ALKT 10-K & 10-Q changes, risk factors and insider trading

•the unpredictableunpredictable, time-consuming and time-consumingcostly nature of our sales cycles;

•privacy and data security concerns, data collection and transfer restrictions, contractual obligations, laws, regulations and standards and our processing and use of the PI of end users;

•regulations and laws applicable to us, our clients and our solutionssolutions, including the impact of tariffs and trade policies on us and our clients;

•the way we recognize revenue, whichbeginning hasfrom the effectlive use of delayingthe service, which causes changes in theclient subscriptions forto ournot solutionsbe fromimmediately being reflectedapparent in our reported operating results;

•our ability to raise sufficient capital in a timely manner and the resulting dilution and the terms of our Amended Credit Agreement (as defined below);

•future sales of shares of our common stock, our lack of an intention to pay dividends and significant influence of our principal stockholders; and

•provisions in the Indenture (as defined below) delaying or preventing beneficial takeover and anti-takeover and exclusive forum provisions in our governing documents.documents;

To increase our revenues, we will need to continue to attract new clients and succeed in having our current clients expand the use of our solutions across their institutions. In addition, for us to maintain or improve our results of operations, it is important that our clients renew their subscriptions with us on similar or more favorable terms to us when their existing subscription term expires. Our revenue growth rates may decline or fluctuate as a result of a number of factors, including client spending levels, client dissatisfaction with our solutions, decreases in the number of client customers,customers or members, changes in the type and size of our clients, pricing changes, competitive conditions, the loss of our clients to other competitors and general economic conditions. We cannot assure you that our current clients will renew or expand their use of our solutions. If we are unable to attract new clients or retain or attract new business from current clients, our business, financial condition and results of operations may be materially and adversely affected. The growth of our business also depends on our ability to develop and maintain resale agreements with favorable terms for third-party solutions through our digitalDigital bankingSales platformand Service Platform agreements. If we are unable to develop and maintain such resale agreements, our business, financial condition and results of operations may be materially and adversely affected.

Growth of our business depends on a strong brandbrand, and any failure to maintain, protect and enhance our brand could hurt our ability to retain or expand our base of clients.

We believe that a strong brand is necessary to continue to attract and retain clients. We need to maintain, protect and enhance our brand in order to expand our base of clients. This will depend largely on the effectiveness of our marketing efforts, our ability to provide reliable services that continue to meet the needs of our clients at competitive prices, our ability to maintain our clients’ trust, our ability to continue to develop new functionality and use cases, and our ability to successfully differentiate our services and platform capabilities from competitive products and services, which we may not be able to do effectively. While we may choose to engage in a broader marketing campaign to further promote our brand, this effort may not be successful or cost effective. Our brand promotion activities may not generate customerclient awareness or yield increased revenues, and even if they do, any increased revenues may not offset the expenses we incur in building our brand. If we are unable to maintain or enhance client awareness in a cost-effective manner, our brand and our business, financial condition and results of operations could be materially and adversely affected.

The Alkami Digital BankingSales & Service Platform integrates with other third-party systems used by our clients, including core processing and payment systems. We do not have formal arrangements with many of these third-party providers regarding our access to their application program interfaces to enable these client integrations. If we are unable to effectively integrate with third-party systems, our clients’ operations may be disrupted, which could result in disputes with clients, negatively impact client satisfaction and materially and adversely affect our business, financial condition and results of operations. Additionally, if we are unable to address our clients’ needs or preferences in a timely fashion or further develop and enhance our solutions, or if a client is not satisfied with the quality of work performed by us or with the technical support services rendered, we could incur additional costs to address the situation, and clients’ dissatisfaction with our solutions could damage our ability to maintain or expand our client base. If the software of such third-party providers has performance or other problems, such issues may reflect poorly on us and the adoption and renewal of our solutions, which could significantly harm our reputation. Moreover, any negative publicity related to our solutions, regardless of its accuracy or whether the ultimate cause of any poor performance actually results from our products or from the systems of our clients, may further damage our business by affecting our reputation and may materially and adversely affect our business, financial condition and results of operations.

Our business, financial condition and results of operations could be materially and adversely affected ifIf our clients are not satisfied with our digital banking solutions or our systems and infrastructure fail to meet their needs.needs, our business, financial condition and results of operations could be materially and adversely affected.

Further, anyAny failure of or delays in our systems could cause service interruptions or impaired system performance. Some of our client agreements require us to issue credits for downtime in excess of certain thresholds and in some instances give our clients the ability to terminate their agreements with us in the event of significant amounts of downtime. If sustained or repeated, these performance issues could reduce the attractiveness of our solutions to new and existing clients, cause us to lose clients, decrease our revenues and lower our renewal rates by existing clients, each of which could materially and adversely affect our business, financial condition and results of operations. In addition, negative publicity resulting from issues related to our client relationships, regardless of accuracy, may adversely affect our ability to attract new clients and maintain and expand our relationships with existing clients.

