ALKT · Research
Alkami Owns the Login for Community Banks but Owners Were Short 27 Million Dollars
Alkami grew revenue 19.4% in the third quarter, but after capex and all stock pay owners were short $27.1M over the latest twelve months.
- Owner cash after capex and all stock pay
- -$27.1M
- Owner cash as a share of revenue
- -5.3%
- New clients implemented
- 36 clients
1. Our call: Hold off, because the front door is growing but owners have not yet kept a dollar
Our call: Hold off. Alkami Technology sells the online and mobile banking software that community banks, credit unions and regional banks put in front of their customers, plus account opening and marketing data tools [1].
At Dec 31, 2025 it served 301 institutions on its digital banking platform and more than 960 clients in total [1].
The growth is real. Third quarter 2026 revenue rose 19.4% to $134.9M, annual recurring revenue reached $533M, up 19%, and the platform ended the quarter with 24.4 million digital banking users [2].
The company guides fiscal 2026 revenue to $530.5M to $532.0M [2].
The owner math is not there yet. Over the twelve months ended Sep 30, 2026, operating cash flow was $55.7M, capital spending including capitalized software was $9.0M and stock pay was $73.9M, so owners were short $27.1M, minus 5.3% of $511.7M of revenue, our calculation from SEC XBRL [3][11].
Owner cash on that basis has been negative in every year since 2020 [11].
The question this piece answers is who owns the checkpoint when software agents begin to open accounts and move money for bank customers. Our answer is that Alkami owns the screen and the login, but the account ledger sits with the core processing vendors it also competes against, so its gate is real but narrower than it looks
2. Alkami spends about a quarter of revenue on research and still loses money under GAAP
| Metric | Value |
|---|---|
| R&D share of revenue | 26.7%, research and development of $118.4M on $443.6M of revenue, fiscal 2025, our calculation [11]. Nine months ended Sep 30, 2026: $95.0M on $390.9M, 24.3%, our calculation [3] |
| GAAP net margin | -10.7%, net loss of $47.7M on $443.6M, fiscal 2025, our calculation [11]. Nine months ended Sep 30, 2026: net loss of $25.6M on $390.9M, -6.6%, our calculation [3] |
| API quality | 3 of 5, our scoring: the 10-K cites open interfaces for deposit gathering and a developer kit for outside integrations, but gives no developer or call volume figures [1] |
| Toll-gate score | 1 of 4 pass, 3 partial (section 2b) |
2b. Alkami owns the login and the user, while the core ledger usually belongs to someone else
Alkami's contracts are long. Revenue comes almost entirely from multi-year digital banking contracts with an average life of about 70 months at Dec 31, 2025, and a typical implementation takes six to 12 months after a sale [1].
No client was more than 10% of revenue in fiscal 2023, 2024 or 2025 [1].
| Test | Result | Evidence |
|---|---|---|
| Owns the record | Partial | The platform syncs, typically in real time, with the systems it integrates into and builds a data lake of user activity [1]. But the 10-K names core processing vendors that also sell digital banking as direct competitors, which means the system of record for balances is usually theirs, not Alkami's [1]. |
| Owns the connection | Pass | Every login, transfer and account opening by 24.4 million digital users passes through Alkami's screens [2]. Its contracts run about 70 months and implementations take six to 12 months, which makes a switch slow and costly for the client [1]. The filings do not disclose a client retention rate, so this pass rests on contract terms, not measured churn [1][3]. |
| Prices close to outcomes | Partial | Alkami mainly charges per registered user, with tiered discounts as more of a client's customers sign up [1]. That ties revenue to adoption, not to deposits gathered or loans made, though account opening tools bought with MANTL sit closer to an outcome [1]. |
| R&D on the gate vs features | Partial | R&D was 24.3% of revenue in the first nine months of 2026, down from 26.7% in fiscal 2025, our calculation [3][11]. The filings do not split spending between the platform core and new features [1][3]. |
One pass and three partials. The strength is the daily habit: a bank customer who logs in through Alkami does so on a long contract that is hard to unwind [1][2].
3. Revenue has grown at least 19% a year since 2021, helped by a 2025 purchase
| Measure | Value | Change |
|---|---|---|
| Fiscal 2021 revenue | $152.2M | +35.7%, our calculation [11] |
| Fiscal 2022 revenue | $204.3M | +34.2%, our calculation [11] |
| Fiscal 2023 revenue | $264.8M | +29.6%, our calculation [11] |
| Fiscal 2024 revenue | $333.8M | +26.1%, our calculation [11] |
| Fiscal 2025 revenue | $443.6M | +32.9%, our calculation [1][11] |
| Twelve months ended Sep 30, 2026 | $511.7M | Our calculation [3][11] |
| Fiscal 2026 guidance midpoint | $531.3M | About +19.7%, our calculation [2][11] |
Part of the fiscal 2025 jump was bought. Alkami paid $375.5M for Fin Technologies, which does business as MANTL and sells account opening software, closing on Mar 17, 2025 [1][11].
