Q3 2021 Alkami Technology Inc Earnings Call

November 4, 2021

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Hello, and welcome to the third quarter of 2021 to financial results Conference call. My name is Brandon B R. Operator for today at this time all participants are gonna listen only mode. Later, we will conduct a question and answer session during which you may Dallas Dar one if you have a question. Please note. This coverage is being recorded.

I'll turn the call over to Rhett Butler, Vice President of Investor Relations, you'll be getting Sir.

Thank you operator, good afternoon, and welcome to Alchemy earnings call for the third quarter.

<unk> 30th 2021 with me on today's call or Mike Hanson album, as Chief Executive Officer, even bohannan, how can these co founder and Chief strategy in sales Officer, and Brian Hill, How can these chief financial officer. During the course of today's conference call. We may make forward looking statements including statements regarding.

Trends strategies and the anticipated performance of the company.

These forward looking statements are based on management's current views and expectations and are subject to various risks and uncertainties, including risks related to our operating and financial performance.

Our actual results may differ materially from those contemplated by these forward looking statements and we can give no assurance that such expectations or any of our forward looking statements will prove to be correct. Please refer to the risk factors included in our filings with the Securities and Exchange Commission, which are available on our Investor Relations website and.

The press release distributed early earlier this afternoon regarding the financial results. We will discuss today to review important factors that could cause actual results to differ materially from those reflected in the forward looking statements.

Price, even turbocharge the alchemy of our next stages.

He will be meeting the broader leadership team denied all of our <unk> in the morning, a video call and our clients and partners moving forward welcome Alex I feel the energy already.

As a bit of background eight years ago, I joined alchemy after being inspired by the vision co founders.

They were driven and committed to expanding financial choice and financial literacy.

Democratizing digital banking technology, and I wanted to help.

Gary Stephen in the chairperson of the Board then and now Brian Smith, we're the ones, who hired me and everyday since I have been overwhelmed by the talent and tenacity of the outcome.

The unique alchemy of purpose people clients technology partners capital and the community is what makes this company so extraordinary.

It is reflected in our culture with our walls and enduring relationships, we established our reinforced daily with our clients and our partners across the ecosystem.

We've accomplished a lot and I'm so proud of all we have done.

And today is day one of the next stage as I have made the decision to retire to make way for a new CEO to take the helm day to day, while I remain a member of the board of directors.

I believe Alex is the ideal leader for this next stage.

He is a proven veteran and visionary in the enterprise software as a service market.

He has successfully scaled companies like work front MTO.

And he is empower their customers to innovate their modern through modern technology.

A track record of growing great companies from the outside in.

Making clients core to our company's strategy and priorities.

And he also brings along with it with new and different perspectives and experiences.

Most importantly, embodies the cultural values that make alchemy and are a remarkable client community so special transparent.

<unk> innovative collaborative.

Behalf of all ALCHEMIST welcome Alex and we will do everything I can to support him in the future success.

He will do and be great.

Do great things for alcohol.

I'd like to make a big shift from our new CEO and take a few minutes to update you on my perspective on the overall market and the results in the quarter of the awesome team of nearly 680 <unk> right.

And the last quarter, we've seen a number of market indicators that once again suggests the digital transformation of financial institutions continues to accelerate.

First according to CB insights to the global Fintech market reached a record $91 5 billion in funding so far this year.

Nearly doubling last year's total.

In Q3, the U S leads the market with almost half of the Fintech funding investment.

Second one of the leading Aggregators has reported that the penetration of U S consumers using fintech offerings increased 52% year over year and is now hovering at around 88%.

Which puts consumer fintech penetration in the same ballpark as streaming video services on social media.

Third crypto currency is hotter than ever.

CB insights reports that global venture capital funding in Crypto and blockchain reached an all time high of $6 5 billion in the third quarter with the U S. Continuing to lead the world in DC funding.

Fourth we have seen increased discussions and decisions on industry consolidations of regional and community financial institutions generally our clients are the acquires the rationale we are seeing for the increased velocity includes references to the challenges of competing in this tech enabled world of financial services.

And finally Megabanks are not standing still one Mega Bank recently reported their digital deposits Dividual only deposits grew significantly in the third quarter and the same Mega Bank reported a significant increase in installment loans, where more than 80% of those loans.

It's a digitally with no contact with the branch system All branch system.

<unk> platform driving user growth.

Client uptake or cross sell of existing and new solutions into our white space that drive <unk> growth, new logos and inorganic opportunities to accelerate growth.

Third we continued our peddle down commitment to innovation.

Through continued investment in R&D and the acquisition acquisition of MK decisions, we'll call. It <unk> for purpose of this call today, allowing us to offer digital account opening and loan origination solutions and expanding our total addressable market by approximately $2 5 billion.

We enhanced our portfolio with the new strategic partnerships with <unk> and <unk>.

We already have our first night did client star bank in production, allowing us and our clients to tap into a growing crypto market.

We expanded our overall Tam by about 34% from 7 billion to a total of just under $10 billion with our potential <unk> moving from $38 per digital user to about 52 per digital user. This is even before considering what we may find as we advance our crypto currency offered offerings that we have announced recently.

Yep, I admire you and I Love you.

And I was excited and energized as I am about joining forces with Alex for this next stage of alchemy I'd be lying if I said I wasn't gonna Miss you.

Thank you for all you've done and for the example, the upset not just for me, but for all alchemists. It's a legacy we will continue to build upon for many years to come.

[noise] and now returned to what you're asking me to talk about with the innovation up either thank you that quick alright. Thank you.

<unk>.

Alright move it onto innovation, our client conference, which we held them September is just one of the many ways. We connect with a remarkable client community. We use this for them to discuss the state of the market and how can these role as a valued partner in helping our clients competing when given the definition of the primary financial institution the customer relationship itself forever evolving how can these value rest in our ability to help.

Our clients remain relevant consider for a moment, how the start of an F. I customer relationship is fundamentally changed such as when a customer remember opens a deposit account.

According to cornerstone advisers digital applications for primary checking accounts exceeded branch applications for the first time in the second half of 2019, even before COVID-19 at.

Cornerstone also reports that more consumers are open to the account in the past three years rated their experience on the mobile channel is excellent versus consumers that applied in a branch and while deposit accounts are certainly important the pastures challenge for F. I's has really been about generating more assets in the form of loans. Another primary conduit for initiating are expanding the customer.

Unship the financial brand reports that nearly 90% of F eyes, right, a greater number of loans as very or somewhat important it's clear that F is need a frictionless automated digital self service way to acquire more deposits and more loans with the ability to pivot their focus seamlessly to maintain the delicate balance between the.

