ALKAMI TECHNOLOGY INC
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
ALKT$13.41+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001529274-24-000168
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0001529274-24-000216
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 163 previous paragraphs and 159 current paragraphs.
101 unchanged; 49 reworded; 7 added; 12 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 8 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Recent Developments
Current report
Second Amendment to Amended and Restated Credit Agreement: On July 1, 2024, the Company entered into a Second Amendment to its Amended and Restated Credit Agreement dated as of April 29, 2022, which, among other things, extended the maturity date of the revolving commitment, increased the amount of the revolving loan commitment, increased the according feature, and modified certain existing covenants. See Note 7 of the Notes to the Unaudited Condensed Consolidated Financial Statements for additional details.
Current report
Secondary Offering of Common Stock: On August 8, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with J.P. Morgan Securities LLC and entities affiliated with General Atlantic, L.P., S3 Ventures Fund III, L.P., George B. Kaiser and Brian R. Smith (collectively, the “Selling Stockholders”), relating to an underwritten secondary offering (the “Offering”) of an aggregate of 5 million shares (the “Shares”) of the Company’s common stock. Pursuant to the Underwriting Agreement, the Selling Stockholders sold all 5 million Shares. The Offering closed on August 12, 2024, and the Company did not receive any of the proceeds from the sale of the Shares by the Selling Stockholders.
Current report
The major components of cost of revenues are represented in the following table as percentages of revenues for the three and nine months ended September 30, 2024 and 2023, respectively:
Current report
(1)Pursuant to the requirements of the Fourth Amended and Restated Investors’ Rights Agreement, dated as of September 24, 2020, by and among the Company and the investors listed therein, the Company incurred secondary offering costs on behalf of the Selling Stockholders related to the Offering.
Current report
Revenues increased $18.2 million, or 26.9%, and $50.7 million, or 26.2%, for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.
Current report
Acquisition-related expenses was $0.2 million for both the nine months ended September 30, 2024 and 2023.
Removed paragraphs (12)
Previous report
The major components of cost of revenues represented the following percentages of revenues for the three months ended June 30, 2024: third-party hosting services (5.9%), the direct costs of bill-pay and other third-party intellectual property included in our solutions (17.5%), our implementation and client support teams (9.7%), our development team responsible for maintaining and releasing updates to our platform (3.6%), amortization (2.2%), and stock-based compensation (1.6%). The major components of cost of revenues represented the following percentages of revenues for the three months ended June 30, 2023: third-party hosting services (7.8%), the direct costs of bill-pay and other third-party intellectual property included in our solutions (17.3%), our implementation and client support teams (13.0%), our development team responsible for maintaining and releasing updates to our platform (3.1%), amortization (2.5%), stock-based compensation (2.3%), and depreciation (0.1%).
Previous report
The major components of cost of revenues represented the following percentages of revenues for the six months ended June 30, 2024: third-party hosting services (6.2%), the direct costs of bill-pay and other third-party intellectual property included in our solutions (18.0%), our implementation and client support teams (9.6%), our development team responsible for maintaining and releasing updates to our platform (3.8%), amortization (2.2%), and stock-based compensation (1.6%). The major components of cost of revenues represented the following percentages of revenues for the six months ended June 30, 2023: third-party hosting services (7.7%), the direct costs of bill-pay and other third-party intellectual property included in our solutions (17.4%), our implementation and client support teams (13.2%), our development team responsible for maintaining and releasing updates to our platform (3.1%), amortization (2.6%), stock-based compensation (2.1%), and depreciation (0.1%).
Previous report
Revenues increased $16.4 million, or 24.9%, and $32.5 million, or 25.9%, for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023.
Previous report
Acquisition-related expenses increased $0.1 million for the three months ended June 30, 2024 and decreased by less than $0.1 million for the six months ended June 30, 2024, compared to the same periods in 2023.
Previous report
For the three months ended June 30, 2024, we incurred $0.1 million of acquisition-related expenses. We incurred less than $0.1 million of acquisition-related expenses for the three months ended June 30, 2023.
Previous report
For the six months ended June 30, 2024, we incurred $0.2 million of acquisition-related expenses. For the six months ended June 30, 2023, we incurred $0.2 million of acquisition-related expenses related to legal, consulting, and professional fees for the acquisition of Segmint.
Previous report
On June 27, 2023, the Company entered into a First Amendment (the “First Amendment”) to the Company’s Amended and Restated Credit Agreement, dated as of April 29, 2022 (as amended by the First Amendment, the “Amended Credit Agreement”), with Silicon Valley Bank (“SVB”), Comerica Bank and Canadian Imperial Bank of Commerce. The First Amendment provided for Citibank, N.A. to join as a new lender, increased the amount of the Revolving Facility (as defined below) commitment by $20.0 million and extended the maturity date of the Amended Credit Agreement to April 29, 2026, as well as other changes discussed below. The Amended Credit Agreement, inclusive of changes established by the First Amendment, includes the following, among other features:
Previous report
•Revolving Facility: The Amended Credit Agreement provides $60.0 million in aggregate commitments for secured revolving loans (“Revolving Facility”), of which there were no outstanding borrowings as of June 30, 2024.