Growth has since settled near 19% to 21%, with nine-month revenue up 21.1% to $390.9M, our calculation [3].
Subscription revenue drives the business. SaaS subscription services were $372.8M of the $390.9M of revenue in the first nine months of 2026, about 95%, our calculation [3].
Implementation and other services made up the rest [3]. Note that annual recurring revenue, as Alkami defines it, adds the next twelve months of expected implementation fees to annualized subscription revenue, so it runs ahead of reported revenue [2].
Revenue per registered user, the company's measure of how much it earns from each digital banking user, rose 5% in the third quarter from a year earlier
4. New clients keep arriving, and each one starts as a takeaway from a rival
The 10-K says each digital banking client win is a competitive takeaway, because almost every bank and credit union already has some online banking system [1]. Ten clients went live in the third quarter of 2026 [2].
The company describes itself as a digital sales and service platform, not just a banking app, and the MANTL purchase gave it account opening for deposits and loans [1]. Its stated growth plan is to deepen existing relationships, add clients and sell more modules into its base [1].
Adjusted EBITDA, a company measure that leaves out stock pay, was $26.3M in the third quarter, a 19.5% margin and more than 530 basis points higher than a year earlier [2]. The company guides fiscal 2026 adjusted EBITDA to $98.0M to $99.0M [2].
We do not use that figure for owner value because it excludes $73.9M a year of stock pay, our calculation [3][11].
5. Gross margin rose and the operating loss narrowed
GAAP gross margin was 57.5% in the third quarter, up from 56.8% a year earlier [2]. Cost of revenues rose 17.5% to $57.3M, slower than revenue [3].
The operating loss for the first nine months of 2026 was $19.7M, against a fiscal 2025 operating loss of $53.6M [3][11]. The third quarter net loss was $6.7M against $14.8M a year earlier [2].
Stock pay is easing as a share of sales but remains large. It was $54.0M in the first nine months of 2026, 13.8% of revenue, against $56.3M and 17.4% in the same period of 2025, our calculation [3].
Depreciation and amortization rose to $24.7M from $19.1M, mostly from intangibles acquired with MANTL [3].
6. Owners have been short every year since 2020, though the gap is closing
| Period | Operating cash flow | Capital spending | Stock pay | Owner cash |
|---|---|---|---|---|
| Fiscal 2020 | -$38.1M | $2.1M | $2.0M | -$42.2M [11] |
| Fiscal 2021 | -$29.0M | $3.7M | $14.5M | -$47.2M [11] |
| Fiscal 2022 | -$38.0M | $4.4M | $44.6M | -$87.1M [11] |
| Fiscal 2023 | -$17.5M | $6.3M | $51.2M | -$75.0M [1][11] |
| Fiscal 2024 | $18.6M | $7.9M | $59.4M | -$48.7M [1][11] |
| Fiscal 2025 | $42.9M | $8.7M | $76.2M | -$42.0M [1][11] |
| Twelve months ended Sep 30, 2026 | $55.7M | $9.0M | $73.9M | Our calculation [3][11] |
Capital spending here is purchases of property and equipment plus capitalized software development, which was $7.1M in fiscal 2025 and $5.4M in the first nine months of 2026 [1][3]. Stock pay is the full expense from the cash flow statement [1][3].
Added up, owners were short $342.2M across fiscal 2020 to 2025, our calculation [11]. The trend is better: operating cash flow rose from $18.6M in fiscal 2024 to $55.7M over the latest twelve months while stock pay was roughly flat in the latest period, our calculation [3][11].
For owner cash to turn positive, operating cash flow has to grow by about $27M more than stock pay and capital spending combined, our calculation [3]
7. Alkami started buying back stock while still short of owner cash
On Apr 23, 2026 the board authorized a $100M buyback [10]. On May 1, 2026 lenders led by Silicon Valley Bank amended the credit agreement to let the company use up to $100M of cash for buybacks [9].
Through Sep 30, 2026 Alkami bought back 1,416,195 shares for $25M, including 531,620 shares for $10M in the third quarter, and $75M of the authorization remained [3]. It also paid $11.2M of taxes on net settled stock awards in the first nine months [3].
Even so, shares outstanding rose from 106,101,875 at Dec 31, 2025 to 107,042,319 at Sep 30, 2026, up 0.9%, our calculation [3]. The buyback so far has offset only part of the dilution from stock pay [3].
Cash and cash equivalents fell from $63.5M to $50.3M over the same period [3].
8. The main risks are the core vendors, bank consolidation and the debt due in 2030
The 10-K says Alkami competes with core processing vendors that also sell digital banking, with other digital banking companies and with internally built systems [1]. A core vendor that bundles a good enough front end at a lower price is the clearest threat to new wins [1].