Two it's Y alchemy announced last quarter of acquisition of MK decisions or M. K D. We believe M. K. These technology, a special and solving the challenge. So many of our clients face many market solutions required disparate platforms and decision engine for each side of the balance sheet deposits are loans, resulting in fragmented processes and user experiences to make.

Difficult and inefficient for financial institutions to cross sell and build strong customer remember relationships and.

We architected our solution to easily add and accept those crypto currencies as part of our <unk> relationship.

At our client conference, we also announced an exciting new partnership with biotech a behavioral biometrics company dedicated to mitigating fraud and identity theft. The pandemic is only exacerbated an already sobering problem as the FTC reports that COVID-19 related fraud has cost Americans $382 million.

More than ever consumers need a safe and frictionless experience to protect their precious financial assets.

<unk> uses behavioral biometrics to continuously monitor users' activity by analyzing behaviors like how they interact with their device. They are typing speed their mouse and finger movements on their desktop or mobile device behavioral biometric technology like that provided by biocatalyst among the more modernized security defenses to help provide users with a secure frictionless.

While also reducing false positives for financial institutions alchemy.

How can we remained steadfast in helping our clients navigate an increasingly complex technology landscape through building or buying solutions or partnering with others for the same unlocking additional value for our clients, while expanding or penetrating our total addressable market our acquisition of <unk> expands our Tam by approximately $2 5 billion is corroborated by a third party consultant and other players in our space.

Our partnership with Biocatalyst complementary to other security products in our portfolio and allows us to further penetrate this part of the market and finally, our partnership with neither gone lots of new opportunity for our clients to offer crypto currency options, many leading indicators in the broader crypto market leaves us bullish on this partnership and as more clients and users adopt the service we will better understand how this partnership benefits.

Tam expansion and penetration goals. These innovations are only a few of the most recent launched recently launched at our client conference and are additive to the innovation roadmap. We have shared on previous calls among them. Our latest generation mobile experience is already receiving positive feedback from clients and early end users. We've also discussed extensibility is core to our roadmap strategy.

And our recent partnerships with 90 <unk> evidence of the same more broadly we continue to experience increased momentum of SDK submissions from our clients and our partners in Q3, we supported the highest number of submissions from clients in Fintech partners in our company's history with approximately 350, new SDK submissions when comparing our third quarter results from 2020.

One to 2020, we've more than doubled the number of SD case submissions for the platform. Our continued ability to attract developers and partners to our platform increases that provide our clients and the velocity by which we deliberate all while relieving alchemy of investing our own development resources in that pursuit.

Our buy build partner efforts reflect alkermes enduring commitment to help our clients navigate the challenging technology landscape by delivering innovation with speed scale and simplicity of execution. We believe doing so helps our clients compete ultimately maximize the financial choice for U S consumers and businesses.

This new this innovation mindset and our nimble technology platform that enables tremendous speed of innovation that clients continue to choose to partner with alchemy will walk through just a couple of examples first Corning credit Union is a client that is achieving great results powered by the alchemy platform CCU is New York based serving over 130000 members across the U S. According to <unk>.

Vice President and CIO, Mark Hufnagel quote since introducing the alchemy platform in early 2018, we have continued to receive very positive feedback from our members alchemy as reliable and secure platform along with continued delivery enhancements has helped <unk> achieve an industry, leading net promoter score for the digital channel and shows that our digital experiences satisfying the needs of our members.

Secondly, Altra credit Union, a California based credit Union with nearly a 160000 members also continues to drive adoption with top quartile NPS scores to the Akamai platform to their dedication and with the help of alchemy <unk> has driven digital adoption to over 80%. These client examples continue to prove that partnering with alchemy can drive digital adoption.

And engagement and help us compete with Mega banks in the broader Fintech community.

Before I turn it over to Brian to cover the financial results I'd like to provide a brief summary of our 2021 sales activity starting with the new logo sales for digital banking during the third quarter, we achieved sequential momentum from the second quarter by closing six new logo clients. This brings our year to date, new logo performance to 15, new digital banking clients, which is flat year over year from <unk>.

<unk> thousand 20 <unk>.

Steven and good afternoon, everyone.

Third quarter financial results were strong across the board.

I'll provide the details momentarily, but first last quarter I reminded every one of the four primary growth pillars contributing to our highly predictable revenue model I think it's worth mentioning them again in providing our progress for each balanced performance across all revenue drivers is key to the predictability of our revenue model and key.

For a long term revenue growth strategy.

First organic user growth, which measures the success of our clients utilizing the alchemy platform is F is build thriving digital banking communities.

Our clients are increased digital users, 14% year over year the.

Historically, we've seen levels as high as 17% during the pandemic.

We're very pleased with mid teens performance for this metric as the overall market has achieved digital user growth at a pace of mid to high single digits over the last several years.

Second increasing product adoption of our platform.

This occurs through continued innovation and expanding our platform increasing our proficiency cross selling into our installed base and closing new logo orders with an increased number of products.

Third success closing new logo cell.

The nature of the M. K D. During 2022, we expect several areas of investment the overall M. K D platform integration with alchemy digital banking platform and our go to market motion, which will include sales and marketing investments as well as client services resources in the air.

Areas of implementation client success and client support.

These investments are necessary and a part of the investment thesis to pursue a 2.5 billion dollar addressable market and utilize this solution to improve our position as a leading provider of digital banking solutions, serving a massive and expanding total addressable market nearing $10 billion.

Now, let me turn to the details of our third quarter performance.

I'll start with revenue.

Total revenue of 39.8 million grew 37% and performed above the high end of our guidance subscription revenue grew 39% for the third quarter compared to last year and represented 94% of total revenue.

Annual recurring revenue or a R. R at 155 million achieve strong year over year growth at 36%.

Sam and expansion of over 520 basis points compared to the same period last year.

Expansion was driven primarily about revenue scale, greater utilization and cost efficiencies in our client implementation client support and client success functions modestly all set with her costs associated with our third party revenue relationships move.

Moving on to operating expense.

Our goal is to balance investment opportunities with revenue growth and to maintain a good Atlanta site towards profitability or adjusted EBITDA positive, we have a large market opportunity to address and recognize gaining market share at the cost of near term profitability is the correct trade off for where we were in our current life.

Michael is a company.

For the third quarter of 2021 total non-GAAP research and development expense was 12.1 million, 23% compared to the prior year.

From a percentage of revenue perspective, R&D represented 30%, which is nearly 350 350 basis points of margin expansion. Despite.

Despite hire personnel related costs due to increased head count allocated a platform enhancements and innovation initiatives, we achieve significant margin expansion primarily through revenue scale.

Total non-GAAP sales and marketing expense was $7 million or 75% higher than the prior year period.

