Alkami Technology, Inc.

Hello, and welcome to Alchemy's first quarter 2022 financial results conference call. My name is Danielle, and I will be your operator for today's call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. I would now like to turn the call over to Steve Koch. Steve, you may begin.

Thank you, Danielle. With me today on the call are Alex Schutman, 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. 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 Form 10A and 10Q entitled Risk Factors and Forward-Looking Statements. Statements made during the call are being made as of today, and we undertake no obligation to update or revise any forward-looking statements. Also, unless otherwise stated, financial measures discussed on 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 comparable GAAP financial measures can be found in our earnings press release and in our quarterly filings with the SEC. I'll now turn the call over to Alex.

Thank you, Steve, and thank you all for joining us today for our first quarter 2022 earnings call. I'm pleased to report that Alchemy delivered another quarter of strong performance. Brian will provide details in a few minutes, but I'd like to share some highlights. In the first quarter, We grew 35%, which was ahead of our expectations. We exited the quarter with 12.8 million live registered users on the Alchemy platform, which is up 2.8 million users year over year. In terms of sales, first quarter was solid. We had five new logos and four renewals of existing clients, and our sales pipeline growth exceeded our expectations. In addition, we have 40 new logos and considerable add-on sales and implementation already, all totaling $37 million in ARR. I continue to be impressed with our team, the Alchemy product portfolio, and the market opportunity we have in front of us. And thank you to all of our Alchemists for your passion and execution. You started off the year very well. Last week, we held our annual user conference in Texas with 325 client and prospect attendees representing 149 financial institutions. This was the largest in-person event in our history, and through many hours with clients, prospects, and partners, I heard a consistent theme of mandatory innovation. The industry knows that it has a significant opportunity to transform and become the kind of service that customers demand in a digital age. Our clients understand that a good digital experience attracts and retains customers. In fact, in a study we sponsored on generational preferences in banking conducted specifically for this conference, 80% of Americans say the quality of their digital banking experience is essential to a new firm becoming their primary financial provider. And 46% of Gen Z and 50% of millennials have had such a bad experience with a financial provider's digital offering that they open an account at a new company. I'd like to share with you some of the specific areas of digital banking that were top of mind with our conference attendees. First is user experience. Our customers want to digitize as much of the banking experience as possible, and they need a great user experience to make that happen. We've always been passionate about delivering a user experience that based upon independent mobile app store ratings It's one of the best in the market. Our investments in functionality, ease, speed, and integration are why we continue to grow faster than any major digital banking provider. And in a few weeks, we will release a new mobile platform that includes an enhanced user experience and one that enables our clients to customize and extend their mobile solution while also effectively doubling our mobile development velocity. Second is security. Alchemy has always been focused on providing security innovations to help our clients protect their institutions and customers. Our security partnerships range from machine learning to behavioral heuristics, biometric security, hard and soft security tokens, and digital authentication of users. Our ACH Alert acquisition is an example of providing products with security in mind. With this technology, in just the last 12 months, we've monitored the flow of of over $300 billion of ACH check and wire transfers, and account holders have stopped over $1.5 billion in fraud without financial institution intervention. Third is access. Alchemy has had a front row seat seeing financial institutions serve as the economic backbone of our communities. We've seen the power that's unlocked when consumers and businesses can interact with their financial institutions in an always-on digital world. It's why we acquired MK Decision, now known as Alchemy Ignite. Alchemy Ignite provides seamless onboarding and a frictionless experience for users to open deposit or credit accounts. And just one example of how we help expand access to financial resources. Fourth is data. Financial institutions know that targeted, personalized, and relevant communications are a requirement. In a study I referenced previously, we found that 64% of Gen Z wished that their financial provider offered a more personal digital banking experience. This is why we announced the acquisition of Segment, an innovative marketing data platform with 147 bank and credit union clients. Segment is a modern data platform that leverages machine learning and artificial intelligence to provide financial institutions with data-driven marketing strategy and analytics. Segment expands our TAM by a billion dollars, adds immediate breadth to the Alchemy product portfolio, enhances the value of our data set, and helps our clients generate incremental and attributable revenue on the Alchemy platform. Segment is also a great complement to our most recent acquisition of MK Decision, as I said earlier, now called Alchemy Ignite, Alchemy can now offer a complete solution for every stage of the end customer life cycle, from account opening to servicing and engagement to cross-sell and back to account opening. And with very little overlap in the Alchemy and segment client bases, we see a clear path to broaden our combined relationships in the market. I'm also encouraged by the resilience of our customer base. About a month ago, I met with 17 customer CEOs And they told me that cash deposits surged since the beginning of the pandemic, which weighed on net interest margins. However, they were having some confidence that they'd see a recovery in certain types of loan demand. And these leaders are aware that continued innovation will be key to strengthening their businesses in the next cycle. We also continue to see elevated M&A activity among the 10,000 financial institutions in the marketplace. And as we've said before, The institutions that we serve are acquirers in this market, and their digital user growth, which was 14 percent in 2021, is typically higher than the market average. For our part, we continue to see strong demand for digital banking innovation, which creates growth in our pipeline as banks and credit unions view digital banking as core to their strategy, and they need a partner like Alchemy. Here's a great first quarter. And more than ever, I'm convinced we're on the right track with our focus on five areas. Number one, we are committed to becoming the digital banking provider of choice for banks while maintaining our market leadership position with credit unions. Number two, we will continue our focus on growing add-on sales, and we're seeing good progress here as evidenced by our financial performance this quarter. Number three, we continue to allocate investment to make our platform the foundation of our clients' digital banking infrastructure. Customers I talked with at our conference said that they want an extensible platform that allows them to plug and play FinTech innovation. Fourth, we are strengthening our focus on talent, ensuring that Alchemy remains an attractive employer in the market and makes the right investments to keep our teammates and grow their careers. And fifth, we will remain agile on the M&A front. A recent acquisition of Segment demonstrates that we are measured and strategic about acquisitions, and I expect to continue that thoughtful approach. In closing, thank you again for joining the call to hear about Alchemy's progress and the road ahead. I can speak for the management team and the entire company when I say that we're proud of the results we've delivered to date, and we are energized by the opportunity in front of us. With that, can we turn the call over to Brian?