If the use of our digital banking solutions increases, or if our clients demand more advanced features from our solutions, we will need to devote additional resources to improving our solutions, and we also may need to expand our technical infrastructure at a more rapid pace than we have in the past. This would involve spending substantial amounts to increase our cloud services infrastructure, purchase or lease data center capacity and equipment, upgrade our technology and infrastructure and introduce new or enhanced solutions. It takes a significant amount of time to plan, develop and test changes to our infrastructure, and we may not be able to accurately forecast demand or predict the results we will realize from such improvements. There are inherent risks associated with changing, upgrading, improving and expanding our technical infrastructure. Any failure of our solutions to integrate effectively with future infrastructure and technologies could reduce the demand for our solutions, resulting in client dissatisfaction, which could materially and adversely affect our business, financial condition and results of operations. Also, any expansion of our infrastructure would likely require that we appropriately scale our internal business systems and services organization, including implementation and client support services, to serve our growing client base. If we are unable to respond to these changes or fully and effectively implement them in a cost-effective and timely manner, our service may become ineffective, we may lose clientsclients, and our business, financial condition and results of operations could be materially and adversely affected.

Additionally, as our clients may use our products for critical transactions, any errors, defects or other infrastructure problems could result in damage to such clients’ businesses. These clients could seek significant compensation from us for their losseslosses, and our insurance policies may be insufficient to cover a claim. Even if unsuccessful, this type of claim may be time-consuming and costly for us. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

Defects, errors or other performance problems in the Alkami Digital BankingSales & Service Platform could harm our reputation, result in significant costs to us, impair our ability to sell our solutions and subject us to substantial liability.

The Alkami Digital BankingSales & Service Platform is complex and may contain defects or errors when implemented or when new functionality is released, or when we modify, enhance, upgrade and implement new systems, procedures and controls to reflect changes in our business, technological advancements and changing industry trends. From time to time, we have discovered, and may in the future discover, defects or errors in our solutions. Any performance problems or defects in our solutions could materially and adversely affect our business, financial condition and results of operations. Defects, errors or other similar performance problems or disruptions, whether in connection with day-to-day operations or otherwise, could be costly for us, damage our clients’ businesses, harm our reputation and result in reduced sales or a loss of, or delay in, the market acceptance of our solutions. In addition, if we have any such errors, defects or other performance problems, our clients could seek to terminate their contracts, elect not to renew their subscriptions, delay or withhold payment or make claims against us. Any of these actions could result in liability, lost business, increased insurance costs, difficulty in collecting accounts receivable, costly litigation or adverse publicity, which could materially and adversely affect our business, financial condition and results of operations. Additionally, our software utilizes open-source software and any defects or security vulnerabilities in such open-source software could materially and adversely affect our business, financial condition and results of operations.

Our success and future growth depend upon the continued services of our management team, in particular Alex Shootman, our Chief Executive Officer, W.Cassandra Bryan Hill,Hudson, our Chief Financial Officer, and other key employees, including in the areas of research and development, marketing, sales, services and general and administrative functions. From time to time, there may be changes in our management team resulting from the hiring or departure of executives, which could disrupt our business. We are also dependent on the continued service of our existing development professionals because of the complexity of our solutions, including complexity arising as a result of the regulatory requirements that are applicable to our clients and, to a lesser extent, us, and the pace of technology changes impacting our clients. We may terminate any employee’s employment at any time, with or without cause, and any employee may resign at any time, with or without cause; however, our employment agreements with our named executive officers provide for the payment of severance under certain circumstances. We have also entered into employment agreements with our other executive officers that provide for the payment of severance under similar circumstances as in our named executive officers’ employment agreements. The loss of one or more of our key employees could harm our business.

From time to time, we encounter implementation challenges as a result of our clients’ integration and functionality requirements, and when this occurs, we must delay revenue recognition, and in certain circumstancescircumstances, we may never recognize the revenue, which could materially and adversely affect our business, financial condition and results of operations.

From time to time we face unexpected challenges related to the complexity of our clients’ integration and functionality requirements. Our expenses increase when clients have unexpected data, hardware or software technology challenges, or complex or unanticipated functionality requirements. In addition, our clients typically require complex acceptance testing related to the implementation of our solutions. Implementation delaysdelays, whether from implementation challenges or our strategic decisions, may also require us to delay revenue recognition under the related client agreement longer than expected. Further, because we do not fully control our clients’ implementation schedules, if our clients do not allocate the internal resources necessary to meet implementation timelines or if there are unanticipated implementation delays or difficulties as a result of expansions of project scope or otherwise, our revenue recognition may be delayed and in certain circumstances, we may never recognize the revenue. Losses of registered users or any difficulties or delays in implementation processes could cause clients to delay or forego the implementation or future purchases of our solutions, which could materially and adversely affect our business, financial condition and results of operations.

High-quality client support is important to the successful marketing and sale of our solutions and for the renewal of existing client agreements. Providing this level of support requires that our client support personnel have financial services knowledge and expertise, making it difficult for us to hire qualified personnel and scale our support operations. The demand on our client support organization will increase as we expand our business and pursue new clients, and such increased support requirements could require us to devote significant development services and support personnel, which could strain our team and infrastructure and reduce our profit margins. If we do not help our clients quickly resolve any post-implementation issues and provide effective ongoing client support, our ability to sell additional solutions to existing and future clients could suffersuffer, and our reputation and our business, financial condition and results of operations could be materially and adversely affected.