We expect revenue in the range of $40 3 million to $41 3 million and an adjusted EBITDA loss of $6 5 million. The acquisition of <unk> is expected to contribute an immaterial amount of revenue and an adjusted EBITDA loss of $1 million, which is included in the guidance.

<unk>.

It is important to note that the fourth quarter of 2020 possessed one 8 million of early termination fee revenue that does not repeat in the fourth quarter of 2021.

Early termination fee revenue is excluded from our calculation of annual recurring revenue and <unk> is the best indicator of revenue growth, which we expect to be over 30% for Q4 at 2021 for.

For the full year ending December 31, 2021, we expect revenue in the range of $150 million to $151 million and an adjusted EBITDA loss of 23, and a half to $22 5 million.

This concludes my comments for our third quarter financial performance and context for our fourth quarter financial guidance.

And the broader alchemy team are pleased we have now performed above our financial guidance for our first three reporting quarters as a public company.

Michael I'll next provide a few closing comments before we open the call to questions. Thank you, Brian and thank you Steven.

Well done as always gentlemen, appreciate that before we commence the Q&A, which we always enjoying appreciate.

I'd like to take a few more minutes to closeout my time as CEO of alcohol.

So.

As I step Hawaii.

No.

1%.

But I thought.

Well I think our founders Gary and Steven.

The materials.

Participant.

In particular I want to thanks, David.

I've worked with him side by side.

The crucible buyers.

Now only focused doing the right things all the time.

A truly phenomenal person.

Mutual banking leader.

Alright with one on your phone.

<unk>.

That's great.

[noise] if you'd like.

Please delta pound sign or the Heskey. It's you on a speaker phone. Please pick up your handset first before dialing once again if you have a question. Please dial star one on your phone keypad.

And from J P. Morgan and we have Sterling Awesome. Please go ahead, Oh, that's cool.

Hi, it's actually my on for styling.

We're comfortable at but you also have to keep in mind that the market is mid single digits. So it's anywhere from 5% to 9% and so at 14% we're doing for our clients through the use of our platform or about two X. What the markets are growing so as we get larger in scale, we expect.

It will normalize more back to the overall market, but we still have a runway of more mid teen growth before we reach that level.

Okay got it thank you.

Good question.

From William Blair, We have Bob Napoli. Please go ahead.

Hey, Mike.

Can be congratulations that menu almost since the early days of this company and congratulations you've done an incredible job and.

And I wish you the best.

Thanks, Steve.

Stephen was telling me by the way that the.

The transcripts and I'll, just say it audible payroll and payroll.

Okay.

If I can pull it out.

[laughter].

With the clients and the like we mentioned earlier one of that's already live with it worked with a few early clients to kind of do the first type trades I think we were the first ones to really kind of work out a lot of the kind of API things with <unk>. So.

The as far as the kind of appetite for it I would tell you that it's hardly any conversation do we have with our client community where they are not interested in this.

Really the Big question is it's like who wants to go first so Fortunately we found a few people that wanted to go first do we you know both on the bank and on the credit Union side of multiple sizes.

But I would tell you that I don't know that I've spoken with anyone that said, we're just not interested in this at all so I think it's mainly getting the first few out there over the next 30 to 60 days and then obviously looking at the metrics are going the way. It performs what kind of what are the if there are any gotchas or anything or new processes with the financial institution has to put into place.

Before youll see kind of the broad or the late majority start to hop onboard I don't know if that answers your question.

<unk>.

Further.

There is some regulatory hurdles that.

Financial institutions are looking at and they want to make sure from a regulatory perspective because crypto.

While it may not be new for our teenage sons and daughters, It's new in the banking world and.

And so they're very careful in how they want to approach that that's my first comment the second comment.

For our customers and so that's why it's white, so near and Dear to our heart.

Bob.

<unk> now has $13 57.

That was on a previous <unk> opportunity of $38 and then it moves to $52 now that we've acquired in K D. So we're still very thinly penetrated in our total platform and the opportunity to grow our <unk> is significant for us and what we're doing on the call with Stephens Inc.

It's just the new innovation that will fuel even further organic growth.

Four years out, but there is still a long way to go and penetrating our base with even the products.

That we that we previously have been speaking to in the products that we've had for many many years and what we're seeing now is in our client sales team. The client sales team is gaining a lot of traction in cross selling product after the.

The original order and and also our new logo team is getting much more proficient and selling even more products and a richer product set on that initial order. So several things driving <unk> and the massive white space that we possess is certainly the underlying drop.

Thank you I appreciate it.

And once again, if you do have a question. Please don't star one on your phone keypad.

From JMP Securities we have Walgreens. Please go ahead.

Hi, This is Joe on for Pat. Thank you so much for taking our question.

I'm just kind of just stay on.

On the <unk> expansion.

I know you guys aren't explicitly explicitly guiding to 2022, but can you give us a sense of kind of how we should think about that <unk> expansion or growth of our view.

Kind of.

Element into 2022, maybe just some color around that.

Yes, I mean, we.

We're really focused on the full revenue model and we outlined on the call really those four main drivers of it and <unk> is just one of those as we look out over a multiyear period.

We've been modeling the business is 20% revenue growth coming a minimum of 20% revenue growth coming from user growth and user growth.

The most recent year or so has been evenly split between organic user growth and adding new clients for our platform. Historically it was about one third user growth coming from organic user growth and two thirds coming from new logos, so whether that trend stays at 50.

Percent allocated to each or we move more back to the one third to organic and that still remains to be seen dependent on what happens in the market in terms of organic user growth, but as it relates to ARPA growth, we've modeled on a multiyear basis about 5%.

Organic <unk> expansion I think there's opportunity for us to expand that not just through cross sell but also as we add more banks too.

The platform today, we have 11 banks under contracts seven of those are on the platform former four of those are in implementation, but what's important to note is all of our banks on average represent about $30 of rfps, so well above the $13 57, So thats why banks are such a key.

Core strategy for us because as you add business banking to the mix of products that they take it has a significant impact on <unk>.

Great. Thanks, so much.

And we have no further questions at this time, ladies and gentlemen. This concludes today's conference. Thank you for joining you may now disconnect.

Everyone else has left to come.

[music].

Hello, and welcome to the third quarter 2021, and financial results Conference call. My name is Brandon and I'll be your operator for today at this time all participants are in a listen only mode. Later, we will conduct a question and answer session during which you may dial star. One if you have a question. Please note. This conference is being recorded.

I'll turn the call over to Rhett Butler, Vice President of Investor Relations you may begin Sir.

Thank you operator, good afternoon, and welcome to Alkermes earnings call for the third quarter ended September 32021 with me on today's call are Mike Hansen, Alkermes, Chief Executive Officer, even bohannan, Alkermes, cofounder and Chief strategy, and sales Officer, and Bryan Hill, Alkermes, Chief Financial Officer.