Previous report
•Term Loan: A term loan of $85.0 million (the “Term Loan”) was borrowed on April 29, 2022, the proceeds of which were used to replenish cash used to fund the acquisition of Segmint, which closed on April 25, 2022. On December 29, 2023, the Company paid the remaining outstanding principal balance of its term loan of $82.9 million.
Previous report
•Accordion Feature: The Amended Credit Agreement also permits the Company, subject to certain conditions, to request additional revolving loan commitments in an aggregate principal amount of up to $50.0 million, of which there were no outstanding borrowings as of June 30, 2024.
Previous report
Revolving Facility loans under the Amended Credit Agreement may be voluntarily prepaid and re-borrowed. Principal payments on the Term Loan are due in quarterly installments equal to an initial amount of approximately $1.1 million, beginning on June 30, 2023 and continuing through March 31, 2024, and increasing to approximately $2.1 million beginning on June 30, 2024 through the Amended Credit Agreement maturity date. Once repaid or prepaid, the Term Loan may not be re-borrowed.
Previous report
The First Amendment added additional covenants that begin each fiscal quarter ending on or after April 29, 2025 (the “Financial Covenant Trigger Date”). Before the Financial Covenant Trigger Date, borrowings under the Amended Credit Agreement bear interest at a variable rate based upon the Secured Overnight Financing Rate (the “SOFR”) plus a margin of 3.00% to 3.50% per annum depending on the applicable recurring revenue leverage ratio. After the Financial Covenant Trigger Date, borrowings under the Amended Credit Agreement bear interest at a variable rate based upon the SOFR plus a margin of 1.50%, 2.00%, 2.50% or 3.00% per annum depending on the applicable consolidated total leverage ratio. If the SOFR is ever less than 0%, then the SOFR shall be deemed to be 0%. The Amended Credit Agreement is subject to certain liquidity and operating covenants and includes customary representations and warranties, affirmative and negative covenants and events of default. The Company is required to pay a commitment fee of 0.25% per annum on the undrawn portion available under the Revolving Facility and variable fees on outstanding letters of credit. The Company has a standby letter of credit in the amount of $0.3 million, which serves as security under the lease relating to the Company’s office space that expires in 2033.
Reworded paragraphs (49)
Previous wording
•our limited operating history, our history of operating losses and our ability to use our net operating loss (“NOL”) carryforwards;
Current wording
•our limited operating history, our history of operating losses and our ability to use our net operating loss carryforwards;
Previous wording
•our ability to raise sufficient capital and the resulting dilution and the terms of our Second Amended Credit Agreement (as defined below);
Current wording
•our ability to raise sufficient capital and the resulting dilution and the terms of our Amended Credit Agreement (as defined below);
Previous wording
For the three months ended June 30, 2024 and 2023, our total revenues were $82.2 million and $65.8 million, respectively, representing a 24.9% increase period-over-period. For the six months ended June 30, 2024 and 2023, our total revenues were $158.3 million and $125.8 million, respectively, representing an increase of 25.9% period-over-period. SaaS subscription revenues, as further described below, represented 95.4% and 95.6% of total revenues for the three and six months ended June 30, 2024, respectively, and 93.0% and 94.4% of total revenues for the three and six months ended June 30, 2023, respectively. We incurred net losses of $12.3 million and $23.8 million for the three and six months ended June 30, 2024, respectively, and net losses of $17.8 million and $34.7 million for the three and six months ended June 30, 2023, respectively, largely on the basis of significant continued investment in sales, marketing, product development and post-sales client activities.
Current wording
For the three months ended September 30, 2024 and 2023, our total revenues were $85.9 million and $67.7 million, respectively, representing a 26.9% increase period-over-period. For the nine months ended September 30, 2024 and 2023, our total revenues were $244.2 million and $193.5 million, respectively, representing an increase of 26.2% period-over-period. SaaS subscription revenues, as further described below, represented 95.5% and 95.6% of total revenues for the three and nine months ended September 30, 2024, respectively, and 95.7% and 94.8% of total revenues for the three and nine months ended September 30, 2023, respectively. We incurred net losses of $9.4 million and $33.2 million for the three and nine months ended September 30, 2024, respectively, and net losses of $15.5 million and $50.2 million for the three and nine months ended September 30, 2023, respectively, largely on the basis of significant continued investment in sales, marketing, product development and post-sales client activities.
Previous wording
Growing our FI Client Base. A key part of our strategy is to grow our FI client base. As of June 30, 2024, we served 254 FIs through the Alkami Digital Banking Platform and over 700 clients when including unique clients only subscribing to one or a combination of ACH Alert, MK or Segmint products. Each of our digital banking client wins is a competitive takeaway, and as such, our historical ability to grow our client base has been a function of product depth, technological excellence and a sales and marketing function able to match our solutions with the strategic objectives of our clients. Our future success will significantly depend on our ability to continue to grow our FI client base through competitive wins.
