Summary
Alkami Technology closed fiscal 2023 with fourth-quarter revenue of $71.4 million, up 28.5% from the prior-year quarter. Full-year revenue was $264.8 million, up 29.6% from 2022. Gross profit for the quarter was $39.9 million, up 39.3% from the prior-year quarter, and full-year gross profit was $144.1 million, up 33.0% from 2022. Gross margin improved by 4.3 percentage points from the prior-year quarter to 56.0%, and full-year gross margin improved by 1.4 percentage points from 2022 to 54.4%. Growth remains near 30%, but GAAP profitability is still a work in progress.
The fourth-quarter operating loss was $13.1 million, and operating margin was -18.4%, down 8.5 percentage points from the prior-year quarter. The quarterly net loss was $12.7 million. Full-year operating loss was $63.7 million, and full-year net loss was $62.9 million. Diluted EPS loss for the full year was $0.67, wider than the prior-year period. Those losses reflect continued investment in sales, marketing, product development, and post-sales client activity.
Operating cash flow was -$5.3 million in the fourth quarter, up 61.6% from the prior-year quarter, and -$17.5 million for the full year, up 54.0% from 2022. Capital expenditures were $0.28 million in the quarter, up 6.0% from the prior-year quarter, and $1.06 million for the full year, flat compared with 2022. The company ended 2023 with annual recurring revenue of $291.0 million, up 28.7% from 2022. Registered users reached 17.5 million, an increase of 3.0 million from a year earlier. Management said Alkami signed 39 new logos to the digital banking platform in 2023, retained all clients on that platform, and served 236 financial institutions through the platform as of December 31, 2023.
Backlog and deferred revenue provide some visibility. Current deferred revenue was $10.98 million, up 24.3% from a year earlier. Remaining performance obligations were $1.1 billion at December 31, 2023, up 23.1% from a year earlier. Management also pointed to 31 client renewals in 2023 and an average contract life of approximately 70 months, which supports the subscription model.
Guidance for the first quarter ending March 31, 2024 includes adjusted EBITDA of $2.5 million to $3.5 million. For the full calendar year ending December 31, 2024, management guided GAAP total revenue to a range of $327 million to $333 million and adjusted EBITDA to a range of $20 million to $23 million. The adjusted EBITDA outlook excludes significant items, and the company does not provide a reconciliation to GAAP net loss because certain information is not available without unreasonable efforts.
The risks are familiar for a high-growth SaaS company. Alkami cites its limited operating history and history of operating losses, the need to manage future growth, and the challenge of attracting new clients while retaining and expanding existing clients. Sales cycles can run from three to 12 months and implementation can take six to 12 months, so timing can be lumpy. Competition is intense. A downturn or consolidation in financial services technology spend could reduce demand. The company also flags reliance on third-party software and services, cybersecurity breaches, acquisition integration, and key employee retention. The banking and regulatory environment remains a factor after the 2023 failures and liquidity concerns at certain financial institutions.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $71.4M | $67.7M | +5.4% | $55.5M | +28.5% |
| Gross profit | $39.9M | $36.5M | +9.3% | $28.7M | +39.3% |
| Gross margin | 56.0% | 54.0% | +2.0 pp | 51.6% | +4.3 pp |
| Research & development | $21.5M | $21.8M | -1.2% | $20.4M | +5.6% |
| Sales & marketing | $11.9M | $11.9M | -0.6% | $9.0M | +32.0% |
| General & administrative | $19.3M | $18.3M | +5.5% | $17.1M | +12.6% |
| Total operating expenses | $53.0M | $52.3M | +1.4% | $34.2M | +55.3% |
| Operating income (loss) | -$13.1M | -$15.8M | +17.0% | -$5.5M | -139.0% |
| Operating margin | -18.4% | -23.3% | +5.0 pp | -9.9% | -8.5 pp |
| Net income (loss) | -$12.7M | -$15.5M | +17.9% | -$4.9M | -158.8% |
| Net margin | -17.8% | -22.9% | +5.1 pp | -8.8% | -9.0 pp |
| Diluted EPS | -$0.67 | -$0.16 | -$0.51 | -$0.05 | -$0.62 |
Risks
All revenue is derived from financial institutions, an industry facing economic and political uncertainty, liquidity concerns, and increased regulation. The MD&A notes the March 2023 SVB closure and says FI consolidation or failure could reduce registered users or give larger FIs more pricing leverage.
The digital banking market is intensely competitive, with point solution and core processing vendors that have greater name recognition, larger sales and marketing budgets, and substantially greater financial resources. Clients may stay with existing partners even if Alkami's features are superior.
Sales cycles last about three to 12 months or longer, and implementation generally takes six to 12 months depending on integration depth. MD&A states the company spends substantial time and money on sales and marketing without assurance of a sale.
As a financial technology provider, Alkami is a target for sophisticated attacks; the filing states its systems have been subject to attempted cybersecurity attacks and that generative AI makes attacks easier to develop. A breach could expose personal information and lead to regulatory investigations, litigation, and client termination rights.
The company processes personal information across multiple jurisdictions and is subject to GLBA, CCPA, CPRA, and GDPR, among others. The filing notes GDPR fines of up to 20 million euros or 4% of annual global revenues, whichever is greater, and that compliance may require costly changes.
Alkami primarily serves clients from AWS data centers and states it cannot easily switch AWS operations to another cloud provider. Any disruption or interference with AWS could increase operating costs and impair delivery of solutions.
The Amended Credit Agreement contains an annual recurring revenue growth covenant, a $20.0 million liquidity covenant, and a free cash flow covenant of not less than $(50.0) million for the quarter ended December 31, 2023. A default could allow lenders to accelerate outstanding indebtedness, though the term loan was paid off in December 2023.
Alkami has a history of operating losses; FY2023 net loss widened to $62.9 million from $58.6 million in FY2022, and FY2023 operating loss widened to $63.7 million from $57.7 million in FY2022. The MD&A reports an accumulated deficit of $435.4 million and expects continued investment.
The company has experienced rapid growth in headcount and operations and expects rapid growth to continue, placing demands on management and operational and financial infrastructure. Failure to scale systems, controls, and employee training could increase costs and harm client satisfaction.
Alkami depends on key executives including CEO Alex Shootman, co-founder Stephen Bohanon, and CFO W. Bryan Hill, as well as development and sales personnel. Competition for such employees is intense, and a decline in the perceived value of equity awards may hurt retention.
The company recognizes subscription revenue over the contractual term beginning from live use, so the majority of quarterly revenue relates to prior agreements. Changes in new client agreements or implementations may have only a small impact in the current quarter and affect future periods.
The digital banking market is characterized by rapid technological advancements and changing FI requirements, and new products from competitors or large FIs could render Alkami's solutions obsolete. Maintaining adequate research and development resources is essential.
SaaS KPIs
All quarters →Non-GAAP Gross Margin
Adjusted EBITDA
Registered Users
Revenue per Registered User (RPU)
Annual Recurring Revenue (ARR)
Remaining Performance Obligations (RPO)
Summary, forecast, risks and KPIs are extracted from ALKAMI TECHNOLOGY, INC.'s SEC filings for Q4 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.