Alkami Technology Surpasses Q4 Projections and Expands Offerings
Alkami Technology Achieves Strong Q4 Results
Alkami Technology, Inc. (NASDAQ: ALKT) witnessed an uptick in shares during premarket trading. This positive movement comes after the company released its fourth-quarter financial results, showcasing a revenue of $89.66 million, which slightly surpasses the consensus estimate of $89.65 million.
Financial Highlights from Q4
One of the standout metrics from the report is the adjustment of gross margin, which increased to 63.1%, up from 60.3% in the corresponding quarter last year. Alkami's adjusted EBITDA also saw substantial growth, soaring to $10.2 million compared to $3.1 million a year earlier. Their adjusted earnings per share (EPS) of $0.11 outperformed the forecast of $0.08.
Future Projections and Guidance
Looking ahead, Alkami Technology has set its sights on the first quarter, projecting an adjusted EBITDA between $9.5 million and $10.5 million, alongside anticipated revenue ranging from $93.5 million to $95.0 million. This forecast hints at a slight divergence from the consensus of $95.03 million.
For the fiscal year 2025, the expectation is a significant increase in revenue, with forecasts estimating sales between $440 million and $445 million, exceeding the previous estimate of $414.64 million. Adjusted EBITDA for this period is estimated to be in the range of $47 million to $51 million.
Growth in User Base
Bryan Hill, Alkami's Chief Financial Officer, commented on the encouraging growth, stating, “In 2024, we added 2.5 million registered users to our digital banking platform, concluding the year with a total of 20 million digital banking users. Our yearly recurring revenue reached $356 million, marking a 22% increase compared to the previous year, with revenue per registered user rising to $17.81, which is a 7% growth year-over-year.”
Strategic Acquisition
In a significant move to enhance its service offering, Alkami announced a definitive agreement to acquire Fin Technologies, Inc. for an enterprise value of $400 million. Founded in 2016, MANTL has been instrumental in aiding clients in securing over $31 billion in deposits while streamlining operations to save more than 350,000 working hours through automation.
This acquisition will be executed on a debt-free, cash-free basis, with customary purchase price adjustments projected to amount to about $7 million. Alkami intends to fund this acquisition primarily with $380 million in cash and approximately $13 million in restricted stock units for MANTL's continuing employees, serving as a replacement for any unvested stock options.
Expected Financial Contributions
The integration of MANTL is subject to typical closing conditions and is anticipated to conclude by or before March 31, 2025. Once merged, Alkami expects that MANTL will contribute approximately $30 million in revenue while also projecting an adjusted EBITDA loss of $5 million for the full year, further emphasizing their growth strategy.
Additionally, MANTL's recurring revenue under contract is forecasted to reach about $60 million by the end of 2025, signaling a growth rate exceeding 30% year-on-year.
CEO Insights on the Acquisition
Alkami's Chief Executive Officer, Alex Shootman, remarked, “This business combination creates a tremendous opportunity for Alkami to expand market share and generate cross-sell opportunities within our client base. This initiative is expected to drive additional revenue growth and strengthen our competitive edge among financial institutions.”
Current Market Performance
As of the latest premarket check, shares of ALKT are experiencing a slight decline of 1.24%, trading at $28.60, reflecting the dynamic nature of market reactions to their recent announcements.
Frequently Asked Questions
What were Alkami Technology's Q4 revenue results?
Alkami Technology reported a fourth-quarter revenue of $89.66 million, slightly above expectations.
What is Alkami's outlook for FY25?
The company forecasts a revenue range of $440 million to $445 million for fiscal year 2025.
Who did Alkami Technology acquire?
Alkami Technology announced it will acquire Fin Technologies, Inc. for $400 million.
What is the expected financial impact of the MANTL acquisition?
Alkami expects MANTL to contribute around $30 million in revenue once integrated.
How have Alkami's user numbers changed?
In 2024, Alkami added 2.5 million registered users, totaling 20 million users on their digital banking platform.
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