Current wording
Growing our FI Client Base. A key part of our strategy is to grow our FI client base. As of September 30, 2024, we served 266 FIs through the Alkami Digital Banking Platform and over 700 clients when including unique clients only subscribing to one or a combination of ACH Alert, MK or Segmint products. Each of our digital banking client wins is a competitive takeaway, and as such, our historical ability to grow our client base has been a function of product depth, technological excellence and a sales and marketing function able to match our solutions with the strategic objectives of our clients. Our future success will significantly depend on our ability to continue to grow our FI client base through competitive wins.
Previous wording
Expanding our Product Suite. Product depth is a key determinant in winning new clients. In a replacement market, we win based on our ability to bring a product suite to market that is superior to the incumbent, as well as to our broader competition. Of equal importance is the ability to cohesively deliver a deep product suite with as little friction as possible to the client customer. The depth of our product suite is a function of technology and platform partnerships. Our platform model with 300 integrations as of June 30, 2024 enables us to deliver thousands of configurations aligned with the digital platform strategies adopted by our clients. We expect our future success in winning new clients to be partially driven by our ability to continue to develop and deliver new, innovative products to FI clients in a timely manner. Furthermore, expanding our product suite expands our Revenue per Registered User (“RPU”) potential. For additional information regarding RPU, see “Key Business Metrics.”
Current wording
Expanding our Product Suite. Product depth is a key determinant in winning new clients. In a replacement market, we win based on our ability to bring a product suite to market that is superior to the incumbent, as well as to our broader competition. Of equal importance is the ability to cohesively deliver a deep product suite with as little friction as possible to the client customer. The depth of our product suite is a function of technology and platform partnerships. Our platform model with more than 300 integrations as of September 30, 2024 enables us to deliver thousands of configurations aligned with the digital platform strategies adopted by our clients. We expect our future success in winning new clients to be partially driven by our ability to continue to develop and deliver new, innovative products to FI clients in a timely manner. Furthermore, expanding our product suite expands our Revenue per Registered User (“RPU”) potential. For additional information regarding RPU, see “Key Business Metrics.”
Previous wording
Client Renewals. Our model and the stability of our revenue base is, in part, driven by our ability to renew our clients. In addition to extending existing relationships, renewals provide an opportunity to grow minimum contract value, as over the course of a contract term our clients often grow, or their needs evolve. Client renewals are also an important lever in driving our long-term gross margin targets, as we generally achieve approximately 70% gross margin upon renewal. We had six and 12 client renewals for the three and six months ended June 30, 2024, respectively. We expect client renewals to continue to play a key role in our future success.
Current wording
Client Renewals. Our model and the stability of our revenue base is, in part, driven by our ability to renew our clients. In addition to extending existing relationships, renewals provide an opportunity to grow minimum contract value, as over the course of a contract term our clients often grow, or their needs evolve. Client renewals are also an important lever in driving our long-term gross margin targets, as we generally achieve approximately 70% gross margin upon renewal. We had 14 and 26 client renewals for the three and nine months ended September 30, 2024, respectively. We expect client renewals to continue to play a key role in our future success.
Previous wording
Continued Leadership in Innovation. Our ability to maintain a differentiated platform and offering is dependent upon our pace of innovation. Our single code base, built on a multi-tenant infrastructure and combined with continuous software delivery enables us to bring new, innovative products to market quickly and positions us with what we believe is market-leading breadth in terms of product offerings and feature sets. We remain committed to investing in our platform, notably through our research and development spend, which was 29.1% and 29.5% of our revenues for the three and six months ended June 30, 2024, respectively. Our future success will depend on our continued leadership in innovation.
Current wording
Continued Leadership in Innovation. Our ability to maintain a differentiated platform and offering is dependent upon our pace of innovation. Our single code base, built on a multi-tenant infrastructure and combined with continuous software delivery enables us to bring new, innovative products to market quickly and positions us with what we believe is market-leading breadth in terms of product offerings and feature sets. We remain committed to investing in our platform, notably through our research and development spend, which was 28.1% and 29.0% of our revenues for the three and nine months ended September 30, 2024, respectively. Our future success will depend on our continued leadership in innovation.
Previous wording
The following table disaggregates our revenues for the three and six months ended June 30, 2024 and 2023 by major source:
Current wording
The following table disaggregates our revenues for the three and nine months ended September 30, 2024 and 2023 by major source:
Previous wording
Cost of revenues is comprised primarily of salaries and other personnel-related costs, including employee benefits, bonuses, stock-based compensation, travel and related costs for employees supporting our SaaS subscription, implementation and other services. This includes the costs of our implementation, client support and development personnel responsible for maintaining and releasing updates to our platform, as well as third-party cloud-based hosting services. Cost of revenues also includes the direct costs of bill-pay services and other third-party intellectual property included in our solutions, the amortization of acquired technology and depreciation.
