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01/11 08:24
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial performance with revenue growth and optimistic guidance, despite some margin pressures. The MANTL acquisition and cross-selling opportunities are driving growth, and the company's strategic expansion in engineering talent indicates long-term positive impact. The Q&A highlighted management's confidence in market opportunities and product innovation. The market cap suggests moderate sensitivity to news, thus predicting a positive stock price movement of 2% to 8%.
Revenue Total revenue for Q3 2025 was $113 million, representing year-over-year growth of 31.5% and organic growth exceeding 20%. The growth was driven by strong demand across the product portfolio, new client wins, and cross-sell success.
Adjusted EBITDA Adjusted EBITDA for Q3 2025 was $16 million, compared to $8.3 million in the year-ago quarter, showcasing significant improvement. This increase highlights the operating leverage of the financial model.
Subscription Revenue Subscription revenue grew 31.5% in Q3 2025 and represented 96% of total revenue. The growth was attributed to the acquisition of MANTL and add-on sales success.
Annual Recurring Revenue (ARR) ARR increased over 31% and exited the quarter at $449 million. This growth was supported by a backlog of $67 million in ARR for implementation, with the majority expected to occur over the next 12 months.
Registered Users The company exited Q3 2025 with 21.6 million registered users on the Alkami platform, up 2.1 million or 11% compared to the prior year. This growth was driven by new client implementations and user adoption.
Gross Margin Non-GAAP gross margin for Q3 2025 was 63.7%, representing nearly 100 basis points of expansion compared to the prior year. The improvement was due to better hosting cost efficiency and operating leverage.
Operating Expenses Operating expenses for Q3 2025 were $56.4 million or 50% of revenue, representing year-over-year operating leverage of approximately 360 basis points. The reduction was driven by efficiencies in R&D and G&A.
Operating Cash Flow Operating cash flow for the first 9 months of 2025 was $26 million, net of a one-time acquisition item of $7 million. Excluding this, it was over 2.5x the $13 million in the year-ago period, reflecting improved cash generation.
Remaining Performance Obligation (RPO) RPO was approximately $1.6 billion, representing 3.6x ARR and up 25% compared to a year ago. This growth reflects strong demand and long-term contracts.
Digital Sales and Service Platform: Design work is complete, and a dedicated engineering team is building it. Product will be shown to clients at the spring customer conference. This integration can generate a 30% uplift to new logo ARR.
Money Movement Hub: Newly released product.
One-click SDK Deployment: Currently in beta testing.
Agentic Code Creator: Prototype shown to client community, builds tailored products for financial institutions.
Treasury Management Features: Released 2 new features and added 6 more to beta client community.
Pioneer Loan Platform: Client originated over $4 million in loans in the first 6 months of usage.
Client Growth: Added 10 new digital banking platform clients, including the largest new logo transaction in company history. Now serves 5 of the top 20 credit unions in the U.S.
MANTL Business Expansion: Added 29 new clients, 15 of which are new to Alkami. Year-to-date, MANTL added 68 new logos, including 29 existing Alkami clients.
Platform Client Relationships: Signed over 60 new platform client relationships year-to-date, combining digital banking and onboarding platforms.
Market Opportunity: Out of the top 2,500 financial institutions, over 900 credit unions and nearly 1,000 banks are not on a modern platform like Alkami.
Revenue Growth: Achieved total revenue of $113 million in Q3 2025, a 31.5% year-over-year growth.
Adjusted EBITDA: Increased to $16 million, compared to $8.3 million in the prior year quarter.
Subscription Revenue: Grew 31.5% in Q3 2025, representing 96% of total revenue.
Registered Users: Exited the quarter with 21.6 million registered users, up 2.1 million from the prior year.
Client Implementations: Brought 13 new clients onto the digital banking platform in Q3 2025, the most in a single quarter in company history.
Gross Margin: Achieved a non-GAAP gross margin of 63.7%, nearly 100 basis points higher than the prior year.
Leadership Change: Appointed Cassandra Hudson as the new CFO, bringing over 20 years of experience in growth, capital markets, and M&A.
Partner Ecosystem: Created a new development team to double the number of partners onboarded each year, enhancing growth potential and customer satisfaction.
