Alkami Technology, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; comparisons are primarily with FY 2021. This is an annual filing, not a standalone fourth-quarter report.
Business context
Alkami provides cloud-based digital banking software to U.S. financial institutions, primarily through multi-year SaaS contracts priced in part by registered users. At year-end, it served 199 financial institutions on the Alkami Platform and reported more than 550 clients across its broader product businesses. It acquired Segmint on April 25, 2022, for approximately $135 million, adding financial data analytics and marketing capabilities.
Financial and operating performance
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $204.3 million | $152.2 million |
| SaaS subscription revenue | $194.4 million | $143.6 million |
| Gross profit / gross margin | $108.3 million / 53.0% | $83.8 million / 55.1% |
| Operating loss | $57.7 million | $42.9 million |
| Net loss | $58.6 million | $46.8 million |
| Adjusted EBITDA (non-GAAP) | $(17.6) million | $(22.0) million |
| Cash used in operating activities | $37.8 million | $29.0 million |
- Revenue grew 34.2%; SaaS subscriptions represented 95.2% of revenue. Management attributed growth mainly to 2.2 million additional registered users and a 13.7% increase in revenue per registered user (RPU).
- Registered users reached 14.5 million, up 17.7%. ARR was $226.1 million, up 33.8%; RPU was $15.55, up 13.7%.
- Gross margin declined 2.1 percentage points, reflecting higher personnel, third-party partner, hosting and acquisition-related costs. Research and development expense rose 42.1%, sales and marketing 52.3%, and general and administrative 41.4%.
- Stock-based compensation was $44.6 million, versus $14.5 million in 2021. Adjusted EBITDA is a non-GAAP measure and excludes this and other specified items.
Liquidity, debt and cash flows
- At December 31, 2022, cash and cash equivalents were $108.7 million and marketable securities were $87.6 million, totaling $196.4 million. Current assets were $242.2 million and current liabilities $41.6 million.
- Long-term debt had $85.0 million principal outstanding, with $84.6 million net of unamortized issuance costs; $3.2 million was classified as current. No borrowings were outstanding under the $40 million revolving facility. The credit agreement matures April 29, 2025.
- Debt bears variable interest at SOFR plus 3.00%–3.50%; the company reported $3.9 million of interest expense in 2022. Debt is secured by substantially all company and subsidiary assets and includes recurring-revenue and minimum-liquidity covenants. Alkami reported compliance at year-end.
- Investing cash outflow was $224.0 million, including $131.8 million for Segmint, net of cash acquired, and purchases of marketable securities. Financing cash inflow was $61.2 million, primarily reflecting $85.0 million of term-loan proceeds and debt principal payments.
- Management stated existing cash resources and the credit facility were expected to fund operations, growth plans and capital expenditures for at least the next 12 months and longer term. This is management’s assessment, not a guarantee.
Material changes, outlook and notable items
- The Segmint acquisition contributed $8.3 million of subscription revenue in 2022; purchase accounting remained preliminary at year-end. Goodwill increased to $148.0 million, including $99.9 million recorded for Segmint.
- A $15.5 million gain from reducing the estimated MK acquisition earn-out to zero reduced reported acquisition-related expenses and supported the 2022 loss comparison. The company cited changed expectations for the timing of customer sales and implementations.
- Management expects continued investment in product development, sales, implementation and support, and said it expects losses for the foreseeable future. No numerical revenue, earnings or margin guidance is provided in the filing text.
- Key risks include continued operating losses and cash use; competition and client renewal or expansion; implementation delays; reliance on AWS and other third parties; cybersecurity, privacy and regulatory exposure; acquisition integration; and variable-rate debt and covenant compliance. The company reported no pending legal matters expected to have a material impact.
- The independent auditor gave an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor was not required to provide an internal-control opinion because Alkami was an emerging growth company.
Investor verification priorities
- Track whether user growth, RPU and cross-selling sustain ARR and revenue growth, and whether the 2022 gross-margin decline reverses.
- Assess the cash cost of continued losses, acquisition integration and capitalized implementation costs against available liquidity and near-term commitments.
- Review the SOFR-linked debt terms, scheduled principal payments, covenant headroom and the April 2025 maturity.
- Verify Segmint’s contribution and integration progress, the final purchase-price allocation, and the assumptions behind acquisition-related gains and goodwill.
- Evaluate the scale and persistence of stock-based compensation and its dilution implications; 13.4 million potential common shares were excluded from diluted EPS as anti-dilutive at year-end.