Current wording
Cost of revenues is comprised primarily of salaries and other personnel-related costs, including employee benefits, bonuses, stock-based compensation, travel and related costs for employees supporting our SaaS subscription, implementation and other services. This includes the costs of our implementation, client support and development personnel responsible for maintaining and releasing updates to our platform, as well as third-party cloud-based hosting services. Cost of revenues also includes the direct costs of bill-pay services and other third-party intellectual property included in our solutions, depreciation, and the amortization of acquired technology.
Previous wording
We intend to continue to increase our investments in our implementation, client support teams and technology infrastructure to serve our clients and support our growth. We expect cost of revenues to continue to grow in absolute dollars as we grow our business, but to vary as a percentage of revenues from period to period as a function of the utilization of implementation and support personnel and the extent to which we recognize fees from bill-pay services and other third-party functionality integrated into our solutions. Our gross margin for the three and six months ended June 30, 2024 was 59.4% and 58.6%, respectively, and 53.9% and 53.8% for the three and six months ended June 30, 2023, respectively.
Current wording
We intend to continue to increase our investments in our implementation, client support teams and technology infrastructure to serve our clients and support our growth. We expect cost of revenues to continue to grow in absolute dollars as we grow our business, but to vary as a percentage of revenues from period to period as a function of the utilization of implementation and support personnel and the extent to which we recognize fees from bill-pay services and other third-party functionality integrated into our solutions. Our gross margin for the three and nine months ended September 30, 2024 was 58.9% and 58.7%, respectively, and 54.0% and 53.8% for the three and nine months ended September 30, 2023, respectively.
Previous wording
General and Administrative. General and administrative expenses consist primarily of personnel-related costs for our executive, finance, legal, human resources, information technology, security and compliance and other administrative employees, including salaries, bonuses, commissions, other incentive-related compensation, employee benefits and stock-based compensation. General and administrative expenses also include accounting, auditing and legal professional services fees, travel and other unallocated corporate-related expenses, such as the cost of our facilities, employee relations, corporate telecommunication and software. We expect that general and administrative expenses will continue to increase as we scale our business and as we incur costs associated with being a publicly traded company, including legal, audit, business insurance and consulting fees.
Current wording
General and Administrative. General and administrative expenses consist primarily of personnel-related costs for our executive, finance, legal, human resources, information technology, security and compliance and other administrative employees, including salaries, bonuses, commissions, other incentive-related compensation, employee benefits and stock-based compensation. General and administrative expenses also include accounting, auditing and legal professional services fees, secondary offering costs, travel and other unallocated corporate-related expenses, such as the cost of our facilities, employee relations, corporate telecommunication and software. We expect that general and administrative expenses will continue to increase as we scale our business and as we incur costs associated with being a publicly traded company, including legal, audit, business insurance and consulting fees.
Previous wording
Non-operating income (expense) consists primarily of interest income from our cash balances, interest expense from borrowings under our revolving line of credit, amortization of deferred debt costs, unrealized gains or losses on marketable securities, realized gains on sales of marketable securities, and changes in fair value of warrants and tranche rights.
Current wording
Non-operating income (expense) consists primarily of interest income from our cash balances, interest expense from borrowings under our revolving line of credit, amortization of deferred debt costs, unrealized gains or losses on marketable securities and realized gains on sales of marketable securities.
Previous wording
The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this filing. The following table presents our selected condensed consolidated statements of operations data for the three and six months ended June 30, 2024 and 2023.
Current wording
The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this filing. The following table presents our selected condensed consolidated statements of operations data for the three and nine months ended September 30, 2024 and 2023.
Previous wording
(1) Includes amortization of acquired technology of $1.4 million for both the three months ended June 30, 2024 and 2023, and $2.7 million for both the six months ended June 30, 2024 and 2023.
Current wording
(1) Includes amortization of acquired technology of $1.3 million for both the three months ended September 30, 2024 and 2023, and $4.0 million for both thenine months ended September 30, 2024 and 2023.
Previous wording
(1)Adjusted EBITDA is a non-GAAP financial measure and should not be considered an alternative to GAAP net loss as a measure of operating performance or as a measure of liquidity. For additional information regarding adjusted EBITDA, see “Key Business Metrics.”
Current wording
(2)Adjusted EBITDA is a non-GAAP financial measure and should not be considered an alternative to GAAP net loss as a measure of operating performance or as a measure of liquidity. For additional information regarding adjusted EBITDA, see “Key Business Metrics.”
Previous wording
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure and should not be considered an alternative to GAAP net loss as a measure of operating performance or as a measure of liquidity. We define adjusted EBITDA as net loss before provision for income taxes; (loss) gain on financial instruments; interest income, net; depreciation and amortization; stock-based compensation expense; and acquisition-related expenses. We believe adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations. Adjusted EBITDA was $4.6 million and $8.4 million for the three and six months ended June 30, 2024, respectively, and $(2.5) million and $(5.5) million for the three and six months ended June 30, 2023, respectively.