We have in the past executed and we may in the future consider executing, strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, solutions and other assets. We may also enter into relationships with other businesses to expand our solutions, which could involve preferred or exclusive licenses, additional channels of distribution, discount pricing or investments in other companies. Negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may be subject to approvalsconditions that are beyond our control. In addition, we have limited experience in acquiring other businessesbusinesses, and the market reaction to our acquisitions may be unfavorable, which may impact our stock price. If an acquired business fails to meet our expectations, our business, financial condition and results of operations could be materially and adversely affected. We may not be able to find and identify desirable acquisition targets, we may incorrectly estimate the value of an acquisition targettarget, and we may not be successful in entering into an agreement with any particular target. If we are successful in acquiring an additional business, we may not achieve the anticipated benefits from the acquired business due to a number of factors, including:

•ouran inability to integrate or benefit from acquired technologies or services;

Any of our operating facilities or infrastructure may be harmed or rendered inoperable by natural or man-made disasters, including hurricanes, tornadoes, wildfires, floods, earthquakes, nuclear disasters, acts of terrorism or other criminal activities, infectious disease outbreaks or pandemic events, such as the COVID-19 pandemic, power outages and other infrastructure failures, which may render it difficult or impossible for us to operate our business for some period of time. Various environmental and social pressures, including climate change, may increase the frequency or intensity of such disasters or contribute to chronic changes that may have similar impacts. Our facilities would likely be costly to repair or replace, and any such efforts would likely require substantial time. Any disruptions in our operations could harm our reputation and materially and adversely affect our business, financial condition and results of operations, and our disaster recovery plans may prove inadequate. We may not carry sufficient business insurance to compensate for losses that may occur, and if such events become more frequent it may adversely impact the cost or availability of insurance going forward. Any such losses or damages could have a material adverse effect on our business and results of operations. In addition, the facilities of our third-party providers, including AWS, may be harmed or rendered inoperable by such natural or man-made disasters, which could cause disruptions, difficulties or otherwise materially and adversely affect our business, financial condition and results of operations.

We have expanded our presence abroad by establishing a subsidiary in India during 2024. While its operations are currently immaterial, weWe may face challenges related to regulatory compliance, tariffs, tax implications, labor laws, currency fluctuations, and operational scaling in the future. Our current and potential future operations in India are subject to certain risks, including:

There is increased scrutiny from investors, customers,clients, policymakers, and other stakeholders regarding companies’ management of climate change, human capital, and various other environmental and social matters. While we may from time to time engage in initiatives to manage such matters and address stakeholder expectations, such initiatives can be costly and may not have the desired effect. For example, many environmental and social initiatives leverage methodologies, standards, and data that are complex and continue to evolve. Moreover, various stakeholders have different, and at times conflicting, expectations. Regulatory expectations are likewise not uniform, which may increase the cost or complexity of compliance. Addressing stakeholder expectations can result in a diversion of resources and management attention, and any failure to successfully navigate such expectations, as well as evolving interpretations of any existing governmental laws or requirements, may result in reputational harm, issues attracting and retaining employees or customers,clients, regulatory or investor engagement, or other adverse impacts to our business.

We rely heavily on hardware, software, technology infrastructure, digital networks and a range of other information technology systems for both internal and external operations that are critical to our business (collectively, “IT Systems”). We own and manage some of these IT Systems but also rely on IT Systems and related services that are operated, managed, integrated or otherwise provided by a host of third-party service providers, vendors, and business partners. In addition, certain elements of our solutions process and store PI, including banking and payment data and other PI regarding our clients’ customers,customers or members, such as social security numbers, and we may also have access to PI during various stages of the implementation process or during the course of providing client support. We, like other organizations, particularly in the financial technology sector, are vulnerable to and have experienced cybersecurity attacks, insider threats and other incidents that threaten the confidentiality, integrity and availability of critical IT Systems and PI or other information regarding clients, client customers,customers or members, vendors, employees, third-party providers, or our company and business. While to date no attacks or incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. Information security risks for banking and technology companies such as ours have significantly increased in recent years, in part because of the proliferation of new technologies, such as AI, the use of the internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties. Because of our position in the financial services industry, we expect to continue to be a target of such threats and attacks. Additionally, geopolitical events and resulting government activity also heighten information security threats and attacks by affected jurisdictions and their sympathizers.

Violations of our policies, procedures and technological safeguards and administrative controls designed to protect our IT Systems and applications have occurred in the past, and there can be no assurance that our cybersecurity risk management program and processes (or those of our third-party providers or partners) will prevent damage to, or interruption or breach of, our IT Systems and operations. Given the unpredictability of the timing, nature and scope of cybersecurity attacks and other security-related incidents, it is impossible to comprehensively secure IT Systems or the data and PI we maintain or use in our databases,business, and we cannot entirely eliminate the risk of improper or unauthorized access to or disclosure of data or PI, other security events that impact the confidentiality, integrity or availability of data, PI or our IT Systems, or the related costs of mitigating the consequences from such events. Additionally, we cannot guarantee that our insurance coverage would be sufficient to cover all losses or that relevant insurance will be available in the future on economic terms or at all.

