Q1 2025 Alkami Technology Inc Earnings Call
Operator: Hello and welcome to Alkami First Quarter 2025 Financial Results Conference Call.
Hello, and welcome to Alkermes first quarter 2035, Peanuts other salts conference call. My name is John and I Hope, you're all but either for today's call.
Operator: My name is John and I will be your operator for today's call.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.
Following the presentation, we will conduct a question and answer session.
If at any time during this call you required immediate assistance. Please press star zero for operator I'd.
Steve Calk: I'd like to turn the conference over to Steve Calk, Vice President of Investor Relations. Steve, please go ahead. Thank you, John.
I'd like to turn the conference over to Steve Calk, Vice President of Investor Relations. Steve. Please go ahead.
Speaker Change: Thank you John with me today on the call are Alex Shoopman, Chief Executive Officer, and Bryan Hill, 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.
Steve Calk: With me today on the call are Alex Shootman, Chief Executive Officer, and Brian Hill, 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.
Speaker Change: Our results may be materially different for summary of risk factors associated with our forward looking statements. Please refer to today's press release and the sections in our latest 10-K entitled risk factors important statements statements made during the call are made as of today and we undertake no obligation to update or revise these statements also unless otherwise stated financial measures discussed in this call will be.
Steve Calk: For a summary of risk factors associated with our forward-looking statements, please refer to today's press release and the sections in our latest 10-K entitled Risk Factors in Forward-Looking Statements. Statements made during the call are made as of today, and we undertake no obligation to update or revise these statements.
Steve Calk: Also, unless otherwise stated, financial measures discussed in 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.
Speaker Change: 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'll now turn the call over to Alex. Thank you Steve.
Steve Calk: I'll now turn the call over to Alex. Thank you, Steve.
Alex Shootman: Good afternoon, and thank you all for joining us. I'm pleased to report a great quarter for Alkami. During the first quarter of 2025, Alkami grew revenue over 28% and generated over $12 million in adjusted EBIT. We exited the quarter with 20.5 million registered users on the Alkali platform, up 2.3 million compared to the prior year quarter, and we successfully closed the mantle acquisition. In Q1, we continued the momentum we've built since becoming a public company and our position to achieve the 2026 financial objectives we outlined during our Q4 2022 earnings call. When we discussed those objectives, our annual revenue was less than half our guidance for 2025, and adjusted EBITDA was a loss of $18 million.
Alex Shoopman: Good afternoon, and thank you all for joining us.
Alex Shoopman: I'm pleased to report a great quarter for alchemy.
Alex Shoopman: During the first quarter of 2025, Oh can we grew revenue over 28% and generated over $12 million and adjusted EBITDA.
Alex Shoopman: We exited the quarter with 25 million registered users on the platform up $2 3 million compared to the prior year quarter, and we successfully closed the mental acquisition.
Alex Shoopman: In Q1, we continued the momentum we built since becoming a public company and are positioned to achieve the 2026 financial objectives, we outlined during our Q4 2022 earnings call.
Alex Shoopman: When we discuss those objectives for annual revenue was less than half our guidance for 2025.
Alex Shoopman: And adjusted EBITDA was a loss of $18 million.
Alex Shootman: Today, our adjusted EBITDA position has improved fourfold. And given our implementation backlog, sales pipeline, product portfolio, and successful completion of the mantle acquisition, we remain confident in the objectives we discussed over two years ago.
Alex Shoopman: Our adjusted EBIT.
Alex Shoopman: Adjusted EBIT position has improved fourfold and given our implementation backlog and sales pipeline product portfolio and successful completion of the mantle acquisition, we remain confident in the objectives, we discussed over two years ago.
Alex Shootman: The number one question I'm asked by investors these days is, how is the demand environment? Consistent with the last few years, we have not seen any decline in the demand for digital banking. I believe the reason for this is that the need for digital banking in regional and community financial institutions is not elastic. It is mandatory innovation if you are going to compete with Chase and Chime in today's market. Our pipeline remains strong, and the demand numbers we see in our instrumentation are consistent with my conversation with clients. Since March, Knoft County clients I've met at a recent user conference have had 29 face-to-face client meetings.
Alex Shoopman: The number one question I'm asked by investors. These days is how is the demand environment.
Alex Shoopman: Consistent with the last few years, we have not seen any decline in the demand for digital banking.
Alex Shoopman: I believe the reason for this is that the need for digital banking and regional and community financial institutions is not elastic. It is mandatory innovation. If you were going to compete with chase and chime in today's market.
Alex Shoopman: Our pipeline remains strong and the demand numbers, we see in our instrumentation or consistent with my conversation with clients.
Alex Shoopman: Since March not counting clients have met at our recent user conference, we had 29 face to face client meetings.
Alex Shootman: To all of the noise we hear in the macro environment, no one talked about reductions in digital banking.
Alex Shoopman: To all of the noise, we hear in the macro environment no one talked about reductions in digital banking.
Alex Shootman: I left those meetings with two observations. First, none of our clients are detached from the uncertainty in the overall macro environment. In times of uncertainty, good bankers prepare for multiple scenarios. But in each of their scenarios, their digital agenda remains a priority. For most, their digital banking has moved from the budget agenda to the capital allocation agenda. They are thinking about how they grow their business digitally with the same or more intensity as their branch strategy. Second, with an eye towards growth, they are focused on account opening and onboarding. Two weeks ago, I was at a client in the Midwest, and the CEO said, if I only had a dollar to spend on any new projects, I'd put $0.90 on account opening and pocket the rest.
Alex Shoopman: I left those meetings with two observations.
Alex Shoopman: First none of our clients are detached from the uncertainty in the overall macro environment.
Alex Shoopman: In times of uncertainty good bankers prepare for multiple scenarios.
Alex Shoopman: But in each of the scenarios there are digital agenda remains a priority.
Alex Shoopman: For most of their digital banking has moved from the budget agenda to the capital allocation agenda.
Alex Shoopman: You were thinking about how they grow their business digitally with the same or more intensity as their branch strategy.
Alex Shoopman: Second with an eye towards growth they are focused on account opening and onboarding.
Alex Shoopman: Two weeks ago or was that a client in the Midwest and the CEO said, if I only had a dollar to spend on any new projects I put 90 cents on account opening and pocket. The rest we have to add customers to thrive and <unk>.
Alex Shootman: We have to add customers to thrive. And because of the younger generations we are pursuing, it has to be an efficient and elegant experience. So far, despite macro uncertainty, we continue to enjoy a healthy pipeline, which is at least as strong as this time last year. We believe this is a testament to the necessity for digital banking. Quality of Alkami's people and products.
Alex Shoopman: Because of the younger generations, we are pursuing it has to be an efficient and elegant experience.
Alex Shoopman: So far despite macro uncertainty we continue to enjoy a healthy pipeline, which is at least as strong as this time last year.
Alex Shoopman: We believe this is a testament to the necessity for digital banking.
Alex Shoopman: Holly at Alkermes people and products in the early stages, we are still in with respect to the digital transformation of the regional and community financial institution market.
Alex Shootman: In the early stages, we are still in with respect to the digital transformation of the regional and community financial institution market. Demand was on display a month ago at CoLab, our annual user conference in Nashville with over 900 attendees representing more than 300 institutions. This size audience continued a trend of record attendance for us, and with a majority of attendees in leadership roles, it demonstrated that digital banking is a strategic focus in our market. The shift we continue to see from prior co-labs is a recognition that digital banking is not just a service strategy. Our prospects and clients see digital banking becoming a sales and service platform.
Alex Shoopman: Demand was on display a month ago with co lab.
Alex Shoopman: Our annual user conference in Nashville, with over 900 attendees, representing more than 300 institutions.
Alex Shoopman: This size audience continue to trend of record attendance for us and with the majority of attendees in leadership roles at demonstrated that digital banking is a strategic focus on our market.
Alex Shoopman: The shift we continue to see from prior co labs is a recognition that digital banking is not just a service strategy.
Our prospects and clients see digital banking, becoming a sales and service platform.
Alex Shootman: They have to acquire an inventory of trusted assets called deposits. They have to sell that inventory as loans, and they have to make money serving their account holders with fee-based services that are valuable, such as wires, FX, credit cards, and interchange. To do this well, they have to be trusted, knowledgeable, and safe. And they are pursuing these attributes by making personalized digital connections with their account holder.
Alex Shoopman: They have to acquire an inventory of trusted assets called deposits they have to sell that inventory as loans and they have to make money serving their account holders with fee based services that are valuable such as wires FX credit cards and interchange.
Alex Shoopman: To do this well they have to be trusted knowledgeable and safe and they are pursuing these attributes by making personalized digital connections with their account holders.
Alex Shootman: From the main stage, I shared an interview with the CEO of one of our largest clients who handed me the phrase that best describes personalization in our industry and what we are building with our data platform. He called it anticipatory banking. To deliver the digital and sales service platform designed by our market that enables anticipatory banking, I shared with the audience that we are spending our R&D dollars on the following product and platform priorities. Our product investments will go into four areas, onboarding and account opening, retail and commercial functionality, user experience, and personalization. Our platform investments are focused on continuing to drive scalability.
Speaker Change: From the main stage I shared an interview with the CEO of one of our largest clients who handed me the phrase the best describes personalization in our industry and what we are building with our data platform he called it.
Alex Shoopman: Anticipatory bank.
Alex Shoopman: To deliver the digital in sales service platform designed by a market that enables anticipatory banking I shared with the audience that we are spending our R&D dollars on the following product and platform priorities are.
Alex Shoopman: Our product investments will go into four areas Onboarding and account opening.
Alex Shoopman: <unk> commercial functionality use.
Alex Shoopman: User experience and personalization.
Alex Shoopman: Our platform investments are focused on continued continuing to drive scalability.
Alex Shootman: Extensibility, Maintaining Industry-Leading Reliability, and Building Out Our Data Capability. Account opening and onboarding generated the most interest in our event, which is understandable since the mantle transaction closed days before our conference. But mostly, the interest was generated by the strategic nature of a great onboarding and account opening experience. Or as one client told me, we are all about customer acquisition. Everything else is just noise. The Mantle sessions were full. The Mantle keynote was the highest rated session. And during the first quarter of 2025, five Alkami clients purchased Mantle. And two of our forecasted first quarter new logos asked to revise their deals to include Mantle.
Alex Shoopman: Extensibility.
