Alkami Technology Earnings Call Shows Growth With Caveats

Alkami Technology Inc ((ALKT)) has held its Q4 earnings call. Read on for the main highlights of the call.

Alkami Technology’s latest earnings call balanced strong 2025 execution with a more tempered near-term outlook, leaving an overall upbeat but measured tone. Management underscored robust double-digit growth, expanding margins, and strategic wins from the MANTL acquisition and DSSP cross-sell, while acknowledging temporary cost pressures and slower 2026 growth tied to timing and one-off items.

Strong Top-Line Acceleration in 2025

Alkami reported full-year 2025 revenue of $443.6 million, a 33% increase from the prior year, underscoring strong demand for its digital banking platform. Fourth-quarter revenue climbed 35% year over year to $120.8 million, highlighting continued momentum as the company exited the year on a high note.

Profitability Leaps as EBITDA More Than Doubles

Profitability improved sharply, with adjusted EBITDA more than doubling to $59.1 million in 2025 from $26.9 million in 2024. The adjusted EBITDA margin expanded 530 basis points to 13.3%, while Q4 adjusted EBITDA reached $19.1 million, delivering a solid 15.8% margin.

ARR and Backlog Signal Future Growth

The company exited the fourth quarter with annualized recurring revenue of $480 million, up 35%, providing strong visibility into future results. Alkami also reported roughly $71 million of ARR in backlog from 42 new clients representing about 1.6 million digital users, most expected to launch within 12 months.

Highly Recurring Subscription-Driven Revenue Mix

Subscription revenue accounted for 95% of total revenue in 2025, underscoring the strength and predictability of Alkami’s business model. This subscription stream grew 32% year over year, reinforcing the company’s transition to a deeply recurring, software-like revenue base.

User Growth and Rising Revenue per User

Alkami closed 2025 with 22.4 million registered users, up 12% from the prior year after adding 2.4 million users. Monetization improved meaningfully, with revenue per user increasing 20% year over year to $21.44, reflecting success in cross-sell and value-added services.

Stronger Cash Generation and a Healthier Balance Sheet

Operating cash flow rose to $42.9 million in 2025 from $18.6 million in 2024, showing improved cash conversion as the business scales. Free cash flow reached $34.2 million, and the company ended the quarter with about $99.1 million in cash and marketable securities after repaying $45 million on its revolver.

MANTL Integration and DSSP Drive Higher ARPU

Post-acquisition, MANTL’s performance accelerated with record new logos and a record fourth quarter for revenue activation, now live at 161 clients and powering more than 1,000 branches. Alkami’s DSSP offering expanded from 11 clients at acquisition to 45 by year-end, with 58% of new digital banking deals in the second half bundled as DSSP and delivering roughly 30% uplift in ARR.

Margin Expansion and Operating Leverage Building

Non-GAAP gross margin for 2025 improved to 64.1%, about 140 basis points higher year over year, while Q4 gross margin came in at 63.4%, up 30 basis points. Management expects further leverage in 2026, targeting gross margin around 65% and back-half adjusted EBITDA margins above 19%, suggesting ongoing scalability.

AI and Product Innovation as Future Growth Engines

The company highlighted early operational efficiencies from AI, including an 18% boost in developer productivity, 29% fewer engineering questions, and about two hours per day saved per implementation team member. On the product front, initiatives such as Segmint AI, fraud-focused AI tools, Alkami Code Studio, and an 18-month data lake aim to open new revenue streams and deepen customer engagement.

2026 Growth to Slow from 2025’s Breakneck Pace

For 2026, Alkami guided to revenue of $525.5 million to $530.5 million, implying growth of 18.5% to 19.6%, a notable slowdown from 2025’s 33% expansion. Management cited timing effects, including MANTL-related dynamics, as key drivers of this deceleration rather than a change in underlying demand.

Sharp Drop Expected in Termination Fee Revenue

A major swing factor in reported growth will be a roughly 75% decline in termination fee revenue in 2026 compared with 2025 levels. This drop is expected to shave a few percentage points off headline growth but is viewed as a normalization of a non-core, less predictable revenue source.

DSSP Implementation Timing Pushes Out Revenue

Alkami is modeling longer implementation cycles for its DSSP bundle, closer to 12 months versus roughly six months for standalone origination or data and marketing offerings. These extended timelines shift some revenue recognition out by several quarters, tempering near-term results even as underlying demand remains robust.

Temporary Pressure from Higher Database Technology Costs

Fourth-quarter operating cost inflation was partly driven by higher database technology expenses, including a vendor license that roughly doubled and compressed margins by a few million dollars. Management plans to migrate off this database, expecting the move to normalize costs and support margin recovery over time.

Operating Expenses Rise as Alkami Scales

Operating expenses in Q4 were $57.9 million, or 48% of revenue, representing a 420 basis-point year-over-year increase. The rise was concentrated in research and development and general and administrative spending, reflecting continued investment in product, platform, and corporate infrastructure.

Near-Term Margin Headwinds and Higher Stock-Based Pay

While Alkami targets sustained margin expansion, the 2026 outlook bakes in elevated stock-based compensation of 14% to 15% of revenue and conservative growth assumptions. These factors, coupled with timing-related headwinds, weigh on near-term margins, though management framed them as largely temporary and consistent with a long-term scaling strategy.

Guidance and Long-Term Ambitions

For the first quarter of 2026, Alkami guided revenue to $124.7 million to $125.7 million, up 27.5% to 28.5% year over year, with adjusted EBITDA of $21.1 million to $21.9 million and a midpoint margin of about 17.2%. Full-year 2026 guidance calls for $525.5 million to $530.5 million in revenue and $93.5 million to $97.5 million in adjusted EBITDA, and management reiterated long-term goals including a Rule of 45 profile by 2030, gross margins nearing 70%, and robust free cash flow conversion.

Alkami’s earnings call painted a picture of a fintech platform growing quickly, scaling profitably, and deepening customer relationships, even as some one-off and timing issues cloud near-term optics. For investors, the story hinges on whether the company can convert its expanding ARR, AI-led innovation, and integrated product strategy into sustained, high-margin growth beyond the temporary 2026 slowdown.