Further, the Alkami Digital BankingSales & Service Platform involves flexible and complex software solutions, which by their very nature are subject to misconfigurations, implementation errors, “bugs,” defects or other security vulnerabilities. And, given the scanning tools we deploy in our broader network environment, we regularly identify, track and patch security vulnerabilities but are unable to comprehensively apply patches or mitigating measures or ensure that patches or measures will be applied before vulnerabilities can be exploited by a threat actor. We have experienced unlawful attempts to disrupt or gain access to our IT Systems, and we are vulnerable to future attacks that may result in unauthorized access to or disclosure of client customer or member PI or other data and disruption of our or our clients’ operations. We cannot anticipate or prevent all techniques used by threat actors to obtain unauthorized access or to sabotage systems or implement adequate preventative measures. Additionally, we and client customers or members integrate our solutions with certain third-party systems used by our clients, which have access to PI and other data about our clients. Our ability to monitor such third parties’ security measures is limited, and aan exploited vulnerability in a third-party system with which we integrate could result in a disruption to our IT Systems or unauthorized access to or disclosure, modification, misuse, loss or destruction of our clients’ and client customers’ or members’ PI and other data, including our business information. Any of the foregoing could result in a material adverse effect on our business, reputation, financial condition and results of operations.

In addition, because we leverage third-party providers, including cloud, software, data center and other critical technology vendors to deliver our solutions to our clients and their customers,customers or members, we rely heavily on the data security technology practices and policies adopted by these third-party providers. Such third-party providers have access to PI and other data about our clients and employees, and some of these providers in turn subcontract with other third-party providers. Our ability to monitor our third-party providers’ data security is limited. AAn exploited vulnerability in our third-party providers’ software or systems, a failure of our third-party providers’ safeguards, policies or procedures, or a breach of a third-party provider’s software or systems could result in a material compromise to the confidentiality, integrity or availability of our IT Systems or the data housed in our third-party solutions. Due to the size and complexity of our technology platform and services, the amount of PI and other data that we store and the number of clients, employees and third-party providers with access to PI and other data, we are vulnerable to a variety of cybersecurity attacks and other security-related incidents and threats, which could result in a material adverse effect on our business, financial condition and results of operations. In addition, we have acquired and continue to acquire companies with cybersecurity vulnerabilities and/or unsophisticated security measures, which exposes us to significant cybersecurity risks.

Cybersecurity attacks and other malicious internet-based activity continue to increase, evolve in nature and become more sophisticated, and providers of digital products and services have been and are expected to continue to be targeted. We have incorporated and maywill likely continue to incorporate artificial intelligenceAI/machine learning solutions and features within our business, which maygives createrise to additional cybersecurityand risks or increaseevolving cybersecurity risks, including risks of security breaches and incidents.risks. Furthermore, the use of generative artificial intelligenceAI has made it easier for threat actors to develop and evolve attacks. Threats to our IT Systems and those of our third-party providers or clients include those resulting from human error, fraud or malice on the part of employees or third parties, including state-sponsored organizations with significant financial and technological resources, or from accidental technological failure. In addition to traditional computer “hackers,” malicious code (such as viruses and worms), phishing, ransomware, social engineering attacks, employee theft, unauthorized access or misuse and denial-of-service attacks, sophisticated criminal networks as well as nation-state and nation-state supported actors now engage in attacks, including advanced persistent threat intrusions. We have acquired and will likely continue to acquire companies with cybersecurity vulnerabilities and/or unsophisticated security measures, which exposes us to additional cybersecurity, operational, and financial risks.

Any cybersecurity attacks, security breaches, phishing attacks, ransomware attacks, computer malware, computer viruses, computer hacking attacks, unauthorized access, coding or configuration errors or similar incidents experienced by us or our third-party providers could result in material operational disruptions and the material loss, compromise or corruption of client or client customer or member data (including PI) or data we rely on to provide our solutions, including our analytics initiatives and offerings, and impair our ability to provide our solutions and meet our clients’ requirements, resulting in decreased revenues and otherwise adversely affecting our business, financial condition and results of operations. Any such incidents may also result in regulatory investigations and orders, litigation (including class actions), disputes, investigations, indemnity obligations, damages for contract breach or penalties for violation of applicable laws or regulations. Also, our reputation could suffer irreparable harm, causing our current and prospective clients to decline to use our solutions in the future. Further, we could be forced to expend significant financial and operational resources in response to a security breach, including repairing system damage, increasing security protection costs by deploying additional personnel and modifying or enhancing our protection technologies, investigating and remediating any information security vulnerabilities and defending against and resolving legal and regulatory claims, all of which could divert resources and the attention of our management and key personnel away from our business operations and materially and adversely affect our business, financial condition and results of operations.