Alex Shoopman: Maintaining industry leading reliability.
Alex Shoopman: And building out our data capability.
Alex Shoopman: Account opening and Onboarding generated the most interested at our event, which is understandable since the mantle transaction closed days before our conference.
Alex Shoopman: But mostly the interest was generated by the strategic nature of a great Onboarding and account opening experience.
Speaker Change: Whereas one client told me we are all about customer acquisition everything else is just noise.
Speaker Change: The Manto sessions were full tomato keynote was the highest rated session.
Speaker Change: And during the first quarter of 2025, five alchemy clients purchased mantle.
Speaker Change: Two of our forecasted first quarter, new logos as to revise their deals to include mantle.
Alex Shootman: One of these deals closed in April, we expect the other deal to close shortly. This is exciting for us as the cross-selling of Mantle into the Alkami client base has just begun.
Speaker Change: One of these deals closed in April we expect the other deal to close shortly this is exciting for US is the cross selling of mantle into the alchemy client base has just begun.
Speaker Change: Yeah.
Alex Shootman: We have no shortage of product opportunities, and as we've previously discussed, we are building a strategic development center in the National Capital Region of India. The purpose of this investment is to increase our product and engineering capacity while maintaining the profitability commitments we've made to our investors. Our efforts with Alkami India are well underway. We are now running a functional office with over 40 alchemists with more to come throughout the year. We will also focus on hiring leadership roles and building out our long-term capacity with the goal of supporting hundreds of alchemists in India in the coming years.
Speaker Change: We have no shortage of product opportunities and as we've previously discussed we are building a strategic development center in the National capital region of India.
Speaker Change: The purpose of this investment is to increase our product and engineering capacity, while maintaining the profitability commitments, we've made to our investors.
Speaker Change: Our efforts with alchemy, India are well underway.
Speaker Change: We're now running a functional office with over 40, ALCHEMIST with more to come throughout the year.
Speaker Change: We're also focused on hiring leadership roles in building out our long term capacity with the goal of supporting hundreds of alkermes in India in the coming years.
Alex Shootman: We expect Alkami India to drive innovation and bring products to market that are new sources of revenue, all while delivering operating leverage in our business.
Speaker Change: We expect alchemy, India to drive innovation and bring products to market that are new sources of revenue.
Speaker Change: All while delivering operating leverage in our business.
Alex Shootman: In closing, we are proud to deliver a great quarter for our investors. We're grateful to our clients for trusting us with their business. And I appreciate the effort each alchemist puts into their work and the values they demonstrate. Thank you for getting it done and doing it right.
Speaker Change: In closing we are proud to deliver a great quarter for our investors.
Speaker Change: Eightfold to our clients for trusting us with their business and I appreciate the effort each ALCHEMIST puts into their work and the values they demonstrate.
Speaker Change: You for getting it done and doing it right.
Alex Shootman: Before I hand the call over to Brian, I'd like to comment on the news in our press release regarding Brian's retirement. When Brian shared with me that he was considering moving to the next phase of his life, we both agreed that this was excellent timing, given the performance and health of the company. Brian has done a great job as CFO. He's been at the company while revenue has grown sixfold and has guided Alkami to a positive adjusted EBITDA position. He was instrumental in Alkami's IPO and played a key role in four acquisitions. He's made my life easy as we exceeded our numbers every quarter since going public.
Speaker Change: Before I hand, the call over to Brian I'd like to comment on the news in our press release regarding Brian's retirement.
Speaker Change: But Bryan shared with me that he was considering moving to the next phase of his life.
Speaker Change: We both agreed that this was excellent timing given the performance and health of the company.
Speaker Change: Brian has done a great job as CFO he.
Speaker Change: He's been at the company or our revenue has grown six fold. It is got it alchemy to a positive adjusted EBIT position.
He was instrumental in alkermes IPO and played a key role in for acquisitions.
Speaker Change: He's made my life easy as we exceeded our numbers every quarter since going public.
Alex Shootman: In true Brian Hill fashion, he's finishing strong by providing the company and our shareholders with an extended transition to his retirement.
Speaker Change: In true Brian Hill fashion, he's finishing strong by providing the company and our shareholders with an extended transition to his retirement.
Alex Shootman: Brian will remain the CFO of Alkami until either a new CFO comes on board or February 27, 2026, whichever comes.
Speaker Change: Brian will remain the CFO with alchemy until either a new CFO comes onboard or February 27, 2026 whichever comes first.
Brian Hill: I'll now hand the call to Brian to take us through our financial results.
Speaker Change: I'll now hand, the call to Brian to take us through our financial results.
Brian Hill: Thanks, Alex, and good afternoon, everyone. Before we dive into the financial results, I want to take a moment to say a little more about the news that Alex just shared.
Brian Hill: Thanks, Alex and good afternoon, everyone before we dive into the financial results I wanted to take a moment to say a little more about the news that Alex just shared.
Brian Hill: After 36 years of experiences and relationships I will forever cherish, and having the opportunity to be a part of successful organizations, I've decided to retire, resulting in my resignation as the Chief Financial Officer of Alkami Tech. I will continue as Alkami's CFO while the company identifies and onboards a replacement, or February 27, 2026, whichever date occurs first. I also plan to continue in a consultative capacity through December of 2026, or an earlier date if my services are no longer necessary, to ensure a smooth transition of responsibilities.
Brian Hill: After 36 years of experiences and relationships I won't forever cherish and have any opportunity to be a part of successful organizations I've decided to retire resulting in my resignation as the Chief Financial Officer, Malcolm you technology.
Brian Hill: I will continue as alchemy CFO, while the company identifies an onboard to replacement or February 27th 2026, whichever data <unk> also.
Brian Hill: We also plan to continue on a consultative capacity through December of 2026, or an earlier date. If my services are no longer necessary to ensure a smooth transition of responsibilities. This was not an easy decision for me, but I believe it is the right time for my family as we move into the next chapter of life.
Brian Hill: This was not an easy decision for me, but I believe it is the right time for my family as we move into the next chapter of life. I want to express my heartfelt gratitude to all Alkami Tech students and faculty. especially the CFO team, as well as our board of directors and our shareholders for the support and trust you've placed in me over the years. It has been an incredible journey and I am proud of what we've accomplished together, particularly in driving the company's growth and scaling its profitability. We have a strong leadership team in place and I'm confident that Alkami will continue to thrive and achieve its objective of becoming the number one digital banking platform.
Brian Hill: I want to express my heartfelt gratitude to all ALCHEMIST, especially the CFO team as well as our board of directors and our shareholders for the support and Trust you have placed in me over the years. It has been an incredible journey and I am proud of what we've accomplished together, particularly in driving the company's growth and scaling.
Brian Hill: Its profitability, we have a strong leadership team in place and I'm confident that alchemy will continue to thrive and achieve its objective of becoming the number one digital banking platform. Thank you again for your support now I will turn to discuss our financial performance.
Brian Hill: Thank you again for your support.
Brian Hill: Now I'll turn to discuss our financial performance. In the first quarter of 2025, we continued to drive exceptional revenue growth and exceeded our profitability goals. We also completed the acquisition of Mantle, the largest in our history, completed a convertible notes offering, and expanded our credit facility.
Brian Hill: In the first quarter of 2025, we continue to drive exceptional revenue growth and exceeded our profitability goals. We also completed the acquisition of mantle the largest in our history completed a convertible notes offering and expanded our credit facility today.
Brian Hill: Today, we are reporting results inclusive of the mantle acquisition, which we closed on March 17, 2025. Consistent with our prior acquisitions, we do not include acquired clients or users in our digital banking platform count. Our reported clients and users reflect only those on our digital banking platform. All other financial metrics include the impact from acquisitions, such as ARR, ARR Backlog, and Average Revenue Per Use. In the first quarter, we achieved total revenue of $97.8 million, representing year-over-year growth of 28.5%, and improved adjusted EBITDA to $12.1 million, compared to $3.8 million in the year-ago quarter. Revenue for the first quarter included a few unexpected items, such as $1.4 million from closing the mantle acquisition earlier than expected and $600,000 of revenue originally expected to occur in the second quarter of 2025 related to our annual client conference COLA.
Brian Hill: Today, we are reporting results inclusive of the mantle acquisition, which we closed on March 17th 2025, consistent with our prior acquisitions. We do not include acquired clients or users and our digital banking platform counts.
Brian Hill: Our reported clients and users reflect only those on our digital banking platform.
Brian Hill: All other financial metrics include the impact from acquisitions, such as <unk>, <unk> backlog and average revenue per user.
Brian Hill: In the first quarter, we achieved total revenue of $97 8 million representing year over year growth of 28.5% and improved adjusted EBITDA to $12 1 million compared to $3 8 million in the year ago quarter.
Brian Hill: Revenue for the first quarter included a few unexpected items, such as $1 4 million from closing the mantle acquisition earlier than expected and $600000 of revenue originally expected to occur in the second quarter of 2025 related to our annual client conference co.
Brian Hill: Subscription revenue grew 27% in the first quarter and represented 95% of total revenue. We increased ARR by 33% and exited the quarter at $404 million. We currently have approximately $68 million of ARR and backlog for implementation, the majority of which will occur over the next 12 months. Included in our backlog are 36 new digital banking clients representing 1.1 million digital users. We edged to the quarter with 278 live clients and 20.5 million registered users on our digital banking platform, representing registered user growth of approximately 2.3 million, or 13%, compared to last year. Over the last 12 months, we implemented 37 financial institutions and 3 clients left our platform.
Brian Hill: Subscription revenue grew 27% in the first quarter and represented 95% of total revenue.
Brian Hill: We increased <unk> by 33% and exited the quarter at $404 million.
We currently have approximately $68 million that are in backlog for implementation the majority of which will occur over the next 12 months <unk>.
Brian Hill: Included in our backlog of 36, new digital.
Brian Hill: Digital banking clients, representing $1 1 million digital users.
Brian Hill: We exited the quarter with 278 life clients and 25 million registered users on our digital banking platform, representing registered user growth of approximately $2 3 million or 13% compared to last year.
Brian Hill: Over the last 12 months, we implemented 37 financial institutions and three clients left or a platform.