During the course of today's conference call. We may make forward looking statements, including statements regarding trends strategies and anticipated performance of the company.

Forward looking statements made during the call are being made as of today November four 2021 based on the facts available to us today, and we undertake no obligation to update or revise any forward looking statements also unless otherwise stated all financial measures discussed on this.

Call will be on a non-GAAP basis, because we believe these measures to be useful to investors in the understanding of our financial results.

A reconciliation of each comparable GAAP metric can be found in today's earnings release, which is available on our website investors that alchemy dot com and as an exhibit to the form 8-K furnished with the SEC today with that thank you for joining us and I'll turn it over to Mike.

Thank you rich very well done there.

And thank you everyone for joining us today as you may have seen our press release, our results for the third quarter were strong.

I'll dive into a few of the highlights in the quarter and a couple of minutes.

Stephen as always will discuss some of our innovation initiatives and go to market highlights following Stephen Brian will dive into the results for Q3.

Our guidance for Q4, and the full year and I'll be back again at the end of Brian's prepared remarks for a few closing comments before Q&A.

However, first I.

Wanted to address the press release that many of you have hopefully seen announcing the appointment of Alex shoot me as the new Chief Executive Officer that alchemy effective tomorrow, just a few hours ago.

I'm. So excited about this announcement in the next stages for alchemy, but his arrival represents.

I believe the combination of what alchemy is today with his complementary talents will catalyze even turbocharge the outcome of our next stages.

He will be meeting the broader leadership team denied all of our ALCHEMIST in the morning, a video call and our clients and partners moving forward welcome Alex I feel the energy already.

It was a bit of background eight years ago I joined alchemy after being inspired by the vision co founders.

They were driven and committed to expanding financial choice and financial literacy.

By Democratizing digital banking technology, and I wanted to help.

Oh, Gary Stephen in the chairperson of the Board, then and now Brian Smith, or the ones, who hired me and everyday since I have been overwhelmed by the talent and tenacity of the ALCHEMIST.

Yeah.

The unique alchemy of purpose people clients technology partners capital and the community is what makes this company. So extraordinary and it is reflected in our culture with our walls and enduring relationships, we established or reinforce daily with our clients and our partners across the ecosystem.

We've accomplished a lot and I'm so proud of all we've done it all.

Today is day one of the next day, because I have made the decision to retire.

Make way for a new CEO to take the helm day to day, while I remain a member of the board of directors.

I believe Alex is the ideal leader for this next stage.

He is a proven veteran and visionary in the enterprise software as a service market.

He has successfully scaled companies like work front up T O.

Our quad and empower their customers to innovate their modern up through modern technology.

The track record of growing great companies from the outside.

Making clients core to our company's strategy and priorities and we also bring along with them in new and different perspectives and experiences.

Most importantly, embodies the cultural values that make alchemy and remarkable client community. So special transparent all innovative collaborative.

Behalf of all Alchemists I welcome Alex and we will do everything I can to support him in the future success.

He will do and be great.

Do great things for alchemy.

I'd like to make a big shift from our new CEO and take a few minutes to update you on my perspective on the overall market and the results in the quarter of the awesome team of nearly 680 alcohol right.

And the last quarter, we've seen a number of market indicators that once again suggests the digital transformation of financial institutions continues to accelerate.

First according to CB insights with a global Fintech market reached a record $91 5 billion in funding so far this year.

Nearly doubling last year's total.

In Q3, the U S leads the market with almost half of the Fintech funding investments.

Second one of the leading Aggregators has reported that the penetration of U S consumers using fintech offerings increased 52% year over year and is now hovering at around 88%.

Which puts consumer fintech penetration in the same ballpark as streaming video services on social media.

Third crypto currency is hotter than ever CB insights reports the global venture capital funding in crypto and blockchain reached an all time high of $6 5 billion in the third quarter with the U S. Continuing to lead the world in DC funding.

Fourth we have seen increased discussions and decisions on industry consolidations of regional and community financial institutions generally our clients are the acquirers. The rationale we are seeing for the increased velocity includes references to the challenges of competing in this tech enabled world of financial services.

And finally Megabanks are not standing still one Mega Bank recently reported their digital deposits just given your only deposits grew significantly in the third quarter and the same Mega Bank reported a significant increase in installment loans, where more than 80% of those loans.

Originated digitally with no contact with the branch system All branch system.

The battle for relevance and success in this increasingly digital and mobile first market has never been more significant our clients see it and are responding accordingly.

Now it can be allows our clients to harness their own innovation and our innovation and the communities innovation through what we believe to be the best digital banking platform in the market to leapfrog others much larger in size and resources.

With that market context, let me move on to the quarterly results I'll touch on a few highlights let Stephen and Brian will provide be providing additional detail and context on a number of them in their upcoming sections of preferred works.

A few of the highlights are we continued our relentless focus on our clients' success and what we see is this accelerating digital transformation financial services.

Our client count on us for a secure performance compliant nimble extensible and market leading platform to win.

In terms of client success Theyre doing stork life clients grew their digital users, 14% year over year, what we estimate to be at least double the annual growth rate of the overall market.

Combined with new launches, we crossed over 11 4 million digital users on the digital banking platform at the end of the quarter.

Over quarter increase of about 680000 digital users.

We demonstrated aspects of the strength and resilience of our four pronged growth strategy with each program contributing to our results. These four prongs, our clients' success with our platform driving user growth.

<unk> uptake or cross sell of existing and new solutions into our white space that drive <unk> growth new logos.

Organic opportunities to accelerate growth.

Third we continued our peddle down commitment to innovation through.

Through continued investment in R&D and the acquisition of acquisition of MK decisions, we'll call. It <unk> for purposes of this call today, allowing us to offer digital account opening and loan origination solutions and expanding our total addressable market by approximately $2 5 billion.

We enhanced our portfolio with the new strategic partnerships with <unk> and <unk>.

We already have our first night did client star bank in production, allowing us and our clients to tap into a growing crypto market.

We expanded our overall payer by about 34% from 7 billion to a total of just under $10 billion with our potential <unk> moving from $38 per digital user to about 52 per digital user. This is even before considering what we may find as we advance our crypto currency all sourcing offerings that we have announced recently.

We experienced the best total sales quarter of the year, So far and saw continued top of funnel momentum in new sales opportunities and we expect this momentum to continue into Q4.

We delivered 37% revenue growth year over year, while remaining ahead of our non-GAAP gross margin stated objective based on 2021 performance overall.

Overall, I would call that a solid and strong quarter.

Now I'll turn it over to Steve O'hara to update you on our innovation and go to market activities and I'll be back at the end of the prepared remarks before Q&A to make a few closing comments Steven Gregg well. Thank you Mike.