If we are not able to detect and identify activity on our platform that might be nefarious in nature or design processes or systems to reduce the impact of similar activity at a third-party provider, our clients and/or clients’ customers or members could suffer material harm, including because many of our products and services are integrated with or connected to our clients’ systems and processes. In such cases, we could face exposure to legal claims, particularly if the client and/or client customer or member suffered actual harm. We cannot ensure that any limitations of liability provisions in our client and user agreements, contracts with third-party providers and other contracts for a security lapse or breach or other security-related matter would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim. We also cannot ensure that our existing insurance coverage will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims related to a security incident or breach, or that the insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation and our business, financial condition and results of operations.

In addition, our clients contractually require notification of certain data security compromises and include representations and warranties in their contracts with us that our solutions comply with certain legal and technical standards related to data security and privacy and meet certain service levels. In our contracts, a data security compromise or operational disruption impacting us or one of our critical vendors, or system unavailability or damage due to other circumstances, may constitute a material breach and give rise to a client’s right to terminate its contract with us. In these circumstances, it may be difficult or impossible to cure such a breach in order to prevent clients from potentially terminating their contracts with us.

In operating our business and providing services and solutions to our clients, we collect, use, store, transmit and otherwise process sensitive employee and client data, including PI regarding client customers or members and other individuals, in and across multiple jurisdictions, including at times, across national borders. As a result, we are subject to a variety of laws and regulations in the United States, Europe and around the world, as well as contractual obligations and industry standards, regarding data privacy, security and protection. In many cases, these laws, regulations and industry standards apply not only to third-party transactions, but also to transfers of information between or among us, our subsidiary and other parties with which we have commercial relationships.

In addition, every state in which we operate (and the District of Columbia) has laws that protect the privacy and security of sensitive and personal information. Certain U.S. state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to sensitive and personal information than international, federal, or other state laws, and such laws may differ from each other, which may complicate compliance efforts. For example, California enacted CCPA which, among other things, requires companies covered by the legislation to provide new disclosures to California consumers and afford such consumers new rights, including the right to access and delete certain personal information, as well as the right to opt-out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches thatinvolving resultdefined in the losscategories of personal information. This private right of action may increase the likelihood of, and risks associated with, data breach litigation. The CCPA also created a new state agency vested with authority to implement and enforce the CCPA. The effects of existing state legislation, including the CCPA, are significant and have required and may require us in the future to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation. In addition, new privacy and security legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies Internationally, many jurisdictions have established their own data privacy and security legal framework with which we or our clients may need to comply as client customers or members travel outside of the United States, including, but not limited to, the United Kingdom (“UK”) and the European Union (“EU”). The UK’s and EU’s data protection landscape is currentlycontinuing evolving,to evolve, resulting in possible significant operational costs for internal compliance and risk to our business. The UK and EU hashave adopted thea General Data Protection Regulation (“GDPR”), which contains numerous requirements and changes from previously existing EU law, including more robust obligations on data processors and heavier documentation requirements for data protection compliance programs by companies. In particular, under the EU GDPR, fines of up to 20 million euros or up to 4% of the annual global revenues of the noncompliant company, whichever is greater, could be imposed for violations of certain of the GDPR’s requirements. Such penalties are in addition to any civil litigation claims by clients and data subjects.

Potential clients may also prefer to continue their relationship with their existing partner rather than change to a new partner regardless of product performance or features. As a result, even if the features of the Alkami Digital BankingSales & Service Platform are superior, clients may not purchase our solution. In addition, innovative start-up companies, and larger companies that are making significant investments in research and development, may develop similar or superior products and technologies that compete with our solutions. Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their market position. As a result, our current or potential competitors might be able to adapt more quickly to new technologies and client customer or member needs, devote greater resources to the promotion or sale of their products and services, initiate or withstand substantial price competition, take advantage of acquisitions or other opportunities more readily, or develop and expand their product and service offerings more quickly than we can. Further, conditions in our industry could change rapidly and significantly as a result of technological advancements. These competitive pressures in our market or our failure to compete effectively may result in price reductions, reduced revenues and gross margins and loss of market share. If our clients do not renew their subscriptions for our solutions on similar or more favorable terms to us, our revenues may decline and it could have a material and adverse effect on our business, financial condition and results of operations.

The market for our solutions is characterized by rapid technological advancements, changes in client requirements and technologies, frequent new product introductions and enhancements and changing regulatory requirements. The life cycles of our solutions are difficult to estimate. Rapid technological changes and the introduction of new products and enhancements by new or existing competitors or large FIs could undermine our current market position. Other means of digital banking may be developed or adopted in the future, and our solutions may not be compatible with these new technologies. In addition, the technological needs of and services provided by, FIs may change if they or their competitors offer new services to account holders. Maintaining adequate research and development resources to meet the demands of the market is essential. The process of developing new technologies and solutions is complex and expensive. The introduction of new solutions by our competitors, the market acceptance of competitive solutions based on new or alternative technologies, such as artificial intelligenceAI and machine learning technologies, or the emergence of new technologies or solutions in the broader financial services industry could render our solutions obsolete or less effective. Advances in AI may allow FIs to develop solutions internally rather than license third-party platforms such as ours, which could further reduce demand for our solutions.

