Alkami Technology, Inc.

to the Q1 2021 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, you will need to press star and the number one on your telephone keypad. If you require any further assistance, please press Store Zero. I would now like to hand the conference over to your speaker today, Mr. Rhett Butler, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Elaine. Good afternoon, and welcome to Alchemy's earnings call for the first quarter ended March 31, 2021. With me on today's call are Mike Hansen, Alchemy's Chief Executive Officer, Stephen Bohannon, Alchemy's Co-Founder and Chief Strategy and Sales Officer, and Brian Hill, Alchemy's Chief Financial Officer. During the course of today's conference call, we may make forward-looking statements, including statements regarding trends, strategies, and the anticipated performance of the company. These forward-looking statements are based on management's current views and expectations and are subject to various risks and uncertainties, including risks relating to our operating and financial performance. Our actual results may differ materially from those contemplated by these forward-looking statements, and we can give no assurance that such expectations or any of our forward-looking statements will prove to be correct. Please refer to the risk factors included in our filings with the Securities and Exchange Commission, which are available on our investor relations website, and the press release distributed earlier this afternoon regarding the financial results we will discuss today to review important factors that could cause actual results to differ materially from those reflected in the forward-looking statements. Forward-looking statements made during the call are being made as of today, May 11, 2021, based on the facts available to us today, and we undertake no obligation to update or revise any forward-looking statements. Unless otherwise stated, all financial measures discussed on this call will be on a non-GAAP basis because we believe these measures to be useful to investors in the understanding of our financial results. A reconciliation of each comparable GAAP metric can be found in today's earnings release, which is available on our website, investors.alchemy.com, and as an exhibit to the Form 8K furnished with the SEC today. With that, thank you for joining us, and I'll turn it over to Mike.

Well, thanks, Rhett, and thanks, everyone, for joining us today on our first quarterly earnings call for the public company. Since this is our first, I'd like to start with a brief review of who we are and then move right into some context around what has happened in the banking space over the last year or so, and then a few comments about Q1. For those on this call that are new to us, Alchemy is an 11-year-old vertical SaaS company focused on one thing, democratizing digital banking technology for community and regional banks and credit unions. We call them generally financial institutions in the U.S. Alchemy enables these financial institutions to level the digital playing field against the megabanks, neobanks, and other technology advanced or well-resourced competitors. In partnership with our clients and our partners, we believe we are ultimately contributing to long-term success of community and regional financial institutions and thereby contributing to greater financial choice and results for consumers and businesses. We offer a single, highly configurable and cloud-based digital banking platform to financial institutions that delivers their unique brand or strategies or offerings to all of their consumers and all their business customers or members digitally. Like many of the most recognizable innovative technology platforms in the world, we employ a multi-tenant architecture along with a single code base seamlessly orchestrating millions of combinations and permutations of systems and versions and configurations and vendors and data models and devices and user preferences. And we utilize technologies that allow us to deliver this innovation rapidly, continuously, and at scale to more than 240 clients today, bringing a speed-to-market advantage at scale to digital banking that we believe is unmatched. We serve what we estimate to be about a $7 billion addressable market today, consisting of approximately 10,000 financial institutions and 185 million digital users, excluding the mega banks. And we are acutely focused on the top 2,000 financial institutions within this segment, which contain the densest concentration of resources and digital users. It's not an exaggeration to say that 2020 was an unprecedented year for U.S. financial institutions. and especially so for Alchemy's clients as well as our target clients. The story of how our end market performed in 2020 and its financial health and positioning in 2021 really has three parts. First, at the height of the pandemic when U.S. businesses struggled to take advantage of available federal loan programs, regional and community financial institutions really stepped up and delivered for their trusted commercial relationships. These institutions were key to the timely application and funding processes of these loan programs and once again prove the strategic importance to the financial system that these institutions represent. Second, the events of 2020 drove customer and member engagement for these financial institutions, and especially digital engagement, to unprecedented levels across a variety of metrics. As government stimulus payments were being made to households in the middle of widespread stay-at-home orders and unpreventable bank branch closures, our clients' digital banking systems were dependent upon at levels not seen before. A number of CEOs have commented to me how tremendously important our platform has been to their missions and service of their clients during these times. In addition, even in early 2021, when stimulus payments began being deployed in mid-March in this latest wave, we saw a significant increase in online traffic again. We handled this increased volume with 100% uptime and no degradation events as it should be, really, as it should be. This performance gives us confidence in the scalability we built into our architecture for the times when it is needed most. We're particularly aware of the fact that in a year when digital user growth overall accelerated financial institutions across the board, Alchemy's clients as a whole grew their digital users approximately 50 to 100% faster than the rate of the market overall, organically at 17% year on year. We believe this growth in digital users is a testament to our clients' strategies and execution, as well as the high-quality, secure, and reliable user experience we enable our clients to deliver to their consumers and business customers with our platform. Finally, based upon call report data and our own research, we estimate