Well I'm going to deviate from this just a little bit I did not I'm going to say I want to say something about <unk> and I didn't put this in the prepared remarks as I knew you would delete them and so I had to put it on my phone just sneak it in here but.

I want to say is a founder it is a nerve racking and scary to bring in a CEO. When we hired you eight and a half years ago. I was excited about the prospect of having someone to help shoulder the load but at the same time. It was full of fear about what it would mean to the company and my role in it.

Today I look back at that decision as one of if not the most critical decisions, but it has brought both alchemy and me personally the growth and success that we've enjoyed.

It's been an alliance more rewarding and fulfilling that I could've ever dreamed you have not only been my leader, but also my mentor and my friend.

I appreciate you I respect you admire you and I Love you.

And is excited and energized as I am about joining forces with Alex for this next stage of alchemy I'd be lying if I said I wasn't going to Miss you.

Thank you for all you've done and for the example that you've set not just for me, but for all alchemists. It's a legacy we will continue to build upon for many years to come.

And now I'll return to what you are asking me to talk about it.

The innovation if I'd to thank you for that question and.

And thank you of course.

Alright, moving on innovation, our client conference, which we held in September is just one of the many ways. We connect with a remarkable client community. We use this forum to discuss the state of the market and alkermes role as a valued partner in helping our clients compete and win given the definition of the primary financial institution in the customer relationship itself, our ever evolving alkermes value rests on our ability to help our <unk>.

Clients remain relevant consider for a moment, how the startup in FY customer relationship has fundamentally changed such as when a customer remember opens a deposit account. According to cornerstone advisors digital applications for primary checking accounts exceeded branch applications for the first time in the second half of 2019, even before COVID-19 hit.

Warner Stone also reports that more consumers are open that account in the past three years rated their experience on the mobile channel as excellent versus consumers that applied in a branch and while deposit accounts are certainly important the past year's challenge for F. EIS has really been about generating more assets in the form of loans, another primary conduit for initiating or expanding the customer.

The financial brand reports that nearly 90% of <unk> right, a greater number of loans as very or somewhat important.

It's clear that <unk> need a frictionless automated digital self service way to acquire more deposits and more loans with the ability to pivot their focus seamlessly to maintain the delicate balance between the two it's why alchemy announced last quarter, our acquisition of MK decisions or MK D. We believe <unk> technology, especially.

<unk> and solving the challenge so many of our clients face many market solutions required disparate platforms and decisioning engines for each side of the balance sheet deposits or loans, resulting in fragmented processes end user experiences that make it difficult and inefficient for financial institutions to cross sell and build strong customer and member relationships and.

In contrast to other alternatives this new acquisition solves for this complexity by supporting both deposit account opening and loan origination on a single cloud based Decisioning platform with an online shopping experience built prep is to maximize the customer onboarding experience with as many products as possible much.

Much the same way that <unk> provides a whole greater than the sum of its parts by converging deposits and loans to a single platform and alchemy and KD combination unlocks innovation to offer financial institutions capabilities previously reserves, the largest technology companies Megabanks in Fintech and the market included among them is the opportunity to apply approve.

<unk> issue in provision and credit card digitally and minutes. This is just one of several exciting innovations possible when combining the capabilities of both platforms to this acquisition and it's just one of the several exciting announcements we made at last quarter's client conference. Among the others is often these partnership with Knight, Inc. A leading technology and financial services firm dedicated to operating crypto currency salute.

<unk> to customers to direct Fi relationship per <unk> more than 20% of Americans own bitcoin with more than 70% of them willing to switch financial institutions for one that offered crypto currency. The alchemy nodding partnership allows our clients to attract deepen and retain customer relationships generate a new source of noninterest income per transaction fees.

And remain an integral part of the customer experience as a conduit for the transactions, we announced our partnership with <unk> in June since then alkermes been hard at work to not only integrate night. It is one of our valued ecosystem partners, but to deliver incremental value by enhancing our product with alkermes owned capabilities wrapped in a beautiful intuitive user experience that we believe will allow for easy adoption for.

Those users who'd like to invest in bitcoin, we already have one client star Bank that launched on our 90 products. A couple of weeks ago, making started the first bank in Indiana to offer <unk> services to its customers. This rollout demonstrates alkermes commitment to not only bring the latest technology to our clients to help them compete but to do so with uncompromising velocity as our multi.

And the architecture and single codebase enables all of alkermes clients to offer this within just a few months of when we announced the partnership this summer.

And as additional crypto currencies beyond bitcoin getting regulatory acceptance, we architected our solution to easily add and accept those crypto currencies as part of our <unk> relationship.

Their precious financial assets biotech uses behavioral biometrics to continuously monitor users' activity by analyzing behaviors like how they interact with their device their typing speed their mouth and finger movements on their desktop or mobile device behavioral biometric technology like that provided by bio catches them onto more modernized security defenses to help her.

Good users with a secure frictionless experience, while also reducing false positives for financial institutions.

Can we remained steadfast in helping our clients navigate an increasingly complex technology landscape through building or buying solutions or partnering with others for the same unlocking additional value for our clients, while expanding or penetrating our total addressable market our acquisition of <unk> expands our Tam by approximately $2 5 billion is corroborated by a third party consultant and other players in our space.

Our partnership with Biocatalyst complementary to other security products in our portfolio and allows us to further penetrate this part of the market and finally, our partnership with neither gone lots of new opportunity for our clients to offer crypto currency options meeting leading indicators in the broader crypto market leaves us bullish on this partnership and as more clients and users adopt the service we will better understand how this partnership benefits.

<unk> expansion and penetration goals. These innovations are only a few of the most recent launched recently launched at our client conference and are additive to the innovation roadmap. We have shared on previous calls among them. Our latest generation mobile experience is already receiving positive feedback from clients and early end users. We've also discussed extensibility is core to our roadmap strategy.

Our recent partnerships with <unk> and bio catch are evidence of the same more broadly we continue to experience increased momentum of SDK submissions from our clients and our partners in Q3, we supported the highest number of submissions from clients in Fintech partners in our company's history with approximately 350, new SDK submissions when comparing our third quarter results from 2020.

One to 2020, we've more than doubled the number of SD case submissions for <unk> platform, our continued ability to attract developers and partners to our platform increases that provide our clients and the velocity by which we deliberate all while relieving alchemy of investing our own development resources in that pursuit.

I believe it's due to this innovation mindset and our nimble technology platform that enables tremendous speed of innovation that clients continue to choose to partner with alchemy walk through just a couple of examples first Corning credit Union is a client that is achieving great results powered by the alchemy platform CCU is New York based serving over 130000 members across the U S. According to <unk>.