If the market for digital banking solutions develops more slowly than we expect or changes in a way that we fail to anticipate, our sales would suffersuffer, and our business, financial condition and results of operations could be materially and adversely affected.

Our products are marketed to and used by FIs, who are subject to extensive laws and regulations regarding the business functions and activities performed on our software solutions. Changes to any applicable statutes, regulations, rules or policies, including the interpretation or implementation of statutes, regulations, rules or policies could affect us in substantial and unpredictable ways, including limiting the types of software products we may offer and increasing the ability of third parties to offer competing services and products to FIs. Assuring that our products adapt to changes in the compliance obligations or expectations of our customersclients requires significant expense and devotion of resources on our part, which may adversely affect our ability to operate profitably.

Alkami is a cloud-based digital bankingsales solutionsand service platform provider. We inspire and empower community, regional and super-regional financial institutions (“FIs”) to compete with large, technologically advanced and well-resourced banks in the United States. Our solution, the Alkami Digital Sales & Service Platform, consisting of the Alkami Digital Banking Platform, Onboarding & Account Opening, and Data & Marketing, allows FIs to onboardonboard, engage and engagegrow new users, accelerate revenues and meaningfully improve operational efficiency, all with the support of a proprietary, true cloud-based, multi-tenant architecture. We cultivate deep relationships with our clients through long-term, subscription-based contractual arrangements, aligning our growth with our clients’ success and generating an attractive unit economic model.

Alkami was founded to help level the playing field for FIs. Since then, our vision has been to create a platform that combines premium technology and fintech solutions in one integrated ecosystem, delivered as a software-as-a-service (“SaaS”) solution and providing our clients’ customersaccount holders with a single point of access to all things digital. We have invested significant resources to build a technology stack that prioritized innovation velocity and speed-to-market given the importance of product depth and functionality in winning and retaining clients. In October 2020, we acquired ACH Alert, LLC (“ACH Alert”) to pursue adjacent product opportunities, such as fraud prevention and to expand our addressable market. In September 2021, we acquired MK Decisioning Systems, LLC (“MK”), a technology platform for digital account opening, credit card and loan origination solutions. In April 2022, we acquired Segmint, Inc. (“Segmint”), a leading cloud-based financial data analytics and transaction data cleansing provider. In March 2025, we acquired Fin Technologies, Inc., dba MANTL (“MANTL”), to provide onboarding, account opening, and loan origination solutions that allow FIs to acquire commercial, business and retail customers through a variety of channels for deposit account and loan types.

During 2024, we established a new subsidiary in India to support potential future operational needs. AsWhile our presence in India has grown since 2024, these operations remain immaterial to our consolidated financial statements as of December 31, 2024, this entity had immaterial operations and did not have a significant impact on our consolidated financial results. We will continue to assess the impact of this entity as operations evolve.2025.

Our domain expertise in retail and business banking has enabled us to develop a suite of products tailored to address key challenges faced by FIs. Due to our architecture, adding products through our single code base is fast, simple and cost-effective. The key differentiators of the Alkami Digital BankingSales & Service Platform include:

•User experience: Personalized and seamless digital experience across user interaction points, including desktop, mobile, chat and SMS, establishing durable connections between FIs and their customers.customers or members.

The Alkami Digital Banking Platform offersallows us to offer an end-to-end set of digitalsoftware banking products.solutions. Our typical relationship with an FI begins with a set of core functional components, which can extendexpand over time to include a rounded suite of products across onboarding and account opening, marketing, data insights, cardaccount experience,management, moneypayments movement,and customerreceivables, service,admin, risk and reporting, business and commercial banking, retail banking, financial wellness, security and fraud protectionanalytics, and extensibility.

We derive our Alkami Digital Banking Platform revenues almost entirely from multi-year contracts that are based on an average contract life of approximately 70 months as of December 31, 2024.2025. We predominantly employ a per-registered-user pricing model, with incremental fees above certain contractual client minimum commitments for each licensed solution. In these cases, our pricing is tiered, with per-registered-user discounts applied as clients achieve higher levels of customer or member penetration, incentivizing our clients to internally market and promote digital engagement.

Third Amendment to Amended and Restated Credit Agreement. In connection with the acquisition of MANTL, on February 27, 2025, the Company entered into a Third Amendment (the “Third Amendment”) to the its Amended and Restated Credit Agreement dated as of April 29, 2022,2022 (as amended, the “Amended Credit Agreement”), which, among other things, extended the maturity date of the revolvingRevolving commitment,Facility (as defined below), increased the amount of the revolvingRevolving loanFacility commitment, permitsextended the Financial Covenant Trigger Date (as defined therein), reduced the applicable interest rate margins, permitted the acquisition of MANTL pursuant to the terms of the Merger Agreement, permitted certain convertible indebtedness and equity derivative transactions, subject to certain restrictions, and modified certain covenants. See Note 178 to the Notes to the Consolidated Financial Statements for additional information.

Growing our FI Client Base. A key part of our strategy is to grow our FI client base. As of December 31, 2024,2025, we served 272301 FIs through the Alkami Digital Banking Platform and over 750960 clients when including unique clients only subscribing to one or a combination of ACH Alert, MKSegmint, or SegmintMANTL 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.