Brian Hill: As a reminder, because of the long-term nature of our contracts, we have three to four quarters of visibility into upcoming client attrition. Currently, we expect to churn four class of 2025, representing less than 1% of ARR. Over the long term, we model digital banking ARR churn at 2% to 3% per year. The primary driver of churn continues to be M&A and consolidation within our client base. We ended the quarter with an RPU of $19.74, of 18% compared to a year ago, driven by the acquisition of Mantle, add-on sale success, and the addition of new clients who tend to onboard with a higher average RPU.
Brian Hill: As a reminder, because of the long term nature of our contracts, we have three to four quarters of visibility into upcoming client attrition.
Brian Hill: Currently we expect to churn for class, a 2025, representing less than 1%.
Brian Hill: Sure.
Brian Hill: Over the long term, we model a digital banking <unk> churn at 2% to 3% per year. The primary driver of churn continues to be Illinois and consolidation within our client base.
Brian Hill: We ended the quarter with an RP you of $19.74 of 18% compared to a year ago, driven by the acquisition of mantle.
Brian Hill: Add on sales success, and the addition of new clients, who tend to onboard with a higher average arpus.
Brian Hill: We continue to see broad-based demand across our product portfolio evidenced by our sales pipeline, new logo, and client renewal success, our ability to cross-sell new products into our install base, and now the rate in which we are seeing the market adopt the MANL onboarding and account opening solution. For the first quarter, we signed four new digital banking platform clients and renewed four existing clients, representing eight contract signings. Mantle added 16 new clients, five of which are Alkami digital banking clients. Excluding Mantle's performance, our add-on sales effort represented approximately 57% of new sales for the quarter.
Brian Hill: We continue to see broad based demand across our product portfolio evidenced by our sales pipeline new logo and client renewal success, our ability to cross sell new products into our installed base and now the rate in which we are seeing the market adopt the mantle onboarding and account opening solution for.
Mansell: For the first quarter, we signed four new digital banking platform clients and renewed for existing clients, representing eight contract signings Mansell added 16, new clients five of which are alchemy digital banking clients. Excluding mantles performance are add on sales effort representative.
Mansell: Proximately, 57% of new sales for the quarter.
Brian Hill: Regarding renewals, we expect a total of 25 renewals in 2025, slightly below our recent average, as we pull forward several renewals into 2024. Our remaining performance obligation was approximately $1.6 billion, representing 3.9 times our ARR and up 31% compared to a year ago.
Mansell: Regarding renewals, we expect a total of 25 renewals in 2025 slightly below our recent average as we pulled forward several renewals into 2024.
Mansell: Our remaining performance obligation was approximately $1 $6 billion, representing three nine times, our <unk> and up 31% compared to a year ago.
Brian Hill: Now turning to Gross Margin. For the first quarter of 2025, we delivered non-gap gross margin of 64.3%, representing over 250 basis points of expansion compared to the prior year. We achieved gross margin expansion through continued improvement in our hosting costs and platform investments, as well as operating leverage across our post-sales operations.
Mansell: Now turning to gross margin for the first quarter of 2025, we delivered non-GAAP gross margin of 64, 3% representing over 250 basis points of expansion compared to the prior year. We achieved gross margin expansion through continued improvement in our hosting costs and platform investments as well.
Mansell: As operating leverage across our post sales operation.
Brian Hill: Moving to operating expenses. For the first quarter of 2025, operating expenses of $51.2 million, or 52% of revenue, represented year-over-year operating leverage of approximately 500 basis points. We primarily drove operating leverage across R&D and G&A, where we continue to realize operational scale. Related sales and marketing expense, we typically conduct COLAB in the second quarter, resulting in approximately $3 million of seasonally higher expense during this quarter. However, in 2025, COLAB occurred during the first and second quarters, resulting in seasonally higher operating expenses in both quarters. Regarding go-to-market efficiency, we continue to rank among the best in SAS.
Mansell: Moving to operating expenses for the first quarter of 2025 operating expenses of $51 2 million or 52% of revenue represented year over year operating leverage of approximately 500 basis points.
Mansell: Primarily drove operating leverage across R&D, and G&A, where we continue to realize operational scale.
Mansell: Related to sales and marketing expense, we typically conduct co lab in the second quarter.
Mansell: Resulting in approximately $3 million of seasonally higher expense. During this quarter. However in 2025 co lab occurred during the first and second quarters, resulting in seasonally higher operating expenses in both quarters regarding go to market efficiency, we continue to rank among the best in SaaS.
Brian Hill: During the last 12 months, we increased ARR $1.20 for each dollar of sales and marketing spend, excluding the impact from the mantle acquisition and the timing of co-last. Our adjusted EBITDA in the first quarter was $12.1 million, better than the high end of our expectations and representing an adjusted EBITDA margin of 12.3%. We are investing in our captive offshore capability, and as we discussed in the last several quarters, we expect an investment of approximately $5 million through 2025. We're still planning to complete the transition from our current vendor during 2026, and we do not anticipate any impact on our 2026 financial targets, although we do expect to see a positive impact on margins beyond 2026.
Mansell: During the last 12 months, we increased <unk> $1 20 for each dollar of sales and marketing spend excluding the impact from the mental acquisition and the timing of co lab.
Mansell: Our adjusted EBITDA in the first quarter was $12 1 million better than the high end of our expectations and representing an.
Mansell: And adjusted EBITDA margin of 12, 3%.
Mansell: We are investing in our captive offshore capability and as we discussed in the last several quarters, we expect an investment of approximately $5 million for 2025.
Mansell: We're still planning to complete the transition from our current vendor during 2026, and we do not anticipate any impact on our 2026 financial targets. Although we do expect to see a positive impact on margins beyond 2026.
Brian Hill: Related to our balance sheet, we ended the quarter with $95 million of cash and marketable securities. We also announced an amendment to our credit facility which expanded our revolver from $125 million to $225 million and extended the maturity date to February of 2030.
Mansell: Related to our balance sheet, we ended the quarter with $95 million of cash and marketable securities. We also announced an amendment to our credit facility, which expanded our revolver from 125 million to $225 million and extended the maturity date to February of 2030.
Brian Hill: Before turning to guidance, let me provide a post-closing recap of the Mantle acquisition. We closed the Mantel acquisition on March 17th, a few weeks earlier than expected. As we announced in February's press release, we agreed to acquire Mantel for an enterprise value of $400 million on a debt-free and cash-free basis and also subject to customary purchase price adjustments. After these adjustments, the final enterprise value is $393 million, which includes the following. $375 million of purchase consideration. $11 million in equity compensation for mantle employees replacing their uninvested equity compensation at the time of acquisition, and $7 million categorized as current period compensation and prepaid compensation, which is presented as a cash Cash Outflow from Operating Activities on the Cash Flow State.
Mansell: Before turning to guidance, let me provide a post closing recap of the mantle acquisition.
Mansell: We closed the mineral acquisition on March 17th a few weeks earlier than expected as we announced in February press release, we agreed to acquire mantle for an enterprise value of $400 million on a debt free and cash free basis, and also subject to customary purchase price adjustments.
Mansell: After these adjustments the final enterprise value is $393 million, which includes the following.
Mansell: $375 million of purchase consideration.
Mansell: $11 million in equity compensation for mantle employees, replacing their unvested equity compensation at the time of acquisition.
Mansell: And $7 million.
Mansell: Categorized as current period compensation and prepaid compensation, which is presented as a cash.
Mansell: Cash outflow from operating activities on the cash flow statement.
Brian Hill: The $375 million of purchase consideration was financed as follows. $13,000,000 from our balance sheet cash, $60,000,000 from our credit facility, and $302,000,000 from net proceeds of convertible notes issued on March 10th after the accounting for the cost of the CAP call. The convertible notes had a 1.5% coupon and a 37.5% conversion premium.
Mansell: The $375 million of purchase consideration was financed as follows.
Mansell: $13 million from our balance sheet cash $60 million from our credit facility and $302 million from net proceeds of convertible notes issued on March 10, after the accounting for the cost of the capped call.
Mansell: The convertible notes had a one 5% coupon and a 37, 5% conversion premium as mentioned earlier, we also entered into a capped call transaction linked to the convertible notes effectively raising the conversion premium to 100%.
Brian Hill: As mentioned earlier, we also entered into a capped call transaction linked to the convertible notes, effectively raising the conversion premium to 100%.
Brian Hill: Now turning to guides. For the second quarter of 2025, we are providing guidance for revenue in the range of $109 million to $110.5 million, which represents total revenue growth of 33% to 35%. For Adjusted EBITDA, we are providing second quarter guidance in the range of $9 million to $10 million, which includes a full quarter of Adjusted EBITDA loss for MANTA.
Mansell: Now turning to guidance for the second quarter of 2025, we are providing guidance for revenue in the range of $109 million to $110 5 million, which represents total revenue growth of 33% to 35%.
Mansell: For adjusted EBITDA, we are providing second quarter guidance in the range of $9 million to $10 million, which includes a full quarter of adjusted EBITDA loss for mantle.
Brian Hill: for the full year of 2025. We are providing guidance for revenue in the range of $443 million to $447 million, representing total revenue growth of 33% to 34% and organic revenue growth at 25% to 26%. We are also providing adjusted EBITDA guidance of $49.5 million to $52.5 million. For full-year guidance, it includes a revenue contribution of approximately $31.4 million and an adjusted EBITDA loss of $5 million from the mantle acquisition.
Mansell: For the full year of 2025, we are providing guidance for revenue in the range of 443 million to $447 million, representing total revenue growth of 33% to 34% and organic revenue growth of 25% to 26%. We are also providing adjusted EBITDA guidance.
Mansell: $49 5 million to $52 5 million.
Mansell: For full year guidance. It includes a revenue contribution of approximately $31 4 million.
Mansell: And an adjusted EBITDA loss of $5 million from the mantle acquisition.
Brian Hill: We believe the Mantle business will be accretive to adjusted EBITDA in 2026. We expect Mantle's ARR under contract at December 31st, 2025, to be approximately $60 million, representing a growth rate of about 30% when compared to the same metric at the end of 2020.
Mansell: We believe the mantle business will be accretive to adjusted EBITDA in 2026, we expect mantles, a or are under contract at December 31, 2025 to be approximately $60 million, representing a growth rate of about 30% when compared to the same metric at the end of 2024.
Brian Hill: In closing, we continue to drive great financial results while executing against our long-term objectives. We continue to leverage our unique financial model and strengthen our competitive position, making us one of the premier SaaS investments in the market.
Mansell: In closing.