Current wording
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure and should not be considered an alternative to GAAP net loss as a measure of operating performance or as a measure of liquidity. We define adjusted EBITDA as net loss before provision (benefit) for income taxes; gain on financial instruments; interest income, net; depreciation and amortization; stock-based compensation expense; secondary offering costs; and acquisition-related expenses. We believe adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations. Adjusted EBITDA was $8.3 million and $16.7 million for the three and nine months ended September 30, 2024, respectively, and $0.8 million and $(4.6) million for the three and nine months ended September 30, 2023, respectively.
Previous wording
Annual Recurring Revenue (ARR). We calculate ARR by aggregating annualized recurring revenue related to SaaS subscription services recognized in the last month of the reporting period, as well as the next 12 months of expected implementation services revenues in the last month of the reporting period. We believe ARR provides important information about our future revenue potential, our ability to acquire new clients, and our ability to maintain and expand our relationship with existing clients. ARR was $321.3 million as of June 30, 2024 and $256.8 million as of June 30, 2023, an increase of $64.5 million, or 25.1%.
Current wording
Annual Recurring Revenue (ARR). We calculate ARR by aggregating annualized recurring revenue related to SaaS subscription services recognized in the last month of the reporting period, as well as the next 12 months of expected implementation services revenues in the last month of the reporting period. We believe ARR provides important information about our future revenue potential, our ability to acquire new clients, and our ability to maintain and expand our relationship with existing clients. ARR was $342.1 million as of September 30, 2024 and $275.0 million as of September 30, 2023, an increase of $67.1 million, or 24.4%.
Previous wording
Registered Users. We define a registered user as an individual or business related to an account holder of an FI client on our digital banking platform who has registered to use one or more of our solutions and has current access to use those solutions as of the last day of the reporting period presented. We price our digital banking platform based on the number of registered users, so as the number of registered users of our digital banking platform increases, our ARR grows. We believe growth in the number of registered users provides important information about our ability to expand market adoption of our digital banking platform and its associated software products, and therefore to grow revenues over time. We had 18.6 million registered users as of June 30, 2024 and 15.8 million as of June 30, 2023, an increase of 2.7 million, or 17.3%.
Current wording
Registered Users. We define a registered user as an individual or business related to an account holder of an FI client on our digital banking platform who has registered to use one or more of our solutions and has current access to use those solutions as of the last day of the reporting period presented. We price our digital banking platform based on the number of registered users, so as the number of registered users of our digital banking platform increases, our ARR grows. We believe growth in the number of registered users provides important information about our ability to expand market adoption of our digital banking platform and its associated software products, and therefore to grow revenues over time. We had 19.5 million registered users as of September 30, 2024 and 16.9 million as of September 30, 2023, an increase of 2.6 million, or 15.4%.
Previous wording
Revenue per Registered User (RPU). We calculate RPU by dividing ARR as of the last day of the reporting period by the number of registered users as of the last day of the reporting period. We believe RPU provides important information about our ability to grow the number of software products adopted by new clients over time, as well as our ability to expand the number of software products that our existing clients add to their contracts with us over time. RPU was $17.29 as of June 30, 2024 and $16.20 as of June 30, 2023, an increase of $1.09, or 6.7%.
Current wording
Revenue per Registered User (RPU). We calculate RPU by dividing ARR as of the last day of the reporting period by the number of registered users as of the last day of the reporting period. We believe RPU provides important information about our ability to grow the number of software products adopted by new clients over time, as well as our ability to expand the number of software products that our existing clients add to their contracts with us over time. RPU was $17.54 as of September 30, 2024 and $16.28 as of September 30, 2023, an increase of $1.26, or 7.7%.
Previous wording
Comparison of Three and Six Months ended June 30, 2024 and 2023
Current wording
Comparison of Three and Nine Months ended September 30, 2024 and 2023
Previous wording
The increase of $16.4 million in revenues for the three months ended June 30, 2024 was primarily due to registered user growth from new and existing clients, and RPU growth.
Current wording
The increase of $18.2 million in revenues for the three months ended September 30, 2024 was primarily due to registered user growth from new and existing clients, and RPU growth.
Previous wording
The increase of $32.5 million for the six months ended June 30, 2024 was primarily due to registered user growth of 2.7 million when compared to June 30, 2023, comprised of 1.4 million in registered user growth from existing clients and 1.3 million in registered users from new clients implemented through our digital banking platform (contractual minimums). In addition, increased revenues were due to RPU growth of 6.7% when compared to June 30, 2023. RPU growth was primarily driven by cross-sell activity to existing clients and higher average RPU of new clients implemented on our digital banking platform compared to aggregate RPU. The average RPU of users from new clients implemented on our digital platform in the last 12 months of $20.41 as of June 30, 2024, is 18.0% higher than the aggregate RPU as of June 30, 2024.
Current wording
The increase of $50.7 million for the nine months ended September 30, 2024 was primarily due to registered user growth of 2.6 million when compared to September 30, 2023, comprised of 1.4 million in registered user growth from existing clients and 1.2 million in registered users from new clients implemented through our digital banking platform (contractual minimums). In addition, increased revenues were due to RPU growth of 7.7% when compared to September 30, 2023. RPU growth was primarily driven by cross-sell activity to existing clients and higher average RPU of new clients implemented on our digital banking platform compared to aggregate RPU. The average RPU of users from new clients implemented on our digital platform in the last 12 months of $19.12 as of September 30, 2024, is 9.0% higher than the aggregate RPU as of September 30, 2024.