Hughes, Vice President and CIO, Mark Hufnagel quote since introducing the alchemy platform in early 2018, we have continued to receive very positive feedback from our members alkermes reliable and secure platform along with continued delivery enhancements has helped <unk> achieve an industry, leading net promoter score for the digital channel and shows that our digital experiences satisfying the needs of our members.

Secondly, Altera credit Union, a California based credit Union with nearly a 160000 members also continues to drive adoption with top quartile NPS scores to the Akamai platform for their dedication and with the help of alchemy <unk> has driven digital adoption to over 80%.

These client examples continue to prove that partnering with alchemy can drive digital adoption and engagement and help out by us compete with Mega banks in the broader Fintech community.

X before I turn it over to Brian to cover the financial results I'd like to provide a brief summary of our 2021 sales activity.

Starting with the new logo sales for digital banking during the third quarter, we achieved sequential momentum from the second quarter by closing six new logo clients. This brings our year to date new logo performance of 15, new digital banking clients, which is flat year over year from 2020.

Would've likely moved ahead of 2020 safer to late stage deals, where the prospects announced an acquisition by another alchemy client. So although we'll end up gaining those clients that affects the opex of new logo stats. We expect this increased momentum of Q3 to carry forward into Q4 as well some additional sales metric highlights our one increased <unk> on the initial sale.

We are pleased with our continued growth in products purchased on the initial sale, which is leading to those contracts had an average <unk> of $21 and two add on sales existing client sales are up 33% year to date compared to 2020. So we continue to see good momentum there with renewals and additional product sales next I'd like to briefly address our.

Golar gaining more traction in the bank market, our 2021, new logo performance for digital banking includes three multibillion dollar banks. Additionally, we've signed 50 bankshare to date to our ACI chose a CHF alert solution 17 of which have assets in the $1 billion to $10 billion range, one that's greater than $10 billion and one that is actually greater than $100 billion our bank pipe.

Line for digital banking AC alert and the <unk> solutions remains healthy we remain encouraged by the activity and traction there.

Turning back to overall sales consistent with previous years, the fourth quarter is key to our full year performance and we're entering Q4 with a strong pipeline and increased momentum. We believe this combined with our product enhancements and additions like digital account opening and LLS resonating well with the market will enable us to end the year with solid sales momentum now.

I'm going to turn it over to Brian to discuss our financial performance for Q3.

Steven and good afternoon, everyone.

Third quarter financial results were strong across the board.

I will provide the details momentarily, but first last quarter I reminded everyone of the four primary growth pillars contributing to our highly predictable revenue model I think it's worth mentioning them again and providing our progress for each balanced performance across all revenue drivers is key to the predictability of our revenue model and key.

Our long term revenue growth strategy.

First organic user growth, which measures the success of our clients utilizing the alchemy platform. That's F EIS build thriving digital banking communities.

Our clients have increased digital users, 14% year over year.

Historically, we've seen levels as high as 17% during the pandemic.

We are very pleased with mid teens performance for this metric as the overall market has achieved digital user growth at a pace of mid to high single digits over the last several years.

Second <unk>.

Increasing product adoption of our platform.

This occurs through continued innovation and expanding our platform increasing our proficiency cross selling into our installed base and closing new logo orders with an increased number of products.

Third success closing new logo. So during the third quarter, we experienced sequential momentum from the second quarter by closing six new logo digital banking clients moving our year to date total to 15, new logos, a similar amount compared to the same period a year ago.

Our 2021, new logo cohort also possesses three new bank clients an area of focus for us in terms of platform investment and new sales focus.

Not included in our 2021, new logo cohort are two prospects representing around 120000 digital users that were in the process of closing that were ultimately acquired by existing clients.

This is important and illustrates the adaptability diversity and resilience of our revenue model. While these digital users will not be added as new logo clients. We will add these digital users to our platform once the acquisitions close and the acquired financial institutions are converted to our clients platform.

We believe new logo sales activity flat with the prior year has been the result of lower new logo opportunity creation and the earlier months of an endemic.

As we progressed through the fall of 2020 and into 2021 this trend improved.

Encouraging for us our 2021, new logo sales cohorts possesses an average 15 products and on average in <unk> 'twenty $1, highlighting the increased proficiency of our new logo sales team as a reminder, new logo sales typically contribute to revenue nine to 12 months followed.

The execution of an order.

M&A activity is the fourth and final primary growth pillar contributing to our revenue model Mark and Stephen provided a detailed discussion of our recent acquisition of MK D representing our second acquisition.

<unk> is an early stage company and should be viewed as an acquisition of technology and talent.

<unk> will continue to invest in this platform as we formulate our digital deposit and loan account openings go to market strategy.

Okay D will exit 2021, with just under $1 million of a.

Given the early stage nature of young KD. During 2022, we expect several areas of investment the overall <unk> platform integration with Alkermes digital banking platform and our go to market motion, which will include sales and marketing investments as well as client services.

Resources in the areas of implementation client success and client support.

These investments are necessary and are part of the investment thesis to pursue a $2 5 billion dollar addressable market and utilize this solution to improve our position as a leading provider of digital banking solution, serving a massive and expanding total addressable market nearing $10 billion.

Now, let me turn to the details of our third quarter performance.

I'll start with revenue.

Total revenue of 39.8 million grew 37% and performed above the high end of our guidance subscription revenue grew 39% for the third quarter compared to last year and represented 94% of total revenue.

Annual recurring revenue or <unk> at $155 million achieved strong year over year growth of 36%.

Underlying this performance we added nearly 680000 users to our platform during the third quarter and nearly $2 4 million over the last 12 months. This drives digital user growth of 26% and ending the quarter with $11 4 million registered users are live on the platform.

We continue to believe we are one of the leading providers of digital banking as it relates to total digital user growth.

Digital user growth has been driven by two areas over the last 12 months.

First we have implemented 26 financial institutions supporting 1 million digital users and second our clients have increased their digital user adoption by $1 4 million users or 14% over the last 12 months.

Revenue per user or <unk> as the final area driving our strong <unk> performance. During the last 12 months, we've expanded our <unk> by 8% and ended the quarter at $13 57.

This compares to our market opportunity at a blended average of approximately $52 per user inclusive of digital account openings for deposit in unsecured consumer loan accounts.

<unk> expansion continues to be driven from a couple of areas first we are adding new <unk> to the platform with a higher RPC than our overall company average.

Second we continue to see an RP advantage, resulting from our client sales team that is responsible for selling add on products and managing the renewal cycle for our clients. Our client sales team increasing success for cross selling products now represents 30% of new sales for 2021 compare.

To just under 20% for the same period a year ago.

In addition, our client sales team have renewed seven clients that represent 7% of our digital users and expect to renew a few more clients during the fourth quarter of 2021.

Moving onto profitability and GAAP gross margins.