Mansell: We continue to drive great financial results, while executing against our long term objectives, we continue to leverage our unique financial model and strengthen our competitive position, making us one of the premier SaaS investments in the market.
Operator: With that, I'll hand the call to the operator to take your questions. Thank you.
Mansell: With that I'll hand, the call to the operator to take your questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone.
Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any key.
Speaker Change: Here at <unk> that <unk> had has been raised.
Speaker Change: Should you wish to decline from the polling process. Please press star followed by the number.
Speaker Change: If you are using a speaker phone please lift the handset before pressing any keys.
Elyse Kanner: Your first question comes from the line of Alexei Gogolev from JP Morgan. Your line is now open. Hi, this is Elyse Kanner on for Alexei Gogolev. So you did confirm the $5 million in spend for the Offshore Initiative. Was it still a lighter expense in Q1? And is kind of the cadence of the expense and benefits still proceeding at this time? That's right. It is a lighter expense in Q1, and actually the majority of that expense will be concentrated in the third and fourth quarter of 2025. But we're making a lot of progress. I mean, we now have 40 alchemists in our India Global Capabilities Center, so we're super excited about that.
Speaker Change: First question comes from the line of Alex Alexei <unk> from Jpmorgan. Your line is now open.
Alicia: Hi, This is Alicia <unk> on for Alexia go grab so you did confirm the $5 million in spend for the offshore and initiatives.
Alicia: It's still a lighter expense in Q1 and is kind of the cadence of the expense and benefits still proceeding as expected.
Alicia: Sure.
Alicia: Thats right. It is a lighter expense in Q1 and actually the majority of that expense will be concentrated in the third and fourth quarter.
Alicia: 2025, but we're making a lot of progress I mean, we now have 40 outcome is.
Alicia: And our India Global capability Center, So we're super excited about that.
Elyse Kanner: We also feel that by the end of this year, we'll start approaching 170, 180 offshore employees. And keep in mind, many of those are transferring from the current provider that we have today that's a third-party provider. We exited 2024 with around 125 consultants from that third party. Got it, thank you.
Alicia: We also feel that by the end of this year, we'll start approaching.
Alicia: 170, 180 offshore employees and keep in mind. Many of those are transferring from the current provider that we have today. That's a third party provider. We exited 2024 at around 125 consultants from that third party.
Speaker Change: Got it. Thank you and then when you cited the growth in.
Elyse Kanner: And then when you cited the growth in revenue per user, what's the order of factors that you mentioned how much they're contributing? So is Mantle maybe the largest contributor to that growth followed by success in add-on sales and then new clients adopting more products? That's right.
Speaker Change: Revenue per user what's the order of factors that you mentioned, how much they're contributing with mantle may be the largest contributor to that growth followed by success in add on sales.
Speaker Change: New clients adopting more product.
Speaker Change: That's right.
Elyse Kanner: And so the way that, and I outlined this on the call, but the way that we treat all of our acquisitions, if we include all the ARR in the RPU calculation, however, we only include digital banking platform registered users. And so as a result of that, Mansfield contributed about $1.80 to RPU this quarter. And then going forward, we'll expect a more normalized growth rate of around 7%, 8%. Got it.
Speaker Change: And so the way that <unk> outlined this on the call, but the way that we treat all of our acquisitions.
Speaker Change: Yes.
Speaker Change: We include all the IRR and the RPE calculation. However, we only include digital banking platform, our registered users and so as a result of that <unk> contributed about $1 80 to RPE this quarter.
And then going forward, we will expect a more normalized growth rate of around seven 8%.
Speaker Change: Got it thank you so much.
Elyse Kanner: Thank you.
Chris Kennedy: Your next question comes from the line of Chris Kennedy from William Blair. Your line is now open.
Christopher Kennedy: Your next question comes from the line of Chris Kennedy from William Blair. Your line is now open. Good afternoon.
Chris Kennedy: Yeah. Good afternoon. Thanks for taking my question and congratulations Brian on the announcement.
Christopher Kennedy: Thanks for taking the question and congratulations, Brian, on the announcement. Alex, you talked about the strong cross selling initially at Mantle. Can you just frame the opportunity there and maybe compare it with the experience that you've had at ACH Alert or Segment? Yeah, thanks. We were pleased that in the first quarter, in the first quarter, Mantle had five transactions that they sold into the Alkami base. And what's exciting for us is that's really before we start to put in the effort to do all of the account planning work, the account profiling work, getting the sales teams working together on pursuits.
Alex Shoopman: Alex you talked about that.
Alex Shoopman: Strong cross selling initially at Mansell can you just frame the opportunity there and maybe compare it with the experience that <unk> had at ACTH alert our segment.
Speaker Change: Yes. Thanks, we were pleased that in the first quarter.
Alex Shoopman: <unk>.
Alex Shoopman: In the first quarter mantle had five transactions that they sold into the alchemy base and what's exciting for US is thats really.
Alex Shoopman: Before we start to put in the effort to do all of the account planning work the account profiling work.
Alex Shoopman: Getting the sales teams working together on pursuits, and so that initial success along with the progress that we're seeing internally.
Christopher Kennedy: And so that initial success, along with the progress that we're seeing internally, provides us a lot of confidence in the cross-selling opportunity within the base. I would expect, if you looked at our ACH acquisition, that was more of a standalone product, and it was applicable to some parts of our base. The segment acquisition was more of a product that would be integrated into our sales motion, and it has been more applicable to our entire base. My expectation would be that the Mantle acquisition behaves more like the segment acquisition than the ACH Alert acquisition.
Alex Shoopman: Provides us a lot of confidence in the cross selling opportunity within the base I would expect.
Alex Shoopman: If you looked at our AC H trends, our <unk> acquisition.
Alex Shoopman: That was more of a stand alone product and it was applicable to some parts of our base.
Alex Shoopman: The segment acquisition was more of a product that would be integrated into our sales motion.
Alex Shoopman: It has been more applicable to our entire base my expectation would be that the mantle acquisition.
Alex Shoopman: <unk> more like the segment acquisition, then the <unk> acquisition.
Christopher Kennedy: Yeah, and Chris, I'll add a couple of comments to Alex's. What we found with Segment, as you're aware, given it's a sales and marketing product, it's a, you know, kind of a newer solution in the space, it took us a while to identify, you know, how to get to the right buyer in our end market. And so it took some time to gain the traction for Segment to become, you know, a part of, you know, like now 70% of our new logo transactions. And then even the cross-sell effort was a little bit more challenging because it was generally a different buyer in the financial institution.
Chris Kennedy: And Chris I'll add a couple of comments to Alex's.
Speaker Change: What we found with segment.
Speaker Change: You are aware, given it's a sales and marketing product.
Speaker Change: Hey.
Speaker Change: Kind of a new were.
Speaker Change: Solution in this space it took us a while to identify how to get to the right buyer and our end market.
Speaker Change: And so it took some time to gain the traction for segment to become a part of now 70% of our new logo transactions and then even the cross sell efforts was a little bit more challenging because it was generally a different buyer in the financial institution, that's not that's not the.
Christopher Kennedy: That's not the case with Mantle. Mantle, you know, oftentimes is the same or certainly common interest buyer in the financial institution. Mantle has a more established go-to-market effort in place. And so I would expect the success that we ultimately have realized on Segment, we're going to achieve that much sooner as it relates to Mantle. Got it.
Speaker Change: Case with mantle.
Speaker Change: Mantle.
Speaker Change: And oftentimes is the same or certainly common interest buyer in the financial institution mantle has.
Speaker Change: A more established go to market.
Speaker Change: Effort in place and so I would expect the success that we ultimately have realized on segment, we're going to achieve that much sooner as it relates to metal.
Speaker Change: Got it very helpful. And then just a follow up on Mansell.
Christopher Kennedy: Very helpful. And then just a follow-up on Mantle. The account opening is clear.
Speaker Change: Yes.
Speaker Change: The account opening is clear can you just talk a little bit about the LLS opportunity with Nassau and kind of what the competitive landscape is in that market.
Christopher Kennedy: Can you just talk a little bit about the LOS opportunity with Nantel and kind of what the competitive landscape is in that market? You know, when we made the last call, when we made the announcement about Mantle, what we said at that time, which is still the same today, is that Mantle has a group of development customers. for whom they are building an LOS capability. And we're eagerly tracking that effort. And when that effort is successful, then as a company, we'll make a decision whether or not we're bringing an LOS application to market. So I want to be clear that this is still a development effort.
Speaker Change: Yes, when we made the.
Speaker Change: Ed.
Speaker Change: Yes.
Speaker Change: Call when we made the announcement about <unk>, what we said at that time, which is still the same today.
Speaker Change: Is that.
Speaker Change: <unk> has a group of development customers.
Speaker Change: For whom they are building an LLS capability.
Speaker Change: And we are eagerly.
Speaker Change: Tracking that that effort.
Speaker Change: And when that effort is successful.
Speaker Change: And as a company, we'll make a decision whether or not we're bringing an LLS application to market. So I want to be clear, though this is still a development effort. It's a development effort with a set of clients. We expect the effort to be successful.
Christopher Kennedy: It's a development effort with a set of clients. We expect the effort to be successful. But we'll make a decision about bringing a product to market more broadly after we see the results of that development effort.
Speaker Change: But we'll we'll make a decision about bringing a product to market more broadly after we see the results of that of that development effort.
Speaker Change: Understood. Thanks for taking the questions.
Christopher Kennedy: Understood.
Christopher Kennedy: Thanks for taking the question.
Speaker Change: Okay.
Speaker Change: Your next question comes from the lineup Jacobs Stefan from Lake Street Capital Markets. Your line is now open.
Jacob Stephan: Your next question comes from the line of Jacob Stephan from Lake Street Capital Market. Your line is now open. Hey, guys, appreciate you taking the questions and congrats, Brian, on all the success you've had with Alkami here. Just wanted to touch a little bit on the mantle acquisition. Maybe you could kind of, you know, tell us where you're seeing the most traction. Is it on the credit union side? Is it banks? Is it broad? Right now, we're seeing balanced demand on both banks and credit unions. As we discussed in the acquisition call, one of the things that we really liked beyond the culture and the people of Mantle is the product itself serves both banks and credit unions and serves both retail and commercial.
Jacobs Stefan: Hey, guys I appreciate you taking the questions and congrats Brian on all the success you've had with alchemy here.