Deepening Client Customer or Member Penetration. We primarily generate revenues through a per-registered-user pricing model. Once we onboard a client, our ability to help drive incremental client customer or member digital adoption translates to additional revenues with very limited additional spend. Our FI clients are incentivized to market and encourage digital account sign-up based on identifiable improvement in customer engagement, as well as discounts received based on certain levels of customer or member penetration. We expect to continue to support digital adoption by client customers or members through continued investments in new products and platform enhancements. Our future success will depend on our ability to continue to deepen client customer or member penetration.

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.customer or member. The depth of our product suite is a function of technology and platform partnerships. Our platform model with more than 300 integrations as of December 31, 20242025 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.”

We derive substantially all of our revenues from SaaS subscription services charged for the use of our digital sales and service solution. Our client relationships are predominantly based on multi-year contracts for the Alkami Digital Banking Platform that have had an average contract life of approximately 70 months as of December 31, 2024. We derive the majority of our revenues from SaaS subscription services charged for the use of our digital banking solution.2025. Subscription services are recognized over time on a ratable basis over the client agreement term beginning on the date our solution is made available to our client. The promised consideration may include fixed or variable amounts. Our clients with enterprise license contracts are invoiced on an agreed upon monthly rate throughout the contract term, which may include fixed monthly or annual rate escalations. Fixed dollar or percentage escalations that are not based on registered users are considered part of the fixed transaction price and recognized on a straight-line basis over the SaaS subscription period evenly. The majority of our client contracts are based on registered users, which we invoice monthly a contractual minimum fee for each licensed solution. In addition, we invoice monthly an additional subscription fee for the number of registered users using each solution and the number of bill-pay and certain other transactions those registered users conduct through our digitalDigital bankingBanking platformPlatform in excess of their contractual client minimum commitments. Our pricing is tiered, with per-registered-user discounts applied as clients achieve higher levels of customer or member penetration, incentivizing our clients to internally market our products and promote digital engagement. Variable consideration earned for subscription fees in excess of contractual minimums is recognized as revenues in the month of actual usage. SaaS subscription services also include annual and monthly charges for maintenance and support services, which are recognized on a straight-line basis over the contract term.

Cost of revenues is comprised primarily of salaries and other personnel-related costs, including employee benefits, bonuses, stock-based compensation, traveltravel, and related costs for employees supporting our SaaS subscription, implementation and other services. This includes the costs of our implementation, client support andsupport, development personnel responsible for maintaining and releasing updates to our platform,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.technology, the amortization of capitalized internal use software, and depreciation.

Research and Development. Research and development costs consist primarily of personnel-related costs for our engineering, information technology and product employees, including salaries, bonuses, other incentive-related compensation, employee benefits and stock-based compensation. In addition, we also include third-party contractor expenses, software development and testing tools, allocated corporate expenses and other expenses related to developing new solutions and upgrading and enhancing existing solutions. We expect research and development costs to increase as we expand our platform with new features and functionality, as well as enhance the existing Alkami Digital BankingSales & Service Platform.

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,related expenses, stockholder matters related expenses, 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. However, we expect that general and administrative expenses will decrease as a percentage of revenue over the long term.

Acquisition-Related Expenses, net.Expenses. Acquisition-related expenses,expenses net, include acquisition-related expensesare primarily related to accrual of deferred compensation,insurance, legal, consulting and professional fees.fees Inincurred addition,for thesethe expenses are inclusiveacquisition of any gain or loss on revaluation of contingent consideration.MANTL.

Non-operating income (expense) consists primarily of interest income from our cash balances, interest expense from borrowings under our revolvingRevolving lineFacility ofand credit,2030 Convertible Notes, amortization of debt discount and deferred debt costs, unrealized gains or losses on marketable securities and realized gains on sales of marketable securities.

Provision (Benefit from) Provision for Income Taxes

Our effective tax rate differs from the statutory tax rate primarily due to the impact of the valuation allowance against our deferred tax assets and state tax expense. As a result of our valuation allowance, (benefit from) provision for income taxes consists primarily of state income taxes and deferred taxes related to the tax amortization of acquired goodwill.goodwill, offset by a deferred tax benefit attributable to the partial release of the Company’s pre-existing valuation allowance related to the MANTL business combination. See Notes 3 and 10 of the Notes to the Consolidated Financial Statements for further information.

(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 costsrelated expenses on behalf of the Selling Stockholders related to the offerings closed on August 12, 2024 and November 8, 2024.

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 from) provision for income taxes; (gain) loss on financial instruments; interest expense (income) expense,, net; depreciation and amortization; stock-based compensation expense; secondary offering costsrelated expenses; acquisition-related expenses, netexpenses; and loss on extinguishment of debt.debt; loss on impairment of intangible assets; and stockholder matters 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.

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 exclude individuals or businesses that solely use the products and services of our acquisitions. 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.

