Alkami Technology, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Alchemy Technology 3rd Quarter 2024 Financial Results Conference Call. At this time, all lines are in 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 today, Wednesday, 30th of October, 2024. I'd like to turn the conference over to Steve Cox, Vice President of Investor Relations, Steve, please go ahead.

Thank you, Operator. With me 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 and 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. A reconciliation of the comparable GAAP financial measures can be found in our earnings press release and in our filings with the SEC. I would now like to turn the call over to Alex.

Thank you, Steve. I am pleased to report another quarter of outstanding performance. In the third quarter of 2024, Alchemy grew revenue 27% and expanded adjusted EBITDA to over $8.3 million, both ahead of expectations. We added nine new digital banking clients, including three banks, and launched 12 clients on the Alchemy platform, which ties a previous record number of client launches in a quarter. In addition, during the quarter, we were recognized by several third parties as we continued to establish ourselves as the leading digital banking platform. FI Navigator listed Alchemy as the top digital banking provider in credit union market share based on the number of enrolled mobile users. We were named as a 2024 FinTech Top Solution Provider by IDC and included on CNBC's 2024 World's Top FinTech Companies list. ShareSheet named Alchemy Best Banking App, and Alchemy became the first digital banking solution company to be certified by J.D. Power for providing clients with an outstanding mobile banking platform experience. User experience, extensibility, availability, and broad functionality are reasons why clients have selected Alchemy. More recently, our ability to create value with our data technology is becoming a differentiator for Alchemy. With our data and marketing products included in approximately 60% of our new client wins in 2023, moving to over 70% so far in 2024. These products have also generated over 20% of our add-on sales to date, in 2024. During this call, I'd like to spend a few minutes describing why data is becoming a differentiator and a growth driver for Alchemy. Digital banking has been a service platform for consumers who did not want to go into a branch to manage their money. It also served to reduce costs for a financial institution by shifting interactions from human to digital. Today we are seeing our market accelerate the adoption of digital revenue generating strategies in addition to using digital banking as a service channel. As these financial institutions implement digital revenue efforts, they're realizing that data is the oil that makes the revenue engine run. For example, our research shows that is deploying modern data capabilities along with predictive AI grow two times faster than FIs that don't apply these technologies. Our market knows they have relevant data to drive revenue strategies, but their data is checked to access and analyze. For instance, in a 2024 Deloitte Banking and Capital Market Survey, 92% of FI data users and leaders say that data is unavailable or takes too long to retrieve. And over half responded that when the data is there, they don't have the technical capabilities to make use of it. Data must be cleansed, maintained, normalized, and curated. Alchemy's data and marketing solutions have these four characteristics at scale. Our data platform contains 29 million deposit accounts with 20 billion historical transactions, and about 20 million new transactions are added each day. FIs early in their data journey can use these data capabilities to close the gap against megabanks who are already investing in data technology and data science teams. FIs starting on a path to predictive AI can use one of our 12 AI models to generate revenue, improve engagement, or retain customers with models built for the compliance requirements of our industry. And FIs that need marketing technology in addition to data and models can use Alchemy's full funnel MarTech stack that covers digital channels, including the digital banking channel, web, and email, and measures ROI for each campaign. Alchemy offers three plans within our data and marketing solutions, data insights, predictive AI, and full funnel marketing. These plans are designed to meet the needs of the regional and community FI market and help these institutions achieve their growth strategies, such as driving new deposits, loans, and non-interest income. In 2023 alone, Alchemy's data and marketing clients generated $4.5 billion in CDs, $525 million in money market accounts, and $391 million in savings accounts. In addition, our clients used these capabilities to generate $1.8 billion in home equity loans, $1.7 billion in mortgages, $1.4 billion in consumer auto loans, and $983 million in commercial loans. It's been exciting for me personally as I've sat through executive meetings in which we show clients revenue opportunities with their live data, including for deposits, we can identify transfers, where investment dollars are going, trial deposits that show when new accounts are opened elsewhere, or track tax refunds so that BFI can keep those in their institution. For lending, we can identify where account holders pay their mortgage, auto loan, and credit cards. Merchant processing, commercial lending, and payroll can all be identified and placed in the hands of commercial relationship managers to drive new business opportunities. Beyond our current capabilities, we see a future in which we can combine our data technology with digital banking to provide real-time revenue opportunities. For instance, if an FI's customer attempted to digitally move money from the FI to a brokerage account, the FI could insert a targeted offer for a high interest rate account complete with a pre-approval and instant account activation. Or if their customer tried to establish a new bill payment for a recurring subscription, the FI could prompt the customer to use a rewards-based debit card instead, generating new interchange revenue and transforming bill payment from a cost item to a revenue source. The more FIs reduce friction in revenue generation, the more they worry about fraud. And we've also run successful experiments in which we use our data scale provide real-time insights into proactive fraud detection. The success of our data and marketing solutions to date, combined with an increased awareness within our market of the power of data to drive revenue activity, gives me confidence that our data capabilities can be a long-term differentiator and growth driver for Alchemy. In closing, Q3 2024 was another quarter in which Alchemy demonstrated continued execution towards our target operating model, and the long-term goal we have to be the number one digital banking platform. I'll now hand the call to Brian to take us through the numbers.