Previous wording
Cost of revenues increased $3.1 million, or 10.2%, and $7.3 million, or 12.6%, for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. Our revenue growth outpaced our cost of revenues growth, leading to an improved gross margin of 59.4% and 58.6% for the three and six months ended June 30, 2024, respectively, compared to a gross margin of 53.9% and 53.8% for the same periods in 2023, respectively.
Current wording
Cost of revenues increased $4.1 million, or 13.3%, and $11.5 million, or 12.8%, for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. Our revenue growth outpaced our cost of revenues growth, leading to an improved gross margin of 58.9% and 58.7% for the three and nine months ended September 30, 2024, respectively, compared to a gross margin of 54.0% and 53.8% for the same periods in 2023, respectively.
Previous wording
The increase in cost of revenues for the three months ended June 30, 2024 was primarily driven by $3.0 million in higher costs of our third-party partners where we resell their solutions as part of the digital platform and $0.5 million in higher various other costs. These expenses were partially offset by lower personnel-related costs of $0.2 million and lower hosting costs of $0.2 million.
Current wording
The increase in cost of revenues for the three months ended September 30, 2024 was primarily driven by $4.2 million in higher costs of our third-party partners where we resell their solutions as part of the digital platform and $0.3 million in higher various other costs. These expenses were partially offset by lower hosting costs of $0.4 million.
Previous wording
The increase in cost of revenues for the six months ended June 30, 2024 was primarily driven by $6.5 million in higher costs of our third-party partners where we resell their solutions as part of the digital platform, a $0.1 million increase in hosting costs, and $0.7 million in higher various other costs.
Current wording
The increase in cost of revenues for the nine months ended September 30, 2024 was primarily driven by $10.7 million in higher costs of our third-party partners where we resell their solutions as part of the digital platform and $1.1 million in higher various other costs. These expenses were partially offset by lower hosting costs of $0.3 million.
Previous wording
Research and development expenses increased $3.0 million, or 14.6%, and $5.3 million, or 12.8%, for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. For the three months ended June 30, 2024, the increase was primarily due to $1.3 million in higher costs for consulting and a $1.3 million increase in personnel-related costs (which includes stock-based compensation of $0.3 million), resulting from headcount growth in our engineering, information technology and product teams dedicated to platform enhancements and innovation. In addition, we incurred $0.3 million in higher costs for hosting and $0.1 million in higher various other net costs.
Current wording
Research and development expenses increased $2.4 million, or 10.9%, and $7.7 million, or 12.2%, for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. For the three months ended September 30, 2024, the increase was primarily due to $1.4 million in higher costs for consulting and a $1.4 million increase in personnel-related costs (which includes stock-based compensation of $0.4 million), resulting from headcount growth in our engineering, information technology and product teams dedicated to platform enhancements and innovation. In addition, we incurred $0.3 million in higher hosting costs. These expenses were partially offset by lower various other net costs of $0.7 million.
Previous wording
For the six months ended June 30, 2024, the increase was primarily due to $2.5 million in higher costs for consulting, a $2.3 million increase in personnel-related costs (which includes stock-based compensation of $0.5 million), resulting from headcount growth in our engineering, information technology and product teams dedicated to platform enhancements and innovation, $0.4 million in higher hosting costs, and $0.1 million in higher various other net costs.
Current wording
For the nine months ended September 30, 2024, the increase was primarily due to $3.9 million in higher costs for consulting, a $3.8 million increase in personnel-related costs (which includes stock-based compensation of $0.9 million), resulting from headcount growth in our engineering, information technology and product teams dedicated to platform enhancements and innovation and $0.7 million in higher hosting costs. These expenses were partially offset by lower various other net costs of $0.6 million.
Previous wording
Sales and marketing expenses increased $3.1 million, or 22.2%, and $6.0 million, or 24.4%, for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. For the three months ended June 30, 2024, the increase was primarily due to a $2.2 million increase in personnel-related costs (which includes stock-based compensation of $0.5 million), resulting from headcount growth in our sales and marketing teams. In addition, we incurred $0.5 million in higher costs related to industry conferences and trade shows, including enhanced client experiences at our in-person client conference, Co:lab, $0.3 million in higher travel costs for the sales team, and $0.1 million in higher various other net costs.
Current wording
Sales and marketing expenses increased $2.5 million, or 20.7%, and $8.5 million, or 23.2%, for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. For the three months ended September 30, 2024, the increase was primarily due to a $2.1 million increase in personnel-related costs (which includes stock-based compensation of $0.4 million), resulting from headcount growth in our sales and marketing teams. In addition, we incurred $0.5 million in higher consulting costs. These expenses were partially offset by lower various other net costs of $0.1 million.