Global Capability Center: Expanded engineering talent in India, with over 110 employees and plans to reach 150 by year-end.
Client Attrition: Three clients left the platform in the last three quarters of 2025, representing less than 1% of ARR. Additionally, two clients were merged with existing Alkami clients. Long-term digital banking ARR churn is modeled at 2%-3% per year.
Implementation Backlog: The company has $67 million of ARR in backlog for implementation, with the majority expected to occur over the next 12 months. Delays in implementation could impact revenue realization.
Market Competition: The company faces competitive pressures in acquiring new clients and retaining existing ones, especially as it expands its product offerings and targets new financial institutions.
Operational Scalability: The company is expanding its engineering talent in India, with plans to grow the team to 150 by the end of 2025. Challenges in scaling operations efficiently could impact cost management and product delivery timelines.
Economic Uncertainty: Broader economic conditions could impact the demand for digital banking solutions, particularly among smaller financial institutions that may face budget constraints.
Product Integration Risks: The integration of digital banking, onboarding, account opening, and data and marketing technologies is underway. Delays or challenges in delivering the planned product integration could impact future growth and client satisfaction.
Client Concentration: The company serves 5 of the top 20 credit unions in the U.S. and has a significant portion of its revenue tied to large clients. Loss of any major client could materially impact financial performance.
Regulatory Compliance: As a provider of digital banking solutions, the company must navigate complex regulatory requirements. Non-compliance could result in fines or loss of client trust.
Sales Pipeline and Market Opportunity: The sales pipeline for Q4 2025 and 2026 is in line with recent years. There are over 900 credit unions and nearly 1,000 banks among the top 2,500 financial institutions that are not on a modern platform like Alkami, indicating significant growth potential.
Product Development and Integration: The design work for the digital sales and service platform, integrating digital banking, onboarding, account opening, and data and marketing technologies, is complete. A dedicated engineering team is working on the build effort, with product demonstrations expected at the spring customer conference. This integration could generate a 30% uplift in new logo ARR.
Revenue and EBITDA Guidance for Q4 2025: Revenue is projected to be in the range of $119.6 million to $121.1 million, representing organic growth of 22%. Adjusted EBITDA is expected to be between $16.1 million and $17.1 million.
Full-Year 2025 Financial Guidance: Revenue is expected to range from $442.5 million to $444 million. Adjusted EBITDA guidance is raised to $56 million to $57 million, reflecting an increase of nearly $4 million above the midpoint of the previous guidance.
Client Growth and Backlog: The company has $67 million of ARR in backlog for implementation, with the majority expected to be realized over the next 12 months. This includes 37 new digital banking clients, representing 1.7 million digital users.
Operational Expansion: The company plans to expand its engineering talent at its global capability center near New Delhi, India, from over 110 employees to approximately 150 by the end of 2025.
The selected topic was not discussed during the call.
The earnings call summary shows strong financial performance with revenue growth and optimistic guidance, despite some margin pressures. The MANTL acquisition and cross-selling opportunities are driving growth, and the company's strategic expansion in engineering talent indicates long-term positive impact. The Q&A highlighted management's confidence in market opportunities and product innovation. The market cap suggests moderate sensitivity to news, thus predicting a positive stock price movement of 2% to 8%.
The earnings call presents strong financial metrics, including a 28% revenue growth, improved EBITDA, and a gross margin expansion. The MANTL acquisition is positioned as a growth driver, and revenue guidance is optimistic. Despite some unclear responses from management, the overall sentiment from the Q&A is positive, with analysts showing interest in MANTL's potential. The market cap indicates a moderate reaction, leading to a positive prediction for stock price movement (2% to 8%) over the next two weeks.
The earnings call reflects strong financial performance with significant revenue growth, improved EBITDA, and successful integration of the Mantle acquisition. The company's guidance is optimistic, projecting continued revenue and ARR growth. Despite some transitional challenges with offshore capabilities, the focus on digital banking and cross-selling opportunities with Mantle are promising. The shareholder return plan and credit facility expansion are also positive indicators. Given the market cap of approximately $2.7 billion, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.
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