Alkami Technology, Inc. Common Stock 2026 Q3 Earnings Call

Steve, you may begin. Thank you, operator.

With me on today's call are Alex Shootman, Chief Executive Officer, and Cassandra Hudson, Chief Financial Officer. During today's call, we may make forward-looking statements about guidance and other matters regarding our future performance. These statements are based on management's current views and expectations and are subject to various risks and uncertainties. Our actual results may be materially different. For a summary of risk factors, please refer to today's press release in the sections in our latest 10-K entitled Risk Factors and Forward-Looking Statements. Statements made during the call are being made as of today, and we undertake no obligation to update or revise these statements. Also, unless otherwise stated, financial measures discussed on this call will be on a non-GAAP basis. We believe these measures are useful to investors in the understanding of our financial results.

A reconciliation of the comparable GAAP financial measures can be found in our earnings press release and in our filings with the SEC. I would now like to turn the call over to Alex.

Good afternoon, and thank you for joining us today. In the third quarter, Alkami again delivered revenue growth and profitability ahead of our expectations. Our end market continues to invest in modernization, which gives us a consistent pipeline of opportunity. The journey our market has taken from the ChatGPT moment at the end of 2022 to Opus 4.6 in February supports our DSSP strategy and creates new product possibilities. I will come back to that later in the call. In the third quarter, we signed five new digital banking relationships, three banks and two credit unions. Two of the five also contracted for DSSP, our digital banking, account opening, and data and marketing products together. This brings our year-to-date total to 16 digital banking new logos, compared with an average of 21 through the third quarter since becoming a public company.

Our digital banking pipeline is consistent with historical norms. However, we believe speculation about Alkami's future ownership created uncertainty for customers and prospects and has been an overhang on our new logo business. Providing clarity to our end market was an important reason we publicly communicated the conclusion of our strategic review in September. The results of that review was a unanimous decision by the Alkami board that executing our long-range plan as an independent public company was the best path to maximize shareholder value. With this behind us, we believe the business has the potential to return to its normal cadence. Along with the digital banking new logos, we signed 14 new MANTL clients. Five additional clients contracted for DSSP, bringing the number of clients contracted for all three DSSP products to 60.

We also now have 544 unique clients contracted for digital banking or MANTL, including 86 contracted for both platforms. Core conversions are an example of the high-impact work we deliver. A core conversion is when an existing client switches their core banking system. We completed seven this year, a record, including six of our largest clients representing more than 3.5 million digital users. Next year, we will nearly double that. In Q3, we brought 10 digital banking clients and 26 MANTL clients live, and over the last 12 months, we added 2.8 million users to our digital banking platform. Last week, we launched four digital banking clients in a single day, a record for Alkami. Five more follow, which will be nine launches in 12 business days.

From 2020 through the end of Q3 this year, we have brought 229 financial institutions onto our digital banking platform, along with their 8.4 million account holders. I am proud of our ability to execute critical client projects. When the real competitor is staying on a legacy platform, what changes an institution's mind is confidence that the migration will work. I am hearing much more clarity from our clients about where AI matters to them. People will still save, spend, borrow, move money, and open accounts. Those jobs have been the same for 100 years. What changes is who does them. Today, the account holder navigates menus and completes each task. In the AI era, they will describe a goal in plain language, and the software will work out the steps and ask for permission to act.

That shift shows up in two places, and we are building for both. The first is inside the institution's own app. Alongside the digital banking experience more than 24 million users rely on today, we are building an agentic conversational experience. It will spot a cash shortfall before a bill is due, suggest a safe amount to move into a CD, or line up a card paydown that will not put rent at risk. These experiences need all three parts of DSSP. The agent reasons over the data and acts inside digital banking. Opening the account or originating the loan depends upon the institution's policy and where they want it, a human approval. The second is outside the app because many account holders will also use general-purpose AI assistants. I think those assistants will be excellent at conversation and limited at banking.

To move money, open an account, or approve a loan, an agent needs governed access, identity, entitlements, limits, approvals, and the systems of record underneath all of it. Alkami runs that layer. We are building connectors into the leading AI assistants so that our clients' account holders can bank through whichever one they use. All of this comes back to control. Our clients want to decide which agents are allowed in, what those agents can do, and where a person has to sign off. Across more than 300 live clients, I hear the full range. Some want read-only access and nothing more. Others see agentic action with controls as the thing that lets them compete with a mega bank. Even the enthusiasts move in stages. Assist first, then recommend, then prepare an action for someone to approve. Acting inside rules they set will come last.

Here is why I think Alkami is positioned for this. We run a single codebase multi-tenant SaaS platform. Every institution on it configures roughly 4,000 policy settings of its own across approximately 25 systems of record that are integrated into Alkami. We built that so our clients could each run their own bank on shared infrastructure. It is also what an agent needs. One place to ask, one set of permissions to respect, and a record of every action taken. We are doing this now. There are three agents in beta inside our onboarding and account opening platform built for the people who run the institution. A KYC agent summarizes a manual review and recommends a disposition against the institution's own policy. A document review agent reads borrower documents, flags mismatches with the application, and coaches the applicant on what to upload.

An MCP server lets a financial institution ask a question from an AI assistant and get an answer grounded in their own application and account data. The main conversation we are having with all of our clients is that every generation's front door to the bank has changed. It was a branch, became a drive-through, then an ATM, the internet, and mobile devices. The next generation's front door will be an agent, and it will interact with digital banking the way the internet and mobile do today. Beyond deciding how agents interact with their customers, our clients share two other priorities. The first is their own transformation through the application of AI technology. As I mentioned on our last call, we built an internal platform in daily use by more than 100 people across our company.

It understands roles and skills, protects sensitive data, carries company context, works across teams, and optimizes across models. In our target market, financial institutions average fewer than 200 employees. We are already running our internal platform inside a company several times their size, and some are asking if they can use ours as their AI-powered enterprise workspace. The second is new agentic applications. With SaaS, we build apps on rented infrastructure. With AI, we build apps on models. Our clients don't just want a helper agent stitched to our SaaS application. They want an AI app built on a foundation model that solves a problem SaaS applications can't solve. An example is the combination of data analysis and workflow optimization necessary to fight fraud. Roughly 10% of our revenue today comes from AI products already in our portfolio, including fraud management. This is an extension of something that already works.

Both client priorities will shape where we invest in 2027, which we will discuss on our Q4 call early next year. In closing, since our founding 17 years ago, Alkami has proven itself as an industry innovator while driving sustainable growth and expanding profitability. Our next chapter builds on that foundation as we become the technology partner of choice for regional and community financial institutions. I will now hand the call to Cassandra to discuss our financial results.