Previous wording
For the six months ended June 30, 2024, the increase was primarily due to a $4.0 million increase in personnel-related costs (which includes stock-based compensation of $0.9 million), resulting from headcount growth in our sales and marketing teams. In addition, we incurred $0.8 million in higher consulting costs, $0.7 million in higher travel costs for the sales team, and $0.5 million in higher costs related to industry conferences and trade shows, including enhanced client experiences at our in-person client conference, Co:lab.
Current wording
For the nine months ended September 30, 2024, the increase was primarily due to a $6.1 million increase in personnel-related costs (which includes stock-based compensation of $1.3 million), resulting from headcount growth in our sales and marketing teams. In addition, we incurred $1.4 million in higher consulting costs, $0.9 million in higher travel costs for the sales team, and $0.4 million in higher costs related to industry conferences and trade shows, including enhanced client experiences at our in-person client conference, Co:lab. These expenses were partially offset by lower various other net costs of $0.3 million.
Previous wording
General and administrative expenses increased by $2.4 million, or 13.2%, and $4.6 million, or 13.1%, for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. For the three months ended June 30, 2024, the increase was primarily due to a $2.2 million increase in personnel-related costs (which includes stock-based compensation of $1.6 million), $0.3 million of higher software costs, $0.2 million in higher audit and consulting costs, and $0.2 million in higher various other costs. These expenses were partially offset by a decrease of $0.3 million in facilities costs and a decrease of $0.2 million in insurance costs.
Current wording
General and administrative expenses increased by $3.9 million, or 21.1%, and $8.5 million, or 15.8%, for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. For the three months ended September 30, 2024, the increase was primarily due to a $1.4 million increase in personnel-related costs (which includes stock-based compensation of $0.6 million), $0.8 million of higher software costs, $0.8 million of secondary offering costs, $0.7 million in higher audit and consulting costs, and $0.2 million in higher various other net costs.
Previous wording
For the six months ended June 30, 2024, the increase was primarily due to a $3.7 million increase in personnel-related costs (which includes stock-based compensation of $3.2 million), $0.9 million in higher audit and consulting costs, $0.6 million in higher software costs, and $0.2 million in higher various other costs. These expenses were partially offset by a decrease of $0.4 million in facilities costs and a decrease of $0.4 million in insurance costs.
Current wording
For the nine months ended September 30, 2024, the increase was primarily due to a $5.1 million increase in personnel-related costs (which includes stock-based compensation of $3.9 million), $1.6 million in higher audit and consulting costs, $1.4 million in higher software costs, and $0.8 million of secondary offering costs. These expenses were partially offset by lower various other net costs of $0.4 million.
Previous wording
Amortization of acquired intangibles was $0.4 million and $0.7 million for the three and six months ended June 30, 2024 and 2023, respectively.
Current wording
Amortization of acquired intangibles was $0.4 million for both the three months ended September 30, 2024 and 2023 and $1.1 million for both the nine months ended September 30, 2024 and 2023.
Previous wording
Non-operating income increased $0.9 million and $1.8 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. For the three months ended June 30, 2024, the increase was primarily due to a $1.0 million increase in net interest income, partially offset by a $0.1 million increase in loss on financial instruments related to marketable securities.
Current wording
Non-operating income increased $0.6 million and $2.4 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. For the three months ended September 30, 2024, the increase was primarily due to a $0.8 million increase in net interest income, partially offset by a $0.2 million reduction in gain on financial instruments related to marketable securities.
Previous wording
For the six months ended June 30, 2024, the increase was primarily due to a $2.0 million increase in net interest income, partially offset by a $0.2 million increase in loss on financial instruments related to marketable securities.
Current wording
For the nine months ended September 30, 2024, the increase was primarily due to a $2.9 million increase in net interest income, partially offset by a $0.4 million reduction in gains on financial instruments related to marketable securities.
Previous wording
The Company recorded income tax expense of $0.2 million and $0.4 million for the three and six months ended June 30, 2024, respectively, resulting in an effective tax rate of (1.5)% and (1.6)%, respectively, compared to income tax expense of $0.1 million and $0.3 million for the three and six months ended June 30, 2023, respectively, resulting in an effective tax rate of (0.5)% and (0.8)%, respectively.
Current wording
The Company recorded an income tax benefit of less than $0.1 million and income tax expense of $0.4 million for the three and nine months ended September 30, 2024, respectively, resulting in an effective tax rate of 0.2% and (1.1)%, respectively, compared to income tax expense of less than $0.1 million and $0.3 million for the three and nine months ended September 30, 2023, respectively, resulting in an effective tax rate of (0.3)% and (0.6)%, respectively.
Previous wording
Our effective tax rate for the three and six months ended June 30, 2024 and June 30, 2023 differs from the statutory tax rate primarily due to the impact of the valuation allowance against its deferred tax assets and state tax expense.
Current wording
Our effective tax rate for the three and nine months ended September 30, 2024 and September 30, 2023 differs from the statutory tax rate primarily due to the impact of the valuation allowance against its deferred tax assets and state tax expense.