Alkami's clients are community, regional and super-regional banks and credit unions [1]. The 10-K warns that consolidation among these institutions could cut registered users and give larger merged banks leverage to cut price or replace its products [1].
The balance sheet carries $345M of 1.50% convertible senior notes due Mar 15, 2030, issued in March 2025, the same month the MANTL purchase closed [1][3]. The company bought capped calls meant to reduce dilution on conversion, at a cost of $33.9M [1].
The revolving loan, which had $15.0M drawn at Dec 31, 2025, was fully repaid in 2026 [3]. The notes come due in a little over three years, and with owner cash still negative the company will likely need to refinance or convert them rather than repay from cash flow, our assessment
9. Six years of negative owner cash mean we cannot value Alkami on what owners keep
With owner cash below zero in every year we measured, there is no positive base to value [11]. Any case for owning the business today rests on the turn to positive owner cash, which we expect but have not seen [3][11].
Net debt, convertible principal less cash and marketable securities, was about $259.8M at Sep 30, 2026, our calculation [3]. Total stockholders' equity was $359.6M and goodwill was $403.4M [3].
Our base case is that owner cash turns positive in fiscal 2027 or 2028 if revenue keeps growing near 18% and stock pay stays near $75M a year, our estimate [2][3]. Until then the business consumes owner value even as it gains users [3][11].
10. Agents that move money still need a bank's front door, but may not need Alkami's
If customers start using software agents to open accounts, move money or apply for loans, those agents will need a trusted, authenticated session with the bank [1]. Alkami runs that session today for its clients, along with the account opening flow from MANTL [1].
The risk is that agents talk straight to the core ledger or to the bank's interfaces, which the 10-K notes Alkami supports for deposit gathering [1]. Per-user pricing would then lag, because fewer humans would need to log in [1].
The upside is that Alkami already sells data and marketing tools on top of its user base, and the 10-K says its data lake feeds insights for clients [1]. If it can price on deposits opened or products sold, the gate would widen [1].
11. A software chief executive who sold his last company to Adobe, a new finance chief and an accounting gap
Alex Shootman has been chief executive, president and a director since November 2021 [4]. He previously ran Workfront, a work management software company, from July 2016 until its sale to Adobe in December 2020 [4].
Cassandra Hudson became chief financial officer on Nov 1, 2025, succeeding Bryan Hill, who retired on Oct 31, 2025 and consults through Dec 15, 2026 [8]. She was previously chief financial officer of StackAdapt and, before that, of EngageSmart [8].
Prerna Sachdeva, chief accounting officer, resigned on Oct 2, 2026 and stays through Nov 2, 2026 [7]. The company says the decision was personal and not due to any disagreement, and Hudson becomes interim principal accounting officer on Nov 3, 2026 [7].
Brian R. Smith, managing director of S3 Ventures, chairs the board, and S3 Ventures Fund III held 13.3% of shares in the proxy [4].
General Atlantic held 13.9%, George B. Kaiser 6.1%, Jana Partners Management 5.1% under a Schedule 13D filed Apr 1, 2026, and BlackRock 5.0% [4].
12. The questions we would ask management, and the calls we are tracking
Question one: in what year do you expect operating cash flow to exceed stock pay plus capital spending?
Question two: what share of clients run on a core vendor that also sells a competing digital banking product?
Question three: will you price any product on deposits opened or loans booked rather than on registered users?
Question four: why buy back stock while owner cash is still negative and share count still rises?
Question five: what did shareholders who withheld votes from the chair want changed? That answer sets our conviction.
Prediction one: fourth quarter 2026 revenue lands inside the $139.7M to $141.2M guide (75%).
Prediction two: twelve-month owner cash at Dec 31, 2026, as we define it, is still negative (80%).
Prediction three: shares outstanding at Dec 31, 2026 are higher than the 106.1M at Dec 31, 2025 (70%).
Prediction four: fiscal 2027 revenue guidance, when given, calls for growth of at least 15% (60%).
Prediction five: a permanent chief accounting officer is named in an 8-K by Jun 30, 2027 (65%).
Filing notes. Jana Partners filed a Schedule 13D on Apr 1, 2026, the same day the 8-K adding two directors was filed, and the 8-K mentions no agreement with any holder [4][6].
The chair drew 27.1% withheld votes, far above other directors, our calculation [5]. The chief accounting officer left eleven months after a new finance chief arrived
Bottom line: Alkami owns the front door to community banks, but owners have not yet been paid for it
Alkami runs the digital front door for hundreds of community banks and credit unions, and it grew revenue 19.4% in the third quarter on long contracts [1][2]. But after capex and all stock pay owners were short $27.1M over the latest twelve months, and they have been short every year since 2020 [3][11].
We would move to Buy if twelve-month owner cash turns positive while revenue growth stays at or above 15% and the share count stops rising. We would move to Avoid if growth falls below 15% before owner cash turns positive, or if the company adds debt to fund buybacks.
Our call: Hold off, conviction 3 of 5.
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