Alkami Technology, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Halcami Technologies Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instruction will be provided at the time for you to queue up for questions. If anyone has any difficulties hearing the conference, Please press star zero for operator assistance at any time. I'd like to turn the conference over to Steve Tocque, Vice President of Investor Relations. Steve, go ahead.

Thank you, operator. And with me today on today's 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 10-K entitled Risk Factors in Forward-Looking Statements. Statements made during the call 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. Reconciliation of the comparable GAAP financial measures can be found in our earnings press release and in our filings with the SEC. Now I'll turn the call over to Alex.

Thanks, Steve, and welcome, everyone. I'm pleased to report another quarter of strong performance for Alchemy. In the second quarter of 2024, Alchemy grew revenue 25%, once again ahead of expectations. In addition, we delivered $4.6 million in adjusted EBITDA, exceeding the high end of expectations. Since our last earnings call, we celebrated a significant product achievement. Alchemy is the first digital banking solution company to be certified by J.D. Power for providing clients with an outstanding mobile banking platform experience. As the first provider in our space to earn this certification, Acme had to pass J.D. Power's rigorous methodology for meeting high consumer expectations. Specifically, we exceeded J.D. Power's industry benchmark across a set of 146 best practices covering all aspects of mobile application development, design, and operational functionality. Additionally, we exceeded J.D. Power's voice of the customer benchmark, which ensures our clients' customers view our mobile banking experience as outstanding. This is meaningful to our business as research continues to show that the number one criteria for an FI selecting a new digital banking platform is the user experience for their customers and members. Our investment in user experience continues to drive success in the marketplace. In the second quarter, we signed eight new digital banking clients, four credit unions and four banks. One of our credit union wins is a union that will become one of our top clients in terms of ARR. One of our bank wins is a large Midwestern bank that has a commercial growth strategy. This bank is an existing ACH client, will be successfully cross sold digital banking. And as a reminder, we currently have over 500 ACH Alert clients under contract, and 80% of those are banks. We now have 34 banks under contract for our digital banking platform, representing approximately a million digital users. Based upon our current implementation schedule, by the end of Q1 2025, we will have approximately 30 banks live on the Alchemy platform. In addition, our sales pipeline remains strong with almost half in the bank market. Our current performance and product excellence reinforce my confidence in our 2026 targets. We continue to experience tailwinds in our market with annual digital user growth amongst U.S. financial institutions averaging 5% to 8%. On a base of more than 480 million users, that means every year more digital users are created than are alive on the Alchemy digital banking platform. This continues to drive our TAM and, growth among our clients. An immutable factor driving tailwinds in our market is the evolution of our clients' customer base. In May, we published a study on generational trends in digital banking being driven by the greatest intergenerational wealth transfer in history. Some key findings include, first, 30% of millennials plan to grow the number of financial providers with whom they have a relationship over the next 12 months. This is two and a half times more than the weighted average of Gen Xers and Baby Boomers who have been driving existing digital banking growth. Next, Millennials have 14% more products with their FIs than Gen Xers and 28% more than Boomers. This can provide demand for additional products to be sold into our client base. And finally, millennials are 56% more likely than Gen Xers and boomers to grow their relationship with their primary FI. This generation views their FI as a broader solution provider, which creates an opportunity for Alchemy to deliver future innovations to our clients. Deep growth and demographic forces are driving demand in our market. And while Alchemy has to capitalize on this demand, we don't have to create the demand. And these demand tailwinds reinforce my confidence in our 2026 targets. We continue to make operational improvements that create leverage in our business. One example is the results we're achieving from investments in our platform. At the end of Q2, almost half of our microservices have been converted to Linux and deployed to Kubernetes, which enables our platform to auto-scale. We launched our centralized certificate management store, which allows thousands of certificates to be refreshed automatically rather than the previous manual process. This quarter, we conducted a successful pilot to monitor our observability framework, which will allow us to detect and troubleshoot issues more efficiently, reducing costs and improving client experience. Early in the quarter, we launched our new SDK Wizard, which is a user-friendly installation tool that allows clients and partners to set up their environment in less than 30 minutes. We also launched the Alchemy Developer Portal, tailored for developers wanting greater control and visibility into their development process on the Alchemy platform. Our new wizard and portal reduce the workload on the Alchemy Engineering Organization, which allows us to work on capabilities such as our API infrastructure, which will enable us to be an API-first platform. These are some of the investments we've made in our platform that have reduced our cost per user, increased the availability, quality, and performance of the platform, and delivered new capabilities to our clients. Our ability to continue to drive operational improvements reinforces my confidence in our 2026 targets. Alchemy continues to attract the best and brightest talent who will help us execute our vision. Over the last two years, we've added senior resources including Deep Varma, who is Alchemy's Chief Technology Officer, and Chief Customer Officer Wayne McCulloch, both of whom are respected technology leaders. In Q2, we were excited to welcome Gagan Kanjaliya as Alchemy's Chief Product Officer. Gagan brings more than 25 years of experience developing products for some of the most prominent financial institutions and fintechs in the country, including Capital One, OnDeck, and most recently, Silicon Valley Bank, where for the last five and a half years he was Chief Product Officer. Duggan is the right executive to help Alchemy continue our momentum in the commercial banking market and refine our long-term strategic product roadmap, which will create an exciting future for Alchemy and our clients. With the addition of Duggan, we now have in place the executive team necessary for the next phase of Alchemy's growth. Our ability to attract people like Doug into Alchemy reinforces my confidence in our 2026 targets. I'm proud of the Alchemy team, grateful for the Alchemy clients that have trusted us with their digital future, and appreciative of the investors who have chosen to be part of the Alchemy story. In closing, our current performance, product excellence, the tailwinds driving demand, our operational improvements, and our ability to attract great talent reinforced my confidence in our 2026 targets. And with that, I'll hand the call over to Brian.