Alkami Technology, Inc.

conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, February 28, 2024. I would now like to turn the conference over to Steve Tuck, Vice President and Head of Investor Relations. Please go ahead.

Thank you, operator. With me today on today's call are Alex Shukman, 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 10-K entitled Risk Factors and Forward-Looking Statements. Statements being made during the call today are being made as of today, and we undertake no obligation to update or revise these 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 the comparable GAAP financial measures can be found in our earnings press release and in our filings with the SEC. I'd like to now turn the call over to Alex.

Thank you, Steve. Good afternoon and thank you all for joining us. I am pleased to report that Alchemy delivered strong financial performance in the fourth quarter of 2023. This contributed to a great year and demonstrated on several fronts progress towards the multi-year revenue and profit guidance we discussed at the beginning of the year. In the fourth quarter, Alchemy grew revenue 29%. Once again, ahead of street expectations. Exited the quarter with 17.5 million live registered users on the Alchemy platform, up 3 million compared to the prior year. And we generated approximately $3.1 million in adjusted EBITDA. The full year of 2023, we delivered excellent results, including 30% revenue growth, achieving positive adjusted EBITDA a quarter earlier than projected, making progress on key initiatives that will deliver on our future revenue and profit targets. Some highlights for the year include the following. We won 39 new logos with a total contract value 21% higher than last year, representing the best new logo year in our history in terms of financial institutions and total contract value sold. Demonstrated the growth opportunity in our client base by delivering total contract value from add-on sales at the highest level in our history. Our culture of treating the client as our North Star produced results as Alchemy did not lose a single client off the platform during 2023. In Q4 alone, we renewed 20 clients who averaged five new products added and extended with Alchemy for another five years. In February of 2024, we renewed our largest client, which is a top 10 credit union, more than doubling the original total contract value and extending the relationship for another five years. Our execution on the bank market continued as we nearly doubled our bank clients under contract and implemented clients on two new bank cores that are key to our long-term strategies. We also signed our second largest total contract value new logo transaction in our history, which is a bad client. Our platform investments for long-term scalability began to deliver results for our clients and our economics. Then we added executive talent in two important areas of our business, engineering and client experience, which includes all post-sales activities. One of the most reassuring outcomes of 2023 is the resilience demonstrated by our end market, which contributes to the confidence we have in our longer-term financial guidance. Our market consists of over 9,000 regional and community financial institutions that are rarely public entities. They are focused on their communities and operate with very diverse strategies. This results in a lower risk profile, which was evident in the months after the spring liquidity event that impacted a handful of super regional banks. Throughout 2023, we saw stability within our clients' deposit balances, number of customer accounts, and strength in the buying behavior of our target market. We're optimistic as that momentum carries over into 2024, and our optimism is supported by some recent market research. We just completed an independent survey of our market in which 90% of banks and 89% of credit unions said they were optimistic about their financial future over the next 18 months. And 67% of banks and 72% of credit unions anticipate increases in their technology budgets in 2024. Alchemy's target market considers a modern digital banking platform to be a non-discretionary investment. Our clients and prospects tell us that to remain competitive with mega banks, they must have a great digital sales and service channel. In fact, one industry analyst recently wrote, we believe the demand for digital transformation remains more robust than ever, particularly as many of these FIs need to invest in technology to attract deposits in what is now a more dynamic deposit-gathering environment with higher interest rates. Companies that convert to and stay with Alchemy tell us that the investment we've made in a cloud-native, single-code-based, multi-tenant system with a superior user experience, extensibility as a philosophy, and data as a long-term advantage helps them compete against megabanks, which is why more FIs said yes to Alchemy in 2023 than any other provider in the market. We continue to focus on the priorities that we share with you since becoming a public company. Win in the bank segment of the market, drive growth through add-on sales, engineer our technology platform for scale, become the employer of choice in our market, and use M&A opportunistically. These objectives will continue to drive our multi-year revenue and profit goals. In 2024, we believe if we do four things well, related to our long-term priorities, we will create distance between us and the rest of the market that will be difficult for others to overcome. Number one, continue to invest in client satisfaction in the client journey. Our clients want to move with speed in bringing new capabilities to market. We are investing in our platform to make it easier to integrate other technologies into Alchemy, and allocating engineering resources to reduce the time it takes to implement new capabilities for existing clients. Number two, accelerate the momentum we're building in banks. During 2023, we had external experts benchmark our commercial offering against market requirements, and they found that Alchemy now meets 92% of client expectations in commercial banking functionality. We have allocated product and engineering resources to fully close the remaining product gaps in 2024. And as we implement the 17 banks in our backlog, we will continue to strengthen the capabilities of our commercial offering. Our sales pipeline remains strong, and we expect continued success in this market segment. Number three, maintain our excellence in launching new clients. Each year as we grow, We continue to ramp the number of new clients we launch. It's one thing to launch a few clients a year, but Alchemy plans to launch 40 new clients in 2024. The ability to successfully launch clients is a sustainable competitive advantage for Alchemy. And during 2024, we intend to build upon our strength in this area while we improve productivity. Finally, we're going to build leadership at all levels of Alchemy. As we grow past 1,000 employees and are on our way to serve 25 million or more digital users on our platform, we need leadership infrastructure just like we have technology infrastructure. We have a leadership development program within Alchemy that's helping our top 50 leaders become great software executives, understanding how to create value for our clients and our shareholders, and maintain the culture that's been critical to our success. In closing, 2023 was a great year for Alchemy. We continued to add more digital users and lose less clients than any other digital banking provider in the market. This is a result of the people we have, the culture we thrive in, the market we serve, and the technology we build. For too long, our market has suffered with outdated technology, and Alchemy intends to bring great technology to this market and be the number one digital banking provider. As we look towards 2024, I'm proud to be part of one of the fastest growing bank technology companies, and I'm excited to drive even more value for shareholders, clients, and employees. I'll now hand the call to Brian.