Speaker Change: Just wanted to touch a little bit on the mantel acquisition, maybe you could kind of.
Speaker Change: Tell us where youre seeing the most traction is it on the credit Union side is it banks is it broad.
Speaker Change: Right now, we're seeing balanced demand on both banks and credit unions.
Speaker Change: We discussed in the acquisition call.
Speaker Change: One of the things that we really liked beyond the culture and the people of mantle as the product itself serves both banks and credit unions and serves both retail and commercial so right now we're seeing pretty balanced demand in both in both cases, what what's driving the demand and I've mentioned this on the call.
Jacob Stephan: So right now, we're seeing pretty balanced demand in both cases. What's driving the demand, and I mentioned this on the call, every one of our customers If you think about the credit union side, the average age of a customer in a credit union tends to skew a little bit older than the average age of a customer in a bank, and every one of our CEOs knows that, and every one of our CEOs is developing strategies to attract the next generation of members, and the most important element of the strategy to attract that next generation of members is an account opening experience that matches the kind of account opening experience that folks are used to in all other aspects of their lives.
Speaker Change: Every one of our customers.
Speaker Change: If you think about the credit Union side, the average age of our customer and our credit union tends to be skewed a little bit older than the average age of our customer and our bank and every one of our Ceos knows that every one of our Ceos is developing strategies to attract the next generation of.
Speaker Change: Of members and the most important element of the strategy to attract that next generation of members.
Speaker Change: Is.
Speaker Change: And account opening experience that matches the kind of account opening experience that <unk>.
Speaker Change: Folks are used to in all other.
Speaker Change: Aspects of their lives so for us whats exciting is as balanced demand in both bank and credit Union.
Jacob Stephan: So, for us, what's exciting is it's balanced demand in both bank and credit union, but the demographics and the business strategy in the credit union we think are going to be a really nice tailwind for driving Mantle into the credit union space. Okay, got it, that's helpful. And then maybe just touching on the backlog, 68 million of ARR, sounds like a lot of that kind of uptick is from the mantle acquisition, but maybe, you know, what's the breakdown of, you know, banks to credit units in that? 36 new customers. Yeah, so we got 36 clients in backlog, and 16 of those are banks.
Speaker Change: But the demographics and the business strategy in the credit Union, we think are going to be a really nice tailwind for driving mantle into the credit Union space.
Speaker Change: Okay got it that's helpful.
Speaker Change: And then maybe just touching on the backlog of $68 million.
Speaker Change: It sounds like a lot of that kind of.
Speaker Change: Uptake has from the mantle acquisition, but maybe whats the breakdown of banks to credit units and that.
Speaker Change: 36, new customers.
Speaker Change: Yes, So we got 36 clients in backlog and 16 of those are banks.
Jacob Stephan: As you would expect, the banks are carrying a much higher RPU of around $30. The credit unions are carrying an RPU of just under $20. The sequential step-up in backlog from Q4 is largely driven by Manil. Manil has a significant ARR backlog, as well as a significant number of financial institutions of backlog. It's around 50 financial institutions in backlog. That's great, Culler. I appreciate you taking the questions. Congrats.
Speaker Change: As you would expect the banks were carrying a much higher <unk> of around $30.
Speaker Change: Credit unions are carrying in our peer just under $20.
Speaker Change: Sequential step up.
Speaker Change: And backlog from Q4.
Speaker Change: <unk> is largely driven by mail mantle has a significant.
Speaker Change: <unk> backlog.
Speaker Change: As well as a significant number of financial institutions backlog, it's around 50 financial institutions in backlog for mail.
Speaker Change: That's great color I appreciate you taking the questions congrats.
Speaker Change: Your next question comes from the line of Charles Nabhan from Stephens. Your line is now open.
Charles Nabhan: Your next question comes from the line of Charles Nabhan from Stephens. Your line is now open. Good afternoon, and thank you for taking my question.
Charles Nabhan: Good afternoon, and thank you for taking my question I wanted to ask Chris a question from a slightly different angle sounds like there's some early signs of progress in terms of cross selling <unk> into your existing base. So I understand you didn't change the assumptions for the 'twenty full year 2025 guide, but is there any.
Charles Nabhan: I want to ask Chris's question from a slightly different angle. It sounds like there's some early signs of progress in terms of cross-selling Mantle into your existing base. So I understand you didn't change the assumptions for the full-year 2025 guide, but is there anything that's occurred over the past few weeks since the close that made you rethink or change the way you're going to approach sales and marketing or cross-sell, maybe accelerating some of your initiatives over the next year to drive synergies over the medium to long-term? The thesis that we had in the acquisition remains how we plan to execute the business.
Charles Nabhan: Anything that's occurred over the past few weeks since the close that.
Charles Nabhan: Made you rethink or change the way youre going to approach sales and marketing our cross sell maybe accelerating some of your initiatives.
Charles Nabhan: Over the next year to drive synergies over the medium to long term.
Charles Nabhan: The thesis that we had in the acquisition remains how we plan to execute the business. There is a fantastic sales and marketing machine inside of mantle and that machine is going to continue to run and cell mantle, new logos in the broader market.
Charles Nabhan: There's a fantastic sales and marketing machine inside of Mantle. And that machine is going to continue to run and sell Mantle new logos in the broader market. and the Alkami Customer Base. Then we have our client sales executive team that's assigned to our customer. they will be selling Mantle into our customer base. And then we have an Alkami New Logo sales team that's selling New Logo Online Banking, and they are selling Mantle into New Logo Online Banking opportunities.
Charles Nabhan: Items.
Charles Nabhan: Outside of the alchemy customer base.
Then we have our client sales executive team, that's assigned to our customer base.
Charles Nabhan: They will be selling mantle into our customer base and then rehab on alchemy, new logo sales team is selling new logo online banking.
Charles Nabhan: And they are selling mantle into new logo online.
Charles Nabhan: Banking opportunities. So that was the thesis that we had when we made the acquisition and Thats the plan that at least for this.
Charles Nabhan: So that was the thesis that we had when we made the acquisition, and that's the plan that, at least for this, at this point in time, that's the plan that we're gonna continue to execute again.
Charles Nabhan: At this point in time, that's the plan that we're going to continue to execute against.
Charles Nabhan: Got it.
Charles Nabhan: And as a follow-up, really nice result on the RPO growth this quarter and I understand some of it is from, some of it is probably from Mantle, but I was wondering if you could parse out how much is on, how much of the growth was on an organic basis and if there were any anything unusual in terms of like larger deals or pull forwards and renewals that occurred around the quarter. No, we experienced in 2024, you know, we had a lot of good renewal success. So a lot of the pull forwards we experienced were in 2024.
Charles Nabhan: And as a follow up.
Charles Nabhan: Really nice.
Charles Nabhan: Result on the <unk> growth this quarter and I understand some of it is from.
Charles Nabhan: Some of it is probably from mantle, but I was wondering if you could parse out how much.
Charles Nabhan: How much of the growth was on an organic basis and if there were any.
Charles Nabhan: Anything unusual in terms of like larger deals or pull forwards.
Charles Nabhan: Renewals that occurred during the quarter.
Charles Nabhan: No we expect experienced in 2024.
Charles Nabhan: You'll get a lot of good renewal success. So a lot of the pull forwards we experienced were in 2024.
Charles Nabhan: We had eight total contract signings in the first quarter of 2025. Half of those were renewals. So the combination of those eight, though, were the driver of organic RPO growth, which is around 20%. And then, of course, we drop in mantle that drives the other 11 percentage points of growth year over year. Got it.
Charles Nabhan: We had eight total contract signings and.
Charles Nabhan: In the first quarter 2025 half of those were renewals.
Charles Nabhan: The.
So the combination of those eight though were the driver of organic <unk> growth, which is around 20% and then of course, we drop in mantle that drives the other 11 percentage points of growth year over year.
Charles Nabhan: Got it.
Charles Nabhan: Thanks for all the color, and Brian, congratulations on your announcement. Thanks, Chad.
Speaker Change: Thanks for all the color and Brian Congratulations on your announcement.
Brian Hill: Thanks Chuck.
Speaker Change: Your next question comes from the line of Jeff Van <unk> from Craig Hallum. Your line is now open.
Jeff Bandy: Your next question comes from the line of Jeff Bandy from Craig Hallam. Your line is now open. Great. Thanks for taking the questions. And Ryan, I'll add my congrats. You'll be missed. Sorry to see you going, but certainly wish you all the best.
Speaker Change: Great. Thanks for taking the question is from Ryan I'll add my congrats youll be missed sorry to see you go on but certainly wish you all the best.
Jeff Bandy: A number of questions, a few housekeeping mostly. In terms of the analytics side, I want to circle back to that maybe a little bit. Where is that in terms of, I think I might have heard Alex reference an attach rate on new bookings, but just if you could state that again, and maybe in the context of total revenue, wondering where you are at this point in terms of analytics. Yeah, we don't split out the revenue, Jeff, as you can imagine, because the way we go to market is a combined offering, and when you start unpacking discounts and those kinds of things, you really kind of start losing the trail on revenue at an individual basis.
Speaker Change: A number of questions a few housekeeping, mostly in terms of the analytics side I didn't I wanted to circle back to that maybe a little bit where is that in terms of I think I might have heard Alex referenced in attach rate on new bookings, but just if you could state that again and maybe in the context of total revenue wondering where you are at this point in terms of analytics.
Speaker Change: Yeah, we don't split out the revenue Jeff as you can imagine because the way we go to market as a combined offering.
Speaker Change: When you start unpacking discounts and those kinds of things, you're really kind of start losing the trail on revenue at an individual basis, but what we've been experiencing and this has been for I would say the last.
Jeff Bandy: But what we've been experiencing, and this has been for, I would say, the last four to six quarters, we're having an attachment rate of about 70% of Mantle on all new logo wins. I'm sorry, yeah, segment, on all new logo wins. And then even for ACH Alert, when it's a bank FI that we're winning, we have an attachment rate 75% up to 80%. So Mantle carries a much higher average ARR than both of those solutions, and we feel that we can achieve somewhere close to the segment attachment rate. So when you think in terms of deal value, a couple things should happen.
Speaker Change: Four to six quarters, where having an attachment rate of about 70% of mantle on saw new logo win I'm, sorry, Yes segment, all new logo wins and.
Speaker Change: And even for AC H alert.
