alk-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 001-40321

ALKAMI TECHNOLOGY, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		45-3060776
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

5601 Granite Parkway,	Suite 120
Plano,	TX	75204
(Address of Principal Executive Offices)		(Zip Code)

(877) 725-5264

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	ALKT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Smaller reporting company	☐
Accelerated filer	☒	Emerging growth company	☒
Non-accelerated filer	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of registrant’s common stock outstanding as of September 30, 2023 was 95,361,787.


TABLE OF CONTENTS


PART I ‑ FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets	1
	Unaudited Condensed Consolidated Statements of Operations	2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity	3
	Unaudited Condensed Consolidated Statements of Cash Flows	4
	Notes to the Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

PART II ‑ OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31

Signatures		32

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ALKAMI TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(UNAUDITED)


	September 30,		December 31,
	2023		2022
Assets
Current assets
Cash and cash equivalents	$	76,381	$	108,720
Marketable securities	101,865		87,635
Accounts receivable, net	31,266		26,246
Deferred implementation costs, current	9,496		7,855
Prepaid expenses and other current assets	13,648		11,709
Total current assets	232,656		242,165
Property and equipment, net	16,249		13,561
Right of use assets	16,044		14,670
Deferred implementation costs, net of current portion	27,708		24,783
Intangibles, net	37,504		42,593
Goodwill	148,050		148,017
Other assets	3,982		3,096
Total assets	$	482,193	$	488,885
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt	$	6,375	$	3,188
Accounts payable	5,693		4,291
Accrued liabilities	26,302		21,643
Deferred revenues, current portion	9,313		8,835
Lease liabilities, current portion	1,493		3,657
Total current liabilities	49,176		41,614
Long-term debt, net	76,062		81,392
Deferred revenues, net of current portion	14,697		13,904
Deferred income taxes	1,862		1,712
Lease liabilities, net of current portion	18,366		15,817
Other non-current liabilities	376		400
Total liabilities	160,539		154,839
Stockholders’ Equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized and 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022	—		—
Common stock, $0.001 par value, 500,000,000 shares authorized; and 95,361,787 and 92,112,749 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	95		92
Additional paid-in capital	744,212		706,407
Accumulated deficit	(422,653)		(372,453)
Total stockholders’ equity	321,654		334,046
Total liabilities and stockholders' equity	$	482,193	$	488,885

The above financial statements should be read in conjunction with the Notes to the Unaudited Condensed Consolidated Financial Statements.

ALKAMI TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(UNAUDITED)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Revenues	$	67,703	$	53,412	$	193,462	$	148,732
Cost of revenues(1)	31,153		25,844		89,300		69,081
Gross profit	36,550		27,568		104,162		79,651
Operating expenses:
Research and development	21,755		18,222		63,170		48,973
Sales and marketing	11,933		9,721		36,694		27,822
General and administrative	18,290		18,337		53,608		54,114
Acquisition-related expenses, net	—		737		220		155
Amortization of acquired intangibles	359		370		1,076		796
Total operating expenses	52,337		47,387		154,768		131,860
Loss from operations	(15,787)		(19,819)		(50,606)		(52,209)
Non-operating income (expense):
Interest income	2,080		851		5,822		1,383
Interest expense	(1,931)		(1,185)		(5,514)		(2,336)
Gain (loss) on financial instruments	201		(59)		421		(446)
Loss before income taxes	(15,437)		(20,212)		(49,877)		(53,608)
Provision (benefit) for income taxes	39		(163)		323		80
Net loss	$	(15,476)	$	(20,049)	$	(50,200)	$	(53,688)
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.16)	$	(0.22)	$	(0.54)	$	(0.59)
Weighted-average number of shares of common stock outstanding:
Basic and diluted	94,675,358		91,182,235		93,477,486		90,703,061

(1) Includes amortization of acquired technology of $1.3 million and $1.4 million for the three months ended September 30, 2023 and 2022, respectively, and $4.0 million and $2.6 million for the nine months ended September 30, 2023 and 2022, respectively.

The above financial statements should be read in conjunction with the Notes to the Unaudited Condensed Consolidated Financial Statements.

ALKAMI TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(UNAUDITED)


		Three months ended September 30, 2023
	Common Stock		Additional Paid-in Capital			Accumulated Deficit		Total Stockholders’ Equity
		Shares			Amount
Balance June 30, 2023		94,228,876	$	94		$	729,607	$	(407,177)	$	322,524
Stock-based compensation		—	—			14,326		—		14,326
Issuance of common stock upon restricted stock unit vesting		484,736	—			(1)		—		(1)
Exercised stock options		648,175	1			4,484		—		4,485
Payments for taxes related to net settlement of equity awards		—	—			(4,204)		—		(4,204)
Net loss		—	—			—		(15,476)		(15,476)
Balance September 30, 2023		95,361,787	$	95		$	744,212	$	(422,653)	$	321,654


		Three months ended September 30, 2022
	Common Stock			Additional Paid-in Capital			Accumulated Deficit		Total Stockholders’ Equity
			Shares			Amount
Balance June 30, 2022			91,036,107	$	91		$	682,946	$	(347,492)	$	335,545
Stock-based compensation			—	—			12,147		—		12,147
Issuance of common stock upon restricted stock unit vesting			114,029	—			—		—		—
Exercised stock options			327,861	—			827		—		827
Payments for taxes related to net settlement of equity awards			—	—			(596)				(596)
Net loss			—	—			—		(20,049)		(20,049)
Balance September 30, 2022			91,477,997	$	91		$	695,324	$	(367,541)	$	327,874


		Nine months ended September 30, 2023
	Common Stock			Additional Paid-in Capital			Accumulated Deficit		Total Stockholders’ Equity
			Shares			Amount
Balance December 31, 2022			92,112,749	$	92		$	706,407	$	(372,453)	$	334,046
Stock-based compensation			—	—			39,143		—		39,143
Issuance of common stock upon restricted stock unit vesting			1,488,164	1			(1)		—		—
Common stock issued under ESPP			271,880	—			2,407		—		2,407
Exercised stock options			1,488,994	2			7,285		—		7,287
Payments for taxes related to net settlement of equity awards			—	—			(11,029)		—		(11,029)
Net loss			—	—			—		(50,200)		(50,200)
Balance September 30, 2023			95,361,787	$	95		$	744,212	$	(422,653)	$	321,654

Nine months ended September 30, 2022

Common Stock

Additional Paid-in Capital

Accumulated Deficit

Total Stockholders’ Equity

Amount

Balance December 31, 2021

89,954,657

SEC Form 10-Q filed by Alkami Technology Inc.