Previous wording
As of June 30, 2024, we had $87.4 million in cash and cash equivalents and marketable securities, and an accumulated deficit of $459.1 million. Our net losses have been driven by our investments in developing our digital banking platform, expanding our sales, marketing and implementation organizations and scaling our administrative functions to support our rapid growth.
Current wording
As of September 30, 2024, we had $101.0 million in cash and cash equivalents and marketable securities, and an accumulated deficit of $468.6 million. Our net losses have been driven by our investments in developing our digital banking platform, expanding our sales, marketing and implementation organizations and scaling our administrative functions to support our rapid growth.
Previous wording
We believe that our existing cash resources, including our Second Amended Credit Agreement, will be sufficient to finance our continued operations, growth strategy, planned capital expenditures and the additional expenses we expect to incur as a public company for the short term (at least the next 12 months) and longer term (beyond the next 12 months). We may, from time to time, seek to raise additional capital to support our growth. Any equity financing we may undertake could be dilutive to our existing stockholders, and any additional debt financing we may undertake could require debt service and financial and operational requirements that could adversely affect our business.
Current wording
We believe that our existing cash resources, including our Amended Credit Agreement, will be sufficient to finance our continued operations, growth strategy, planned capital expenditures and the additional expenses we expect to incur as a public company for the short term (at least the next 12 months) and longer term (beyond the next 12 months). We may, from time to time, seek to raise additional capital to support our growth. Any equity financing we may undertake could be dilutive to our existing stockholders, and any additional debt financing we may undertake could require debt service and financial and operational requirements that could adversely affect our business.
Previous wording
During the six months ended June 30, 2024, net cash provided by operating activities was $1.5 million, which consisted of a net loss of $23.8 million, adjusted by non-cash charges of $33.1 million and net cash outflows from the change in net operating assets and liabilities of $7.8 million. The non-cash charges were primarily comprised of depreciation and amortization expense of $5.2 million, stock-based compensation expense of $28.6 million, and net other non-cash charges of $0.1 million, partially offset by accrued interest on marketable securities, net of $0.8 million. The net cash outflows from the change in our net operating assets and liabilities were primarily due to a $3.5 million increase in accounts receivable, a $3.8 million increase in prepaid expenses and other current assets, a $0.7 million decrease in accounts payable and accrued liabilities and a $2.6 million increase in deferred costs, partially offset by a $2.6 million increase in deferred revenues.
Current wording
During the nine months ended September 30, 2024, net cash provided by operating activities was $12.5 million, which consisted of a net loss of $33.2 million, adjusted by non-cash charges of $51.0 million and net cash outflows from the change in net operating assets and liabilities of $5.3 million. The non-cash charges were primarily comprised of depreciation and amortization expense of $7.9 million, stock-based compensation expense of $43.8 million, and other non-cash charges of $0.2 million, partially offset by accrued interest on marketable securities, net of $0.9 million. The net cash outflows from the change in our net operating assets and liabilities were primarily due to a $6.9 million increase in accounts receivable, $5.1 million increase in deferred costs, and a $2.6 million increase in prepaid expenses and other current assets, partially offset by a $6.3 million increase in accounts payable and accrued liabilities and a $3.0 million increase in deferred revenues.
Previous wording
During the six months ended June 30, 2023, net cash used in operating activities was $15.3 million, which consisted of a net loss of $34.7 million, adjusted by non-cash charges of $28.4 million and net cash outflows from the change in net operating assets and liabilities of $9.0 million. The non-cash charges were primarily comprised of depreciation and amortization expense of $5.1 million and stock-based compensation expense of $24.4 million, partially offset by net other changes in non-cash charges of $1.1 million. The net cash outflows from the change in our net operating assets and liabilities were primarily due to a $1.9 million increase in accounts receivable, a $1.9 million increase in prepaid expenses and other current assets, a $2.1 million decrease in accounts payable and accrued liabilities, driven by the reduction of accounts payable in the current period, a $2.9 million increase in deferred implementation costs, and a $0.2 million decrease in deferred revenues.
Current wording
During the nine months ended September 30, 2023, net cash used in operating activities was $12.2 million, which consisted of a net loss of $50.2 million, adjusted by non-cash charges of $43.1 million and net cash outflows from the change in net operating assets and liabilities of $5.1 million. The non-cash charges were primarily comprised of depreciation and amortization expense of $7.8 million and stock-based compensation expense of $37.9 million, partially offset by accrued interest on marketable securities, net of $2.1 million and other changes in non-cash charges of $0.5 million. The net cash outflows from the change in our net operating assets and liabilities were primarily due to a $5.0 million increase in accounts receivable, a $2.6 million increase in prepaid expenses and other current assets, and a $4.0 million increase in deferred implementation costs, partially offset by an increase in accounts payable and accrued liabilities of $5.2 million and a $1.3 million increase in deferred revenues.
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Net Cash Provided by (Used in) Financing Activities
Current report — wording carried from elsewhere
2023, respectively. Amortization expense was $0.1 million and $0.2 million for the three and nine months ended September 30, 2024, respectively, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2023, respectively.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Net Cash Used in Financing Activities