Alkami Technology, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This 10-K reports full-year results; standalone fourth-quarter financial figures are not clearly provided in the filing text summarized here.
Business context
Alkami provides cloud-based digital banking software to U.S. financial institutions, primarily through long-term SaaS contracts priced largely by registered users. At year-end, it served 236 digital banking platform financial-institution clients and had 17.5 million registered users. SaaS subscriptions represented 95.3% of revenue.
Financial and operating metrics
| Metric | FY2023 | FY2022 | Change / context |
|---|---|---|---|
| Revenue | $264.8 million | $204.3 million | Up 29.6% |
| SaaS subscription revenue | $252.3 million | $194.4 million | Up 29.8%; 95.3% of FY2023 revenue |
| Gross profit / margin | $144.1 million / 54.4% | $108.3 million / 53.0% | Margin improved 1.4 percentage points |
| Operating loss | $63.7 million | $57.7 million | Loss widened |
| Net loss | $62.9 million | $58.6 million | Loss widened; diluted loss per share was $0.67 versus $0.64 |
| Adjusted EBITDA | $(1.6) million | $(17.6) million | Non-GAAP; improved by $16.0 million |
| Operating cash flow | $(17.5) million | $(38.0) million | Cash use declined |
| Cash and marketable securities | $92.1 million | $196.4 million | Year-end cash plus securities |
| Debt | No term debt outstanding | $85.0 million term loan | Remaining $82.9 million principal repaid in December 2023 |
| ARR | $291.0 million | $226.1 million | Up 28.7%; company-defined metric |
| Registered users / RPU | 17.5 million / $16.63 | 14.5 million / $15.55 | Users up 20.4%; RPU up 6.9% |
Current assets were $148.6 million and current liabilities were $39.4 million at year-end. The company reported $60.0 million of revolving credit commitments, with no borrowings outstanding. The filing states that available resources are expected to fund operations and planned spending in the short and longer term.
Material changes and management commentary
- Revenue growth reflected approximately 3.0 million additional registered users and 6.9% RPU growth. User additions were split between existing clients and newly implemented clients; cross-selling and the Segmint contribution also supported RPU.
- Gross margin rose to 54.4%, while cost of revenue increased 25.8%. Management cited higher third-party partner costs, hosting expenses, and staffing to support implementation and clients.
- Research and development expense increased 22.1% to $84.7 million; sales and marketing increased 31.9% to $48.6 million. R&D equaled 32.0% of revenue. Stock-based compensation totaled $51.2 million.
- The company repaid its term loan, reducing debt, but year-end cash and marketable securities fell from $196.4 million to $92.1 million. Financing cash outflow included debt principal payments and taxes on net-settled equity awards.
- Management expects to continue investing in product development, sales, implementation, client support, and infrastructure, and stated it expects losses for the foreseeable future. No specific revenue or earnings guidance is provided in the filing text.
Outlook, risks, and unusual items
- Growth depends on winning financial-institution clients, client renewals, deeper user penetration, and cross-selling products. Contracts average approximately 70 months, but sales cycles and implementation commonly take months and can delay revenue recognition.
- Key risks include competition, financial-sector consolidation or reduced technology spending, reliance on AWS and other third parties, integration and service interruptions, cybersecurity and privacy incidents, regulatory compliance, and retaining staff while scaling.
- The credit facility matures April 29, 2026. Covenants include minimum liquidity and recurring-revenue growth requirements, plus a free-cash-flow covenant; the company reported compliance at December 31, 2023. Most company assets secure the facility.
- Future purchase commitments totaled $37.4 million over five years, including $23.8 million due within 12 months. Operating lease payments totaled $28.3 million; the Plano lease was amended to reduce space and extend the remaining term through August 2033.
- The company reported no known cybersecurity incidents that materially affected or were reasonably likely to materially affect it, while acknowledging ongoing cyber threats. Management said no pending legal matters were expected to have a material impact.
- Tax attributes may be restricted under Section 382; the company maintained a $109.2 million valuation allowance against deferred tax assets. The 2022 comparison included a $15.5 million gain from revaluation of MK contingent consideration, affecting year-over-year comparisons.
Important facts for investors to verify
- Whether registered-user, ARR, and RPU growth continues, and how much comes from existing clients versus new implementations.
- Whether operating cash use and GAAP losses decline without compromising growth, and how stock-based compensation affects dilution.
- Gross-margin progress, including third-party reseller costs, hosting costs, and management’s stated expectation of roughly 70% gross margin upon client renewals.
- Liquidity after the term-loan payoff, covenant headroom, revolving-facility availability, and the effect of any future borrowing or interest-rate changes.
- Client retention and renewal performance, implementation delays, security and uptime performance, and potential effects of banking-sector consolidation or regulation.
Audit and controls: Ernst & Young issued 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 opine on internal-control effectiveness because Alkami remained an emerging growth company.