Alkami Technology NASDAQ: ALKT executives said the company’s core digital banking market remains steady, while cross-selling and its Digital Sales & Service Platform are becoming increasingly important drivers of growth.
Speaking at an investor event, Chief Executive Officer Alex Shootman said Alkami’s target market continues to consist of community banks and credit unions that are largely operating on legacy technology. He said the company has not assumed a change in the number of annual replacement opportunities in its long-term model.
“Right now it’s holding steady,” Shootman said, referring to the pool of potential annual digital banking replacement deals. He described the market as governed by five- to seven-year contract cycles, with roughly 300 institutions coming up for renewal each year. Shootman said the company’s model does not assume that pace improves, though he said Alkami hopes to influence the decision-making through higher-value offerings.
MANTL Deal Seen as Key to Increasing Conversion Value
Shootman said the company’s acquisition of MANTL was intended to increase the value proposition for financial institutions considering a conversion away from legacy systems. He said the combination of Alkami and MANTL gives community banks a stronger digital front end that can help them increase deposits and sell more loans.
“For the jump balls to change, it has to either be a reduced risk of a conversion or an increased value, and that’s why we made the MANTL acquisition,” Shootman said.
He added that customer adoption of the combined offering has exceeded expectations. At the time of the acquisition, Alkami had 11 customers using all three products that now make up its Digital Sales & Service Platform: digital banking, data and marketing, and origination. Shootman said that number has grown to nearly 50 customers signed up for all three.
Chief Financial Officer Cassandra Hudson said DSSP is already contributing to new business. She said about half of new logos in the first quarter were DSSP customers and that the product should remain an important driver of revenue per user growth, both for new clients and add-on sales.
Bank Market Gains Traction
Shootman said Alkami has reached product-market fit in the bank market after historically being more concentrated in credit unions. He said Alkami had one bank customer in 2020 and two in 2021, but grew from about 11 live bank customers in 2022 to 38 live bank customers by 2025.
“The question is no longer can Alkami sell in the bank market,” Shootman said. “Now the question is can Alkami operationalize what it’s gonna take to grow in the bank market.”
He said banks are attractive because Alkami’s long-term ambition is to become the No. 1 technology provider for regional and community financial institutions. Shootman said the company cannot achieve that goal by serving only credit unions.
He also said community banks are increasingly focused on generational shifts among their deposit-heavy business customers. As ownership of businesses moves from baby boomers to younger generations, bank executives are concerned about retaining those relationships without modern digital capabilities, Shootman said.
Cross-Selling Remains Central to Growth Model
Hudson said Alkami’s growth algorithm has three components: new logo growth, existing customer growth tied to account and population trends, and product cross-selling. She said existing customer growth has contributed in the range of 5% annually and is expected to continue supporting overall growth.
Shootman said customers typically begin with a digital banking conversion, then revisit their broader digital strategy after implementation. Alkami’s account teams conduct strategic account workshops with customers to map out the next 24 months of digital initiatives, he said.
“That creates for us this continuous flow of digital projects over a number of years where we’re adding products to the customer,” Shootman said.
Hudson described Alkami as a “cross-sell machine,” citing hundreds of integrations and more than 40 products the company resells. She said the breadth of the platform gives Alkami visibility into add-on sales opportunities and allows it to bring new technology to customers quickly.
AI Opportunities Balanced Against Pricing and Cost Questions
Shootman said Alkami’s customers are focused on using artificial intelligence to generate more loans, increase deposits, reduce back-office costs and lower fraud costs. He said they are not looking to rebuild digital banking systems with AI, in part because of regulatory complexity, money movement rules and customer-specific business logic embedded in digital banking platforms.
Alkami has built several AI prototypes, including a prompt-driven code generator trained on 8 million lines of code that customers had built into Alkami, Shootman said. However, he said the company is still evaluating how to price AI products and how to manage potential consumption costs.
“We can build the technology,” Shootman said. “We don’t know how much we can charge for it, and we’re a little bit concerned about what this cost model on the backend’s gonna be.”
Hudson said Alkami is already seeing productivity gains internally from AI and expects those benefits to begin showing up over the next 12 to 18 months. She said employees are increasingly focused on deploying AI use cases rather than ramping headcount as quickly.
Guidance, Margins and Capital Allocation
Hudson said annual recurring revenue is a key internal metric for Alkami and noted that ARR grew 22% in the first quarter. She said ARR is cleaner than revenue in assessing the business because revenue this year includes noise from termination fees and the timing of the MANTL acquisition.
On implementation timing, Hudson said standalone MANTL or Data & Marketing implementations take about six months, while DSSP deals are currently assumed to take the full 12 months associated with digital banking implementations. She said implementation timing could create variability and potential upside if customers choose to implement some products earlier.
Alkami has churned less than 1% of digital banking ARR annually for the past three years, according to the discussion, but Hudson said the long-term model assumes 2% to 3% total dollar churn because other products, including standalone MANTL contracts, have different contract lengths and churn profiles.
Hudson said margin expansion is expected to come primarily from scale leverage, particularly in research and development and general and administrative expenses. She said Alkami’s India captive operation is past much of its initial investment phase, but scale is the larger driver of the long-term margin outlook.
On capital allocation, Hudson said Alkami continues to evaluate acquisitions and buybacks each quarter. She described the company’s M&A strategy as opportunistic and said that, at current stock price levels, a buyback “felt like the right thing to do at this time.”
Shootman closed by emphasizing what he described as a healthy and predictable end market. “Once a customer comes on board, we’ve got a very predictable growth pattern for the customer,” he said.
About Alkami Technology NASDAQ: ALKT
Alkami Technology, Inc is a provider of cloud-based digital banking and engagement solutions tailored for banks and credit unions. The company's platform offers a comprehensive suite of online and mobile banking features, including bill payment, peer-to-peer transfers, card management, streamlined account opening and real-time alerts, all designed to enhance the end-user experience and drive customer loyalty.
Built on a multi-tenant, software-as-a-service (SaaS) architecture hosted in the cloud, Alkami's platform leverages modern APIs and a partner ecosystem to integrate third-party fintech applications and services.
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