Alkami Technology, Inc. Q4 FY2025 earnings call

Alex announced strong fourth quarter and full-year performance, exceeding consensus estimates. Fourth quarter had 16 new digital banking clients and 33 new Mantle clients. 2025 matched best year for digital banking new logos and Mantle had best new client booking year. Mantle's acquisition led to integration benefits, like DSSP platform integration. Progress in bank market with Q4 being second best bank new logo quarter, and release of new Treasury management features. AI impact on Alchemy, including Segment engine for data and marketing, fraud products using AI, and AI in development and support. Also, growth in clients and users, and strong visibility into attrition.

In the fourth quarter, Alchemy grew revenue 35% and increased adjusted EBITDA to $19 million. For the full year, revenue growth was 33% and adjusted EBITDA was over $59 million. The Mantle acquisition's performance: Q4 was a record revenue activation quarter, and its origination platform had 161 clients live, with 26 being digital banking clients. In the fourth quarter, there were 16 new digital banking clients (including 6 banks) and 33 new Mantle clients (including 18 credit unions). 2025 saw 39 new digital banking clients (matching best year in history) and Mantle had the best new client booking year in its history.

For Q1 2026, expect revenue of $124.7 million to $125.7 million (growth 27.5% - 28.5%) and adjusted EBITDA of $21.1 million to $21.9 million. For full year 2026, expect revenue of $525.5 million to $530.5 million (growth 18.5% - 19.6%) and adjusted EBITDA of $93.5 million to $97.5 million. Expect full-year non-GAAP gross margin of approximately 65%, adjusted EBITDA margin north of 19% in back half of 2026. Aim to achieve Rule of 45 by 2030, with long-term non-GAAP gross margin near 70% and adjusted EBITDA margin expansion of ~300 basis points annually.

AI's impact is not uniform and has uncertainties. Temporary increase in database technology costs. Risk in bank market clients' decision to switch to new platforms. Long-term outlook does not assume incremental M&A.

Q: 2026 outlook moving parts including termination fees, DSSP, implementation timing.

A: Termination fees lower in 2026 impacting growth, DSSP has longer implementation cycles shifting revenue out but with stronger long-term economics.

Q: Loan activation and DSSP impact on win rate.

A: DSSP helps with win rate by connecting to positive business outcomes, loan side still in product build with lighthouse accounts.

Q: Banks pipeline and mix evolution.

A: Pipeline consistent, 50-50 credit union and bank mix, upside if bank core unwind faster.

Q: ARR growth and runway for credit unions.

A: Revenue guide translates to ARR, still 900 credit unions in ideal client profile with runway.

Q: Cassandra's priorities and free cash flow conversion.

A: Priorities on growth, activating customers, DSSP, product delivery, AI; target 90% free cash flow conversion by 2030.

Q: Credit union catalysts and bank go-to-market.

A: Credit union market share gain via contract cycles and client testimonials; bank go-to-market with separated sales teams and core provider joint efforts to de-risk client decisions.

Q: Mantle LOS capabilities and CrossFit progress.

A: Focus on retail and HELOC, 45 clients have all three DSSP products.

Q: Capital allocation priorities.

A: Continue paying down revolving line of credit, assess opportunistic M&A and share buybacks.