Speaker Change: It's a bank AFI that we're winning we have an attachment rates 75 up to 80% so.
Speaker Change: Matt.
Carries a much higher average.
Speaker Change: More than both of those solutions.
Speaker Change: And we feel that we can achieve somewhere close to the segment attachment rates. So when you think in terms of deal value.
Speaker Change: A couple of things could should happen, we should see a higher deal values and there was ceased mansell differentiation. We should also start experiencing a bit higher win rate on new logo wins.
Jeff Bandy: We should see a higher deal value, and then with the Mantle differentiation, we should also start experiencing a bit higher win rate on new logo. Very helpful. And you continue to see the add-ons ramp as well.
Speaker Change: Yes.
Speaker Change: Very helpful and you've continued to see the add on add ons ramp as well any thoughts on goals for add ons as a percentage of the bookings for the year for 2005.
Jeff Bandy: Any thoughts on goals for add-ons to send to the bookings for the year, for 25? I think the long-term shape of the business that we've articulated for a few years is that in terms of new ARR, we'd like half of that to come from add-on sales, half of that to come from new logos, and in terms of new logos themselves, over time, we'd like half of that to come from credit unions and half of that to come from banks. That's right. And I'll only qualify what Alex just mentioned, is we'll include mantle as an add-on sale, just like we do Segma and ACH Alert when we sell that into a new logo for those products, so in other words, not a part of a new logo deal.
Speaker Change: I think the long term shape of the business that we've articulated for a few years is that in terms of <unk>.
Speaker Change: New <unk>, we'd like half of that to come from add on sales half of that to come from new logos and in terms of new logos and sales over time, we'd like half of that to come from credit unions in half that's come from banks, that's rugs and I'll only qualify what Alex just mentioned is will include mantle.
Speaker Change: <unk> as an add on sale just like we do segment in <unk> alert when we sell those.
Speaker Change: So that into a.
Speaker Change: Yeah.
Speaker Change: A new logo for those products. So in other words, not a part of our new logo deal and so you will see the 50% from add on sales trend up over time as mantle continues to have success, just adding new logos to their book of business.
Jeff Bandy: And so you will see the 50% from add-on sales trend up over time as Mantle continues to have success just adding new logos to their book of business. Yeah, very helpful.
Speaker Change: Yes.
Jeff Bandy: And then maybe just last, I think Alex might have been in the script of the release, but you talked about a continue to lead the industry and share gains. Just expand on that a little bit. Any any thoughts on you know, any quantification around that? Or, in particular, where that's coming from? Or most interestingly, maybe, you know, changes and where that share gain is coming from? Those comments would be related to third-party data that measures users, digital users in the marketplace, and the third-party data that we use is FI Navigator, and so that's the source of the data.
Very helpful. And then maybe just last I think Alex you might've been in <unk>.
Speaker Change: Script of the release you talked about continue to lead the industry and share gains just expand on that a little bit any any thoughts on any quantification around that or in particular, where that's coming from our most interestingly maybe changes in where that share gain is coming from.
Speaker Change: Those comments would be related to third party data that measures users digital users in the marketplace and the third party data that we users.
Speaker Change: <unk> navigator and so that's the source of the data, yes, when you look at the top five.
Jeff Bandy: Yeah, when you look at the top five market share owners in terms of users, Alkami is outperforming all five at a pretty fast rate. No one's really adding, you know, two and a half to three million digital users a year, but in terms of just pure percentage gain in market share, Alkami is leading the pack. Got it. Great.
Speaker Change: Market share owners in terms of users.
Speaker Change: Alchemy is outperforming all five at a pretty fast rate.
Speaker Change: No one's really adding two five to 3 million digital users a year, but in terms of just pure percentage gain in market share alchemy is leading the pack.
Speaker Change: Yes.
Speaker Change: Got it great. Thanks for taking the questions guys I appreciate it.
Jeff Bandy: Thanks for taking the questions, guys. Appreciate it.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Patrick Wall Ravens from citizens Bank. Your line is now open.
Patrick Walravens: Your next question comes from the line of Patrick Walravens from Citizens Bank. Your line is now open. Okay, great. Thank you.
Speaker Change: Okay, great. Thank you so.
Speaker Change: You know, Brian everyone else with congratulating, you, but I'm sad to see you go so when did you decide.
Patrick Walravens: Brian, everyone else is congratulating you, but I'm sad to see you go. So when did you decide? When did I just, you know, Pat, I knew out of everyone who asked me this question, it was going to be Pat Walraven. Yeah. And I'm going to miss you, Pat, because I really enjoy working with you. But no, seriously, to answer the question, you know, this is obviously a big decision for me. It's one where you take a lot of things into consideration. You know, and I reflected on, you know, really the success we've had at Alkami.
Speaker Change: We ended out as Pat I knew.
Speaker Change: Everyone, who asked me. This question it was going to be Pat Walraven.
Speaker Change: I'm going to Miss you, Pat because I really enjoy working with you, but no seriously to answer the question.
Speaker Change: Yes. This is obviously a big decision for me.
Speaker Change: It's one where you take a lot of things into consideration.
Speaker Change: And as I reflected on.
Speaker Change: Really the success, we've had at Alchemy, and then you factor in your age and changing family circumstances.
Patrick Walravens: And then you factor in your age and changing family circumstances and those kinds of considerations. And then you make the decision.
Speaker Change: And those kinds of considerations and then you make the decision.
Patrick Walravens: And so the decision for me was really 2026 is the year that I plan to walk away from. And so then you really come down to a couple other key considerations is, well, what's the best time to announce it once you make the casual decision and not really the formal decision of communicating with the company? And what I thought about, Pat, as it relates to that, is really how are you leaving the company where you were the CFO? Because it's very important to me that I'm walking away from a company knowing that it's performing well and it's going to continue to perform well.
Speaker Change: So the decision for me was really 2026 is the year that I plan to walk away from this.
Speaker Change: So then you really come down to a couple of other key considerations as well, what's the best time to announce it once you make the.
Speaker Change: The casual decision and not really the formal decision of communicating the company and what I thought about pet as it relates to that is really how are you, leaving the company where you were the CFO because it's very important to me that I'm walking away from.
Speaker Change: Our company, knowing that is performing well and it's going to continue to perform well Brian Hills sees.
Patrick Walravens: Brian Hill's CFO exit is not going to be a situation where a company drops off after the CFO leaves. And that's very, very important to me because we've accomplished way too much at Alkami for that to be the case. And then the last consideration, or I guess a couple more considerations, is around, well, what about the team? What about the CFO team? And the CFO team is more than ready to deal with the challenges that can occur by bringing in a new CFO. It is the absolute best CFO team I've ever worked with, and I'm very proud to have built this team over the last six years.
Speaker Change: CFO exit is not going to be a situation, where a company drops off after the CFO leaves and Thats very very important to me because we've accomplished way too much at al can be for that to be the case and then the last consideration or I guess, a couple of more considerations.
Speaker Change: Is around well what about the team what about the CFO team.
Speaker Change: And the CFO team is more than ready.
Speaker Change: To deal with the challenges that can occur by bringing in a new CFO. It is the absolute best CFO team I've ever worked with.
Speaker Change: And I'm very proud.
Speaker Change: To build this team over the last six years and then finally it's.
Patrick Walravens: And then finally, it's how much time do you want to give and provide the company? And in order for Alkami to bring in the right CFO, which it should attract top talent given our performance, given the management team and what we're trying to accomplish here, I wanted to make sure that Alex and the board had plenty of time to find the right candidate. So not a situation where there's a quick exit of a CFO and there's a shot clock running that the company feels like they need to make a rush decision. Alkami and Alex need to do this very thoughtfully, and they need to do it quite honestly with the transparency of it being known what's going on and not a confidential search and those kinds of things.
Speaker Change: How much time do you want to give and provide the company.
Speaker Change: And in order for alchemy to bring in the right CFO, which it should attract top talent given our performance.
Speaker Change: Given the management team and what we're trying to accomplish here.
Speaker Change: I wanted to make sure that Alex and the board had plenty of time.
Speaker Change: Find the right candidate so not a situation where theres a quick exited the CFO and theirs.
Speaker Change: <unk> clock running that the company feels like they need to make a rash decision I mean alchemy and Alex needs to do this very thoughtfully and they need to do it quite honestly with the transparency of.
Speaker Change: Being known what's going on and not a confidential search and those kinds of things. So so really all of that played into it Pat and that's how we landed where we are today.
Patrick Walravens: So really all that played into it, Pat, and that's how we landed where we are today. Yeah, that's actually super helpful.
Speaker Change: That's actually Super helpful.
Alex Shootman: Okay, so Alex, for you, what are you looking for in the next candidate?
Speaker Change: Okay. So Alex for you what are you looking for in the next candidate.
Alex Shootman: We've scraped some of Brian's skin cells and we've sent them off to a DNA place and we're cloning him, we're cloning him right now. So, I would just echo what Brian said, I think the company plus Brian have been thoughtful about providing investors with a long transition plan and then making the situation public so that we can execute a public search with an asset like Alkami, it's going to be a whole lot more effective executing a public search than trying to run a confidential search.
Speaker Change: We scraped some.
Speaker Change: Some of Brian's skin cells, and we've sent him off to a DNA place.
Speaker Change: And we are quoting him.
Speaker Change: Cloning him right now so.
Brian: I would just echo what Brian said.
Chris Kennedy: I think the company plus Brian had been thoughtful about providing investors with a long transition plan.
Chris Kennedy: And then making the situation public so that we can execute a public search.
Chris Kennedy: With an asset like Alex me, it's going to be a whole lot more effective executing a public search than trying to run.
Chris Kennedy: <unk>.
Chris Kennedy: Confidential search.
Chris Kennedy: Okay, Great and then if I could if I could do one more just big picture out whats the whats the most.
Alex Shootman: And if I could do one more, just big picture, what's the most important thing for you to get right over the next... We have an opportunity. to really create some space between us and the market from a differentiation perspective in the use cases and problems that we solve by bringing together digital banking, onboarding and account opening, and our data platform. And when we do that, is a digital banking provider. There's just going to be a lot of space between us and everybody else, which is going to, in my opinion, which is going to really help our win rate.
Chris Kennedy: Important thing for you to get rate over the next year.
Chris Kennedy: We have an opportunity.
Chris Kennedy: To really create some space between us and the market from a differentiation perspective.