Our target operating model objective is to achieve between $60 to 65% non-GAAP gross margin over the next few years. We have also stated that we plan to achieve this through expanding non-GAAP gross margin on average between 203 hundred basis points per year.

Our progress towards achieving this continues to be ahead of our stated objective based on 2021 performance for the third quarter of 2021, non-GAAP gross margin was 58% an expansion of over 520 basis points compared to the same period last year.

Expansion was driven primarily by revenue scale, greater utilization and cost efficiencies in our client implementation client support and client success functions modestly offset with higher costs associated with our third party revenue relationships.

Moving on to operating expense.

Our goal is to balance investment opportunities with revenue growth and to maintain a good Atlanta sight towards profitability were adjusted EBITDA positive, we have a large market opportunity to address and recognize gaining market share at the cost of near term profitability is to correct trade off for where we are in our current lie.

Cycle as a company.

For the third quarter of 2021 total non-GAAP research and development expense was $12 1 million, but 23% compared to the prior year.

From a percentage of revenue perspective, R&D represented 30%, which is nearly 350 350 basis points of margin expansion. Despite.

Despite higher personnel related costs due to increased head count allocated a platform enhancements and innovation initiatives, we achieved significant margin expansion primarily through revenue scale.

Total non-GAAP sales and marketing expense was $7 million or 75% higher than the prior year period.

From a percentage of revenue perspective sales and marketing represented 17%, which is nearly 380, <unk> 80, 380 basis points of margin contraction higher sales and marketing expense and margin contraction with the result of returning to pre pandemic sales event and activities such as our <unk>.

Client conference and other sales events in the third quarter of 2021.

Combined with higher employee related costs from head count and investments in our sales and marketing teams.

The 2021 incremental sales and marketing expense attributable to our client conference in other sales event activities represented 330 basis points of the third quarter 2021 revenue.

Total GAAP general and admin and general and administrative expense was $10 7 million up 42% compared to the prior year period.

G&A was 27% of revenue, which represents approximately 80 basis points of margin contraction. The primary driver of margin contraction was the addition of cost necessary now that we are a public company, including higher business insurance, and adding new accounting Investor relations legal and human resource person.

Enel.

Total non-GAAP loss was $6 7 million.

Our adjusted EBITDA loss for the quarter was $6 1 million better than the high end of our expectations.

Moving on to cash we had.

Over $314 million of cash on the balance sheet as of September 32021, representing a $24 million net use of cash during the quarter. The cash paid at close for the <unk> acquisition is the primary driver for the sequential decline.

Now turning to guidance.

For the fourth quarter ending December 31, 2021, we expect revenue in the range of $40 3 million to $41 3 million and an adjusted EBITDA loss of $6 5 million. The acquisition of <unk> is expected to contribute an immaterial amount of revenue and in adjusted.

EBITDA loss of $1 million, which is included in the guidance.

It's important to note that the fourth quarter of 2020 possessed one $8 million of early termination fee revenue that does not repeat in the fourth quarter of 2021.

Early termination fee revenue is excluded from our calculation of annual recurring revenue and <unk> is the best indicator of revenue growth, which we expect to be over 30% for Q4 at 2021 for.

For the full year ending December 31, 2021, we expect revenue in the range of $150 million to $151 million and an adjusted EBITDA loss of 23, and a half to $22 5 million.

This concludes my comments for our third quarter financial performance and context for our fourth quarter financial guidance I on the broader alchemy team are pleased we have now performed above our financial guidance for our first three reporting quarters as a public company.

Mike will next provide a few closing comments before we open the call to questions. Thank you, Brian and thank you Steven.

Well done as always gentlemen, appreciate that before we commence the Q&A, which we always enjoy and appreciate.

I'd like to take a few more minutes to closeout my time as CEO of alcohol.

So.

Ill step away.

Okay.

About 1%.

So a quarter of a thought.

Thank our founders Gary its Steve.

Two.

Participant.

In particular I want to thank Steven.

I've worked with him side by side.

Yes.

Only focused on the right things all the time.

A truly phenomenal Purcell.

Digital banking leader.

The best founder I've ever been around.

So thankful for the allies, you've always been also wanted to thank our tremendously supportive investors and are wildly competent and committed board of directors.

To a person.

Every director has been there for us.

And still are.

Also want to thank our Rockstar clients and partners for trusting me teaching me and challenging me it can be better.

And a huge thank you to all the ALCHEMIST and their families with us today and those who passed we've crossed along the way.

So I'll just say this.

<unk>.

It's truly been our greatest experience of my 46 years.

Career to do this.

Yes.

Thank you to my wife and daughters.

Okay.

Paul.

Uh huh.

Hello.

Mine was somewhere else.

With that let's open up to questions.

Sure.

Okay.

So Rob would you. Please take over so you can get this organized.

[laughter].

Operator, I think we're ready for questions.

Thank you ladies and gentlemen, we will now begin the question and answer.

If you have a question Darren.

Star one on your phone.

Great.

That's great.

If you'd like.

Please note the pound sign or the hash key if you're on a.

Speakerphone, please pick up your handset first before dialing once again, if you have a question. Please star one on your phone keypad.

And from Jpmorgan, we have Sterling Auty. Please go ahead.

Hi, its actually Mike.

On for Sterling.

Hi, I wanted to ask a bit about the pan.

If this call is there any purpose.

<unk> is coming from.

Until the acquisition or is it also from the standard products.

Little bit more about that.

Yes, so what we did this quarter was we updated our Tam based on the <unk> acquisition. So that only includes digital account openings for deposit accounts as well as unsecured consumer loan accounts.

Our previous Tam calculation for digital banking and ACTH alert was just under 7 billion.

This acquisition adds about $2 5 billion, so that converting that to an RP you.

Based on 185 million users is the $52 that were speaking to in the script now the other innovation areas that we're working on and Steve Stephen mentioned and Mike mentioned, we have not added those to our Tam at this point like crypto currency. For example, we have very very high expectations for that in 2022.

We've already have one client live they've already run a transaction.

Crypto currency at this point, so super excited on that level, but at this point.

That's not included in our Tam, but we'll update our Tam once we have a better sense of what we think the overall market take will be of that product as it relates to <unk> again, that's a product that in some ways. It helps us realize existing Tam because we presently have security products and this just adds to the Tam opportunity.

Or the component allocated to security products. So there was no change there. It's just a product where we view, we make investment to better realize the existing channel.

Okay, great that makes sense, if I could just ask one more just wondering on the organic user growth. So is that mid teens level.

Thank you.

Or do you think that will come down a bit more volatile.

Yes.

Are they out of the pandemic.

Well when we hit the height of the pandemic and as digital transformation even further.

As noted in the marketplace, we saw highs of 17%.

