follow-up, it’s great to hear Mantle is nearing $60 million of ARR, about a quarter ahead of expectations. Can you just talk about the loan origination initiative from Mantle and what you see as the opportunity with that? Thanks for taking the questions.

Let me remind everybody what we’ve talked about in terms of the loan origination platform. We said there are a set of lighthouse clients that are collaborating with Alkami and Mantle to build a loan platform. We’re going to be bringing those lighthouse clients on the loan platform. We’re going to be evaluating product-market fit and our ability to do a great job for those clients. Sometime towards the end of this year or the beginning of next year, based upon our evaluation of our ability to go to market with that product, we’ll make a decision to go to market with that product. That is not a generally available product that our sales team can sell right now. To frame your expectations, it’s a market that would like us to be in it.

It’s a product that we’re building, but we’re going to make darn sure that it’s got great product-market fit, and we’ve got live customers that are satisfied before we put it in the bag of the sales team.

Very clear. Thank you.

Steve Calk, Unspecified, Alkami Technology: Your next question is from Jeff Van Rhee from Craig Hallum. Please go ahead.

Hey, Alex, Bryan, this is Daniel. I’ve just been on for Jeff Van Rhee. Thanks for taking the questions. On Mantle, I think what really stuck out to me a lot about some of the numbers you were quoting there, the signings this quarter, if I have it right, 29 new clients for Mantle, 15 of which were new to Alkami. Call it half of the Mantle signings this quarter were Alkami clients. I assume cross-sell plays a really big role in that. The Mantle base can’t be half Alkami clients. I think you said I would infer the Mantle base is closer to sort of market share division in terms of Alkami. Half of new signings coming on, coming from the Alkami base. Are we looking at Mantle’s new signings almost doubling as a function of being tied up with Alkami?

Just your thoughts on the pace and impact that Alkami being part of Mantle is bringing.

Alex Shootman, Chief Executive Officer, Alkami Technology: I’m going to give you a qualified answer and let Bryan talk to the numbers. What you’re seeing from our base is a demand for a great, highly intuitive onboarding and account opening product. When they see Mantle and what that team has built, they want to buy the product. It’s had great reception in our market. I would never project doubling sales.

Operator: Yeah. Mantle joined Alkami. Let me kind of put that out there. I think you said Alkami joining Mantle, but Mantle joined Alkami. When we acquired Mantle, we tried to compare that to our segment acquisition, which is our data and marketing analytics products. What we had at the time of the acquisition as an investment thesis is the fact that the acquirer, the purchaser within an FI of the Mantle solution, is generally the same or close to the same and is closely situated to the individual who buys online banking. We have a good contact from a cross-sell into our install base perspective that would allow us to leverage those relationships. Now, comparing that to the data and marketing analytics product, we see a very, very high attachment rate on a new logo sale, a new client win, when the C-suite’s involved in the decision.

The challenge that we initially had with that acquisition was it’s a different buyer in the financial institution. The relationships that we had for cross-selling into our install base weren’t necessarily the relationship to champion that purchase decision, that buy decision within the FI. We don’t have that challenge with Mantle. That’s what we should point out. That’s why we’re seeing very early success and much greater success than what we experienced with the segment acquisition in the first two to three quarters.

Thanks. That’s helpful. Just on the ARR and backlog for implementation, I believe I heard that was $67 million, just for the fact-check if that’s correct, $67 million in ARR and backlog for implementation. If that was $68 million last quarter, I have written down here, so a slight tick down sequentially there. Given the 10 new signings to the digital banking platform, strong signings for the quarter, like you called out, why would that not tick up? What are the dynamics there?

We had a significant implementation quarter. We had the largest number of online banking new client implementations than we’ve had in the history of the company. Within that, there were six banks, and there was also a very large client that went live as well.

Alex Shootman, Chief Executive Officer, Alkami Technology: Also, Mantle had as many implementations in Q3 as in the entire first half.

Operator: Yeah. Mantle continues to improve their throughput of implementation. That is the factor that pulls out of your backlog. It was just a significant implementation quarter, which is what gives us confidence in the step-up and organic growth both for revenue and ARR as we exit the year.

Thanks. That’s it for me.

Steve Calk, Unspecified, Alkami Technology: There are no further questions at this time. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.