Chris Kennedy: And the use cases and problems that we solve by bringing together digital banking.
Chris Kennedy: Onboarding and account opening and our data platform and when we do that.
Chris Kennedy: As a digital banking provider.
Chris Kennedy: Theres, just going to be a lot of space between us and everybody else, which is going to.
Chris Kennedy: In my opinion, which is going to really help our win rate. So that's the that's probably the most important thing that we can do Pat.
Alex Shootman: So that's probably the most important thing that we can do, Pat, in the near term, is take what we understand as the use cases that we can deliver with this technology and bring it to life in some customers, and then have those customers show the outcomes that they've achieved from Alkami. And that's going to help with our competitive win rates.
Chris Kennedy: In the near term is take what we understand is the use cases that we can deliver with this technology.
Chris Kennedy: And bring it to life in some customers and then have those customers show the outcomes that they achieve from alchemy, and that's going to that's going to help with our competitive.
Chris Kennedy: Our competitive win rates.
Alex Shootman: Great, thank you both.
Speaker Change: Great. Thank you Bob.
Adam Hotchkiss: Your next question comes from the line of Adam Hotchkiss from Goldman Sachs.
Speaker Change: Your next question comes from the line of Adam Hotchkiss from Goldman Sachs. Your line is now open.
Adam Hotchkiss: Your line is now open. Great. Thanks so much for taking the questions.
Speaker Change: Great. Thanks, so much for taking the questions Pat Pat is difficult to follow up on but accurate my best wishes to you going forward Brian.
Adam Hotchkiss: Pat, it's difficult to follow up on, but I'd like my best wishes to you going forward. Brian, I wanted to touch back on just broader capital allocation priorities at banks. You mentioned the $0.90 out of a dollar going to the digital account opening. I thought that was a pretty striking concentration.
Speaker Change: I wanted to touch back on just broader capital allocation priorities of banks you mentioned the.
Speaker Change: The 90 <unk> out of a dollar going digital account opening I thought that was pretty striking concentration curious how sustainable you think that is and maybe just remind us what it is about the environment. We're in today, whether that's just the operating environment or where <unk> are in their broader digital banking transformation, that's driving that.
Brian Hill: Curious how sustainable you think that is and maybe just remind us what it is about the environment we're in today, whether that's just the operating environment or where FIs are in their broader digital banking transformation that's driving that. Yeah, I want you to picture in your mind for a bit, you're in a regional bank or a credit union, and the technology platform that you have is an amalgamation of several different legacy capabilities that you're trying to operate on. And now your competition is Chase and your competition is Chime. And when somebody's opening an account in either of those environments, it's a very elegant one or two minute experience that looks like any other new digital experience that they have.
Speaker Change: Yes.
Speaker Change: I want you to picture in your mind for a bit.
Speaker Change: You're in a regional bank.
Speaker Change: Or credit Union.
Speaker Change: And the technology.
Speaker Change: <unk> platform that you have.
Speaker Change: Is an amalgamation of several different legacy capabilities that you are trying to operate on.
Speaker Change: And now your competition is chase and your competition is chime and win.
Speaker Change: Somebody's opening account in either of those environments.
Speaker Change: It's a very elegant one or two minute experienced that looks like any other new digital experience that they have now youre. This regional bank.
Brian Hill: Now, you're this regional bank and you're trying to recreate that experience and do that across all of these legacy technologies. And what those bank accrediting CEOs will tell me is they are personally embarrassed about the experience that they are providing to somebody where it's 20 minutes. It's walk into the branch and sign some paperwork. It's just nothing that is anything close to what people experience. Well, the combination of Alkami and Mantle allows a regional institution to punch way above its weight and deliver an experience that's every bit as good as a Chase experience or a Chime experience.
Speaker Change: And youre trying to recreate that experience and do that across all of these legacy technologies.
Speaker Change: Those bank or credit Union Ceos will tell me as they were personally embarrassed.
Speaker Change: <unk>.
Speaker Change: <unk> experienced that they are providing to somebody where it's 20 minutes, it's walk into the branch and sign some paperwork.
Speaker Change: Just nothing that is anything close to what people experience.
Speaker Change: The combination of alchemy, and mantle allows our regional institution to punch way above its weight.
Speaker Change: And deliver an experience that's every bit as good as it chase experience or China experience and when you are faced with.
Brian Hill: And when you're faced with an existential need to add customers and to add members and to add deposits for the long-term health of your institution, It's a really nice environment to sell into when you've got the right product. Okay, understood. That's really helpful, Culler.
Speaker Change: An existential need to add customers and to add members and to add deposits for the long term health of your institution.
Speaker Change: It's a really nice environment to sell into when you've got the right products.
Speaker Change: Okay understood. That's really helpful color and then Brian would you just remind us the integration lift that's left for mantle.
Brian Hill: And then, Brian, would you just remind us the integration lift that's left for Mantel? I know you mentioned a couple of cross-sells already, which is great to hear. But what about the product makes it either easier or harder to fully integrate than some of your other acquisitions? You know, there's not, in our view, there's not any major blockers there from an integration perspective. I mean, there's several different integrations you really have to think about. The first is how broadly have they integrated into the core offering of the larger core providers, and Mantle has made a ton of progress there.
Speaker Change: I know you mentioned a couple of cross sells already which is great to hear but what about the product makes it either easier or harder to fully integrate and some of your other acquisitions.
Speaker Change: Yes.
Speaker Change: There is not in our view there is not any may.
Speaker Change: Major blockers, there from an integration perspective.
Speaker Change: There is several different integrations, you really have to think about.
Speaker Change: The first is how broadly have they integrated into the core offering of the larger core providers and mantle has made a ton of progress there and in fact, that's probably one of their more significant differentiators and then there's the integration into our platform from a.
Brian Hill: In fact, that's probably one of their more significant differentiators. And then there's the integration into, you know, our platform from a technology perspective. So we're delivering more when you sell Mantle and Alkami together versus Mantle combined with one of our competitors. That'll take a little bit of time to accomplish, but we're already making moves in that direction. Then finally, there's the integration as it relates to operations and go-to-market. And as Alex pointed out in his prepared comments, we're already making a lot of progress in that area. So the Mantle team, the more I'm around them, the more impressed I am and impressed with this acquisition, how it is the correct strategy for Alkami.
Speaker Change: Technology perspective, so we're delivering more.
Speaker Change: When you sell mantle and alchemy together versus mantle combined with one of our competitors.
Speaker Change: That'll take a little bit of time to accomplish.
Speaker Change: But we're already making moves in that direction and then finally, there is the integration as it relates to operations and go to market.
Speaker Change: And as Alex pointed out in his prepared comments, we're already making.
Speaker Change: A lot of progress in that area. So the mantle team the more I'm around all day.
Speaker Change: More impressed I am impressed with this acquisition how it is the correct strategy for alchemy.
Brian Hill: I mean, it involved a lot of acquisitions over the last 36 years, and I think Mantle's going to prove to be one of the best.
Speaker Change: Involved.
Speaker Change: Sort of acquisitions over the last 36 years.
Speaker Change: And I think mantle is going to prove to be one of the best.
Speaker Change: Great. Thank you very much.
Mayank Tandon: Great, thank you very much. Your next question comes from the line of Mayank Tandon from Needham.
Speaker Change: Your next question comes from the line of <unk> Tandon from Needham. Your line is now open.
Mayank Tandon: Your line is now open. Thank you. Good evening.
Speaker Change: Thank you good evening, Brian Let me extend my congratulation as well it's been a pleasure working with you.
Mayank Tandon: Brian, let me extend my congratulations as well. It's been a pleasure working with you. We'll be missed. Thank you. You're welcome.
Speaker Change: Just.
Speaker Change: Yeah. Thank you.
Speaker Change: Two Alex Alex as we came into this year. There was a lot of talk about deregulation in the banking industry I know, it's still early days with the new administration, but what's sort of the feedback from your customers both prospective customers and current customers on any potential deregulation and if he could be a little bit more.
Mayank Tandon: to Alex.
Mayank Tandon: Alex, as we came into this year, there was a lot of talk about deregulation and the banking industry. I know it's still early days with the new administration, but what's sort of the feedback from your customers, both prospective customers and current customers on any potential deregulation? And if you could be a little bit more specific in terms of if it does happen, what are the implications for a company like Alkami?
Speaker Change: Specific in terms of if it does happen what are the implications for a company like alchemy.
Mayank Tandon: I'll tell you, the big thing that kind of came out in the discussion is, is open banking really going to occur? And the reality is, if open banking occurs, We think it's an opportunity for our customers to take share if they've got the right technology. Because all of a sudden, if you've got portability of accounts, and you're in a local community, and you feel disconnected from a mega bank, and you've got the right technology to move people over to your institution, it gives you an opportunity to take share. So to the extent that open banking ever materializes, in the conversations that we have with our customers, they think it's an opportunity for them to go on offense, but they would need the technology to be able to go on offense.
Speaker Change: Well tell you.
Speaker Change: The big thing that kind of came out in the discussion is.
Speaker Change: Is open banking really going to.
Speaker Change: Occur.
Speaker Change: And the reality is open banking occurs.
Speaker Change: We think it's an opportunity for our customers to take share if they've got the right technology because all of a sudden if you've got portability of accounts and youre in a local community and you feel disconnected from a megabank and you've got the right technology to move people over to your institution.
Speaker Change: Gives you an opportunity to take share so to the extent that open banking ever materializes.
Speaker Change: In the conversations that we have with our customers. They think it's an opportunity for them to go on offense, but they would need the technology to be able to to go on.
Speaker Change: On offense, but that's been the majority of the conversations that I've had with folks other than within some credit union to executives.
Mayank Tandon: But that's been the majority of the conversation that I've had with folks, other than within some credit union executives. I wouldn't call this as an opening up, but in some credit union executives, there's discussions about are the regulations going to change in terms of taxing credit unions or not taxing credit unions. But every single credit union executive that I talk to says if it changes, We'll figure out, we'll make an adjustment, we'll figure out how to manage our business.
Speaker Change: And this is.
I wouldn't call. This is an opening up in some credit Union executives. There is discussions about our the regulation is going to change in terms of <unk>.
Speaker Change: Tax and credit unions or not to actually credit unions, but every single credit Union executives that I talk to says if it changes.
Speaker Change: We will figure out we'll make an adjustment we'll figure out how to manage.