We knew that that was probably more event driven than a sustainable level and so now this quarter or the back half or more in the mid teens at 14% that's closer to where we historically were prior to the pandemic. So it's a level that we're more comfortable at.

But you also have to keep in mind that the market is mid single digits. So it's anywhere from 5% to 9% and so at 14% we're doing for our clients through the use of our platform or about two X. What the markets are growing so as we get larger in scale, we expect will normalize more.

Back to the overall market, but we still have a runway of more mid teen growth before we reach that level.

Okay got it thank you.

Yeah.

From William Blair, We have Bob Napoli. Please go ahead.

Yes.

Hey, Mike.

It can be congratulations that menu almost since the early days of this company and congratulations you've done an incredible job.

And I wish you the best.

Bob.

Stephen was telling me by the way you will see the transcripts and I'll, just say it audible payroll and payroll.

I will turn out.

[laughter].

Well a question on <unk>.

On MK decision and the acquisition.

And you pay $20 million for it and it's like a $25 million earn out so what is that.

Predicated upon.

Now what is the target and what are the goals I guess for MK decision that would allow the.

Our salary team.

Uh huh.

Iron that FDA additional $25 million.

Yes, so Bob as you can imagine I mean, given that this was an early stage company, where we primarily bought or acquired technology and talent.

In order to convey the right level of value, we needed to share risk with the sellers and through that we constructed.

And some levels there is some.

I would say.

<unk>.

Average difficulty in achieving revenue objectives, but to achieve the full $25 million theres, some pretty lofty revenue goals and those are all based on 2022 and 2023 revenue targets.

Okay.

Thank you.

Just the crypto.

Trading product when did you start developing guidance.

Kind of demand are you seeing for.

Okay.

<unk>.

Hey, Bob This is Stephen So we started we started developing that right really kind of right. After we signed the partnership with <unk>.

So we started developing and I think within I guess about 45 to 60 days, we had our kind of are working.

Not just a prototype but working function to their test systems, and then worked with a few early clients.

I mentioned earlier, one of that's already live with at work with a few early clients to kind of do the first type trades I think we were the first one to really kind of work out a lot of the kind of API things with <unk>. So.

The as far as the kind of appetite for it I would tell you that it's hardly any conversation do we have with our client community where they are not interested in this.

Really the big question is looks like who wants to go first so Fortunately we found a few people that wanted to go first do both on the bank and the credit Union side of multiple sizes.

But I would tell you that I don't know.

Though that I've spoken with anyone that said, we're just not interested in this at all so.

It's mainly getting the first few out there over the next 30 to 60 days and then obviously looking at the metrics within the way performs what kind of what are that if there are any gotcha is there anything or new processes with the financial institution has to put into place before youll see kind of the broad or the late majority start to hop on board I don't know if.

It answers your question, yes, and.

Just add further there is some regulatory hurdles that.

Financial institutions are looking at and they want to make sure from a regulatory perspective because crypto.

While it may not be new for our teenage sons and daughters.

New in the banking world.

And so they're very careful in how they want to approach that.

That's my first comment the second comment.

And Steven made a very good point.

We moved very quickly on the development of integrating this solution into our platform at its core it's important to note that many of the third party revenue partners. We have these arent just simply single sign on type of.

<unk> offerings to improve the user experience and to enhance our platform. There's a lot of development work and integration that takes place and Thats, what differentiates us from the rest of the field when they are offering similar solutions.

Great and if I could just sneak one last one and Steven and product new product development of the products that have recently been launched and whats.

Which ones are you most excited about where do you see the most demand.

Uh huh.

What's the one site once we mentioned to you I guess I get to pick out what you want us to highlight on the call I think probably one of the only ones I didn't besides <unk> and <unk>, obviously MK D. One of the ones that we're really excited about what we talked about at our client conference was really that all the new card card controls.

Issuance and push provisioning.

Apple card when it came out a couple of years ago really set the standard in people and trying to catch up ever since and I will say that with the with.

With all the various processors were integrated to know some of the things that we're doing with some of our early our early partner processors, where you are.

You log in you get your card you can see the fold digital card number you can purchase immediately to your Apple wallet, your Samsung pay or Google pay.

That right. There is really kind of an equalizer for the Apple card type of experience so that probably be one of the other ones that we didn't kind of just didn't make into the remarks that they were kind of already long as they were that's probably the next thing.

Something that really drives a lot of revenue.

For our customers and so thats why its white, so near and Dear to our heart and Bob.

<unk> now has $13 57.

That was on a previous <unk> opportunity of $38 and then it moves to $52 now that we've acquired in K D. So we're still very thinly penetrated in our total platform and the opportunity to grow <unk> is significant for us and what we're doing on the call with Stephens Inc.

It's just the new innovation that will fuel even further organic growth.

People years out, but theres still a long way to go and penetrating our base with even the products that we that we previously have been speaking to in the products that we've had for <unk>.

Many many years and what we're seeing now is in our client sales team. The client sales team is gaining a lot of traction in cross selling product after the.

The original order and then also our new logo team is getting much more proficient and sewing even more products and a richer product set on that initial order. So several things driving <unk> and the massive white space that we possess is certainly the underlying driver.

Thank you I appreciate it.

And once again, if you do ask a question. Please don't star one on your phone keypad.

From JMP Securities we have Walgreens. Please go ahead.

Hi, This is Joe on for Pat. Thank you so much for taking our question, Brian just kind of just stay on <unk>.

On the <unk> expansion.

I know you guys aren't explicitly explicitly guiding to 2022, but can you give us a sense of kind of how we should think about that <unk> expansion or growth of our view.

Gosh development into 2022, maybe just some color around that.

Yes.

Really focus on the full revenue model and we outlined on the call really those four main drivers of it and <unk> is just one of those as we look out over a multiyear period, what how we've been modeling the business is 20% revenue growth coming a minimum of 20% revenue growth coming from.

User growth and user growth in.

In the most recent year or so has been evenly split between organic user growth and adding new clients for our platform. Historically it was about one third user growth coming from organic user growth and two thirds coming from new logos, so whether that trend stays at 50.

Modeled on a multiyear basis about 5%.

Organic <unk> expansion I think there is opportunity for us to expand that not just through cross sell but also as we add more banks.

To the platform today, we have 11 banks under contracts seven of those are on the platform former four of those are in implementation, but what's important to note is all of our banks on average represent about $30 of rfps, so well above the $13 57, So thats why banks are such a key.

Core strategy for us because as you add business banking to the mix of products that they take it has a significant impact on <unk>.

Great. Thanks, so much.

And we have no further questions at this time, ladies and gentlemen. This concludes today's conference. Thank you for joining you may now disconnect.

Q3 2021 Alkami Technology Inc Earnings Call

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