these financial institutions have significant capacity and capitalization to support their customers' needs and to continue to invest in digital technologies like Alchemist. We believe the events of 2020 and 2021 have proved that the right focused digital technology investments are even more mission critical to financial institutions going forward. These events also demonstrated the strength and the creativity and the commitment and the results that these community and financial institutions bring to their consumer and business customers and their communities. And our hats off to them for that. Moving on to the quarter. The start to 2021 has been historic for Alchemy. After an arduous process, I'll call it, and launching during what some have called a rough tape, we successfully completed our IPO on April 14th. Importantly, during this time, we maintained our focus on the business and achieved strong year-over-year results in revenue and ARR growth of 43% and 39%, respectively. Our overall financial performance is solid and at or above our expectations across the board. Brian will dig into the financials in more detail momentarily. These results, while we have been essentially 100% work from home for the past year, underscore the immense importance of the group of 626 alchemists or so and their competence, caring, and dedication to what we do for our customers. During the quarter, we also achieved nearly 10 million digital users on our platform. We estimate that this group of live clients is the largest in terms of average client size as a group in terms of digital users in the industry today at over 63,000 users per client. In addition, we're beginning to see more results of our multiyear strategy to build out industry leading business banking functionality. In the quarter, we signed one of our largest banks in our history. While Steven will speak more about incremental investments in business banking in a moment, Liberty Bank, a $7 billion Connecticut-based banking bank, underscores a proof point in the bank segment on our platform's capabilities and our long-term business strategy. Dave Mitchell's quote in our recent press release announcing the partnership said it so well, and I'll quote. Our customers expect an anytime, anywhere, highly personalized banking experience that rivals that of media and entertainment and online shopping. We needed a partner who could provide the ability to add new features and functions quickly with an open digital banking platform. Alchemy's deep expertise in retail and business banking translates into platform innovations like extensibility with APIs, an expansive software development kit, plus modern UX with cybersecurity tools and a world-class data center. Unquote. I couldn't have said it better and we're excited and honored to be working with Liberty Bank in our partnership. I'd also say our Q4 2020 acquisition of ACH Alert has been another proof point for us, a little over six months in now. As we look back on our strategy and plans relative to the acquisition, I feel ACH Alert is a prototype of the type of space and the type of client success and the type of talent the client type of offering and the type of integration processes we would employ and the type of financial results we would plan to replicate multiple times over as we go forward. As we enter 2021, I want to highlight three of the key strategic focus areas for us and provide a bit of color for each. These three are enhanced client success with our platform, new and existing product innovation, and go-to-market strategies and activities. I'll touch on the first of these focus areas and let Steven, our Chief Strategy and Sales Officer and Founder, speak to the last couple. For those of you who know us well, this will come as no surprise, but clients are the lifeblood of Alchemy. Virtually everything we do as an organization aligns with their strategic and operational imperatives, while efficiently and effectively driving their digital success. After all, our vision is to create thriving digital communities for financial institutions of all sizes, and particularly within our target market of the top 2,000. We're very much a client-driven and people-driven company and we're committed to putting our best foot forward and delighting clients throughout the entire client lifecycle pre and post implementation. In that vein, we're investing in several areas that will benefit our clients and us over the long term. One of the key pillars of our growth strategy is our clients' success with our platform. Their success drives digital user growth and drives engagement, which increases users and revenues for us, a classic win for them and a win for us. For our newly launching clients, we're advancing a number of innovative automation techniques to improve the efficiency and quality of new platform implementations. We call them Go Lives. And while we do not expect these efforts to significantly shorten implementation times, We do expect them to allow us and our clients to more efficiently navigate the increasingly complex digital offerings of today and in the future and ensuring we are implementing them better and with less effort. For our live clients, we found we can do even more too to help them capitalize upon the opportunities afforded by our platform and our community and our ecosystem. As you can think of it, in many ways, we're catalyzing or supporting a digital transformation effort underway in our clients as a part of these projects. We have found ideas, best practices, and programs leveraging our platform can be offered to accelerate these efforts. In terms of client success and our success, another important aspect is to continue to future-proof our architecture. We all know and see examples of new technologies continuing to advance all around us at increasing velocities, be it cloud enhancements, automation, serverless technologies, cross-platform mobile development frameworks, API ecosystems, edge computing, machine learning, artificial intelligence, crypto, security, Alchemy is continuing to invest here. We are relentlessly focused on not only functional and product expansions and enhancements, but also on advancing our architecture to take advantage of these new capabilities and technologies. These ongoing architectural advancements in our platform have been a key part of our DNA and will firmly drive velocity stability, security, and thereby client success and satisfaction. We've seen historical results from an intense focus on our clients and their success, and we expect our strategies here will benefit us over the long term from a retention and cross-sales perspective. So now I'll turn it over to Stephen to talk about the other two key strategies I mentioned, our innovation and our go-to-market activities. And I'll be back for some closing comments just before the Q&A. With that, I'll turn it over to Stephen.