Speaker Change: Manage our business so those have been the two comp.
Mayank Tandon: So those have been the two. Conversations that I've been part of. got it.
Speaker Change: Conversations and I've been part of.
Speaker Change: Yes.
Speaker Change: Got it.
Mayank Tandon: And then let me ask you this. I buy into the view, as you said, this is mission critical and the banks are still spending despite all the uncertain. environment that we're in right now, what would it take for banks to then? may be slow spending. Have they talked about that? What would it actually take for them to push out some of these implementations by 6, 12, 18 months? We haven't seen that yet and it's great to hear the visibility in your model, but I'm just sort of playing devil's advocate. You know, what would it... What would it cost to derail some of the growth in the near term, if it were to happen?
Speaker Change: And then let me ask you this.
Speaker Change: <unk> Butte as you said this is mission critical and.
Speaker Change: The banks are still spending despite all the uncertainty.
Speaker Change: The environment that we're in right now what would it take for banks do then.
Speaker Change: Maybe slow spending have they talked about that like what would it actually take the time to push out some of these implementations by 612 18 months, we haven't seen that yet and it's great to hear the visibility in your model, but I'm, just sort of playing Devil's advocate what would it.
Speaker Change: What would it cost you to like derail some of the growth in the near term if it were to happen.
Mayank Tandon: The conversations that I have with customer executives, they are managing their expenses, right? So they are managing their expenses more closely than they were managing their expenses a couple of years ago. But what they're doing is they are cutting off some other projects, but they're not cutting off their digital banking project. Remember, these contracts are five- to seven-year contracts. You have, let's call it a nine-month to a year process to go through the conversion. So when you back up from the date that they need the conversion to go live, back up a year, and then say maybe a nine-month sales cycle before that, and recognize that we're selling into a budgeted line item, They're going to go through with their decision unless there was, I can't game it, like there'd have to be some extraordinary dislocation for them to stop going through some of these decisions.
Speaker Change: The conversations that I have with customer executives they are managing their expenses right. So they are managing their expenses more closely than they were managing their expenses a couple of years ago.
Speaker Change: But what they're doing is they are.
Speaker Change: Cutting off some other projects, but they're not cutting off their digital banking project remember these contracts are five to seven year contracts.
Speaker Change: You have let's call it nine months to a year process to go through the conversion. So when you back up from there.
Speaker Change: The data that they need the conversion to go lives back up a year and then say maybe a nine month sales cycle before that and recognize that we're selling into our budget in line item.
Speaker Change: They're going to go through with their decision.
Speaker Change: Unless there was.
Speaker Change: I can't game it like they would have to be some extraordinary dislocation for them to start going through some of these decisions. All I can say is it could happen to date, we haven't seen it happen to date, we've seen people following through with.
Mayank Tandon: All I can say is it could happen. To date, we haven't seen it happen. To date, we've seen people following through with their decision process, their decision timelines, wanting to get, the biggest constraint we normally have is we cap, to some degree, our conversion calendar because we want to make sure that we're doing a good job for our customer. So most of the conversations we have with a customer are, hey, let's make sure that we get you into our calendar in time for when your contract's up and making sure that we're doing a good job.
Speaker Change: Their decision process through decision timelines.
Speaker Change: Wanting to get.
Speaker Change: The biggest constraint we normally have is.
Speaker Change: We kept.
Speaker Change: To some degree our conversion calendar, because we want to make sure that we're doing a good job for our customer. So most of the conversations we have with a customer or hey, let's make sure that we get you into our calendar.
Speaker Change: In time for when your contracts up.
Speaker Change: And making sure that we're doing a good job.
Mayank Tandon: And I would just say, to date, we haven't had any conversations about customers slowing down their decision process based upon economics on the digital banking side.
Speaker Change: And I would just say to.
Speaker Change: To date, we haven't had any conversations about customers slowing down their decision process based on economics.
Speaker Change: Banking side and my this isn't really a question of are you going to cut costs as it relates to your digital banking platform.
Mayank Tandon: And Mayank, this isn't really a question of, are you going to cut costs as it relates to your digital bank? As financial institutions are looking for areas for opportunity, most of them are working in a distributed network, and distributed networks are expensive, but if you have a channel that can touch 100% of your base, or you have the same cost in a single location that touches 10% of your base, you're going to reevaluate the distribution of your offer versus cut the channel that has high touch as it relates to your customer base. So that's really the decision process that they go through and they think about.
Speaker Change: As financial institutions are looking for areas for opportunity.
Speaker Change: Most of them are working in a distributed network and distributed networks are expensive, but if you have a channel that can touch 100% of your base.
Speaker Change: Or you have the same cost in a single location that touches 10% of your base.
Speaker Change: Youre going to reevaluate the distribution of your offerings.
Speaker Change: <unk> cut the channel that touches has high touch as it relates to your customer base. So that's really the decision process that they go through and they think about.
Mayank Tandon: As it relates to implementation timelines and those kinds of things, I mean, they want to move to the new platform as soon as they can. So the real question for Alkami is to make sure that you're investing in your platform, which we do, you're continuing to create a gap, and you can widen that gap from what the incumbent offers today, which we do both organically, and then we've also done with Mantle and the segment in ACH Alert Acquisitions, and it's always staying ahead of the competition because the focus on digital banking is only going to increase, it's not going to decrease.
Speaker Change: As it relates to implementation timelines and those kinds of things they want to move to the new platform as soon as they can so the real question for alchemy is to make sure that you're investing in your platform, which we do you are continuing to create a a GAAP and you can widen.
Speaker Change: That gap from what the incumbent offers today, which we do both organically and then we've also done with mantle in the segment and <unk> acquisitions, and it's always staying ahead of the competition because the focus on digital banking is only going to increase its not going to decrease.
Mayank Tandon: So I would characterize our posture as rational optimists. So we're aware that something could change. We have not seen anything change yet in the demand of That's a great perspective.
Speaker Change: I'd characterize our posture as rational optimist so.
Speaker Change: We are aware that something could change.
Speaker Change: We have not seen anything change yet in the demand environment.
Speaker Change: Okay.
Speaker Change: That's a great perspective, thank you so much for the details and congrats.
Mayank Tandon: Thank you so much for the details, Brad.
Speaker Change: Your next question comes from the line of Anthony <unk> from Keybanc capital markets. Your line is now open.
Anthony D'Elise: Your next question comes from the line of Anthony D'Elise from KeyBank Capital Markets. Your line is now open. Hi, this is Anthony DeLease. I'm for Alex Moorgraf. Alex, your comments regarding clients not reducing digital banking is clear. However, I'm curious if you've observed any changes to the structures of the deals from your pipeline conversations due to the macro environment. And then my second question is, as Alkami has made this push to serve more banks, is there anything you can share on how recent banking implementations have impacted your pipeline conversations with other banks? Thank you.
Speaker Change: Hi, This is actually on for Alex Mark Graf, Alex your comments regarding clients that reduced digital banking is clear. However, I'm curious if you've observed any changes to the structures of the deals from the pipeline conversations due to the macro environment.
Speaker Change: And then my second question is alchemy is made this push to serve more banks is there anything you can share on how recent banking implementations have impacted your pipeline conversations with other banks. Thank you.
Anthony D'Elise: um I'll turn to Brian. I haven't seen any deal construction differences in the new logos that are coming into our deals in terms of the price points or the number of products that they're buying. What's going to begin to occur when we're talking to new banks that will emerge as we convert the bank customers that are in implementation into live customers is. The new customers are going to increase their confidence in signing on to Alkami because we'll now have three examples, four examples, five examples, or more on a particular core. And in the bank market, there's a concentration of cores that's a little bit higher concentration of the bank market than there is in the credit union market.
Speaker Change: Ill kind of turn to Brian I haven't seen any deal construction differences in the.
Speaker Change: The new logos that are coming into our.
Speaker Change: Into our deals.
Speaker Change: In terms of the price points or the number of products that they're buying.
Speaker Change: What's going to begin to occur when we're talking to new banks.
Speaker Change: That will emerge as we converge.
Speaker Change: Bank customers that are in implementation into live customers.
Speaker Change: Is.
Speaker Change: The new customers are going to increase their confidence in signing onto alcohol because we'll now have.
Speaker Change: Three examples for example has five examples.
Speaker Change: Or more.
Speaker Change: On a particular core and in the bank market there is a concentration of cores.
Speaker Change: That's a little bit higher concentration of the bank market and there is in the credit Union market.
Anthony D'Elise: So, in summary, my expectation would be, as we convert the customers that are in the implementation pipeline into live customers, That will increase our win rate over our number one competitor, which I want to remind us all that our number one competitor is staying with the incumbent. And so as these banks start seeing other customers come live on our platform, that will increase their confidence to not stay with the incumbent and move over to Alkami.
Speaker Change: So in summary, my expectation would be as we convert the customers that are in the implementation of our pipeline into live customers.
Speaker Change: That will increase our win rate over our number one competitor, which I want to remind.
Speaker Change: I saw that our number one competitor is staying with the incumbent.
Speaker Change: And so as these banks start seeing other customers come live on our platform that will increase their confidence to not stay with the incumbent and move over to alchemy.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Alexia <unk> from JP Morgan. Your line is now open.
Alexei Gogolev: Your next question comes from the line of Alexei Gogolev from J.P. Morgan. Your line is now open. Thank you. One more quick one from me. How much of ARR was in organics this quarter? Our organic AR growth was right at 22 percent. Got it. Okay, thank you so much and congrats again.
Speaker Change: Alright. Thank you one more quick one from me how much of IRR was inorganic this quarter.
Speaker Change: Our organic <unk> growth was right at 22% for the quarter.
Speaker Change: Got it okay. Thank you so much and congrats again Brian.
Speaker Change: Thank you.
Speaker Change: There are no further questions at this time I will now hand, the call over to Alex Shipman for closing remarks.
Operator: There are no further questions at this time.
Alex Shootman: I'll now hand the call over to Alex Shootman for closing remarks. Okay thank you everyone for joining us today, to our investors for your questions and for following the company, to our clients for your continued partnership and to our alchemists for outstanding work in the quarter. Have a great evening and thank you very much.
Speaker Change: Okay. Thank you everyone for joining us today to our investors for your questions and for following the company to our clients for your continued partnership and tour Alkermes for outstanding work in the quarter have a great evening and thank you very much.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Okay.
Speaker Change: Yeah.