Research and development expenses increased $11.6$22.2 million, or 13.6%,23.1%, for 20242025 compared to 2023,2024, primarily due to a $5.8$20.4 million increase in personnel-related costs (which includes stock-based compensation of $1.3$5.2 million) resultingassociated primarily fromwith headcount growth, $5.4 million in higher consulting costs, $1.1$1.5 million in higher hosting costs, and $1.3 million in higher miscellaneoussoftware other costs of $0.7 million.costs. These expenses were partially offset by an increase of $1.4$1.3 million in capitalized development costs.

Sales and marketing expenses increased $11.2$20.4 million, or 23.1%,34.1%, for 20242025 compared to 2023.2024. The increase was primarily due to an $8.6$15.5 million increase in personnel-related costs (which includes stock-based compensation of $1.8$4.5 million) resultingassociated primarily fromwith headcount growth in our sales and marketing teams. In addition, we incurred $1.7$1.4 million in higher travel costs for our sales team, $1.3 million in higher consulting costs, and $1.0 million in higher travel costs forrelated ourto salesindustry team.conferences Theseand expensestrade are partially offset by lower miscellaneous other costs of $0.1 million.shows.

General and administrative expenses increased $10.8$17.2 million, or 14.7%,20.6%, for 20242025 compared to 2023.2024. The increase was primarily due to a $6.5$14.6 million increase in personnel-costs (which includes stock-based compensation of $5.3$8.1 million) resultingassociated primarily fromwith headcount growth, higher auditgrowth and consulting fees of $2.4 million, higher software costs of $1.7$2.2 million, and $1.3 million of secondary offering costs. These expenses are partially offset by $1.1 million lower miscellaneous other costs.million.

Acquisition-RelatedAcquisition-related Expenses, Netexpenses

Non-operating incomeexpense increased $3.3$9.4 million for 20242025 compared to 2023,2024, primarily due to a $3.4$9.4 million increase in net interest income and a reduction in loss on extinguishment of debt of $0.4 million, partially offset by a $0.5 million reduction in gain on financial instrumentsexpense related to marketablethe securities.2030 Convertible Notes and Revolving Facility.

(Benefit from) Provision for Income Taxes

The Company recorded a benefit from income taxes of $11.3 million and a provision for income taxes of $0.3 million for the years ended December 31, 2025 and less2024 than $0.1 million,respectively, resulting in an effective tax rate of 19.2% and (0.8)% and (0.1)% for 20242025 and 2023,2024, respectively.

OurThe Company’s effective tax raterates differsfor the years ended December 31, 2025 and 2024 differ from the statutory tax rate primarily due to the impact of the valuation allowance against the Company’sits deferred tax assets.assets and state tax expense, offset by a deferred tax benefit attributable to the partial release of the Company’s pre-existing valuation allowance related to the MANTL business combination.

As of December 31, 2024,2025, we had $115.7$99.1 million in cash and cash equivalents and marketable securities, and an accumulated deficit of $476.2$523.9 million. Our net losses have been driven by our investments in developing our digitalDigital bankingSales platform,& Service Platform, expanding our sales, marketing and implementation organizations, and scaling our administrative functions to support our rapid growth.

We believe that our existing cash resources, including our AmendedRevolving Credit Agreement,Facility, 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.growth, including fund acquisitions, as we did with the issuance of the 2030 Convertible Notes to fund, in part, the acquisition of MANTL. 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.

Net Cash Provided by InvestingOperating Activities

There are no material changes to the risk factors previously disclosed under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026.2026 other than the additional risk factor discussed below.

•our ability to raise sufficient capital in a timely manner and the resulting dilution and the terms of our Amended and Restated Credit Agreement dated as of April 29, 2022 (as definedamended, belowthe “Amended Credit Agreement”);

During 2024, we established a new subsidiary in India to support potential future operational needs. While our presence in India has grown since 2024, these operations remain immaterial to our Condensed Consolidated Financial Statements as of MarchJune 31,30, 2026.

•Integrations: Scalability and extensibility driven by more than 350 real-time integrations to back-office systems and third-party fintech solutions as of MarchJune 31,30, 2026, including core systems, payment cards, mortgages, bill pay, electronic documents, money movement, personal financial management and account opening.

We derive our Platform revenues almost entirely from multi-year contracts that are based on an average contract life of approximately 70 months as of MarchJune 31,30, 2026. We predominantly employ a per-registered-user pricing model, with incremental fees above certain contractual client minimum commitments for each licensed solution. In these cases, our pricing is tiered, with per-registered-user discounts applied as clients achieve higher levels of customer or member penetration, incentivizing our clients to internally market and promote digital engagement.

For the three months ended MarchJune 31,30, 2026 and 2025, our total revenues were $126.1$129.8 million and $97.8$112.1 million, respectively, representing a 28.9%15.9% increase period-over-period. For the six months ended June 30, 2026 and 2025, our total revenues were $256.0 million and $209.9 million, respectively, representing an increase of 22.0% period-over-period. SaaS subscription revenues, as further described below, represented 95.8%94.7% and 94.9%95.2% of total revenues for the three and six months ended MarchJune 31,30, 20262026, respectively, and 94.5% and 94.7% of total revenues for the three and six months ended June 30, 2025, respectively. We incurred net losses of $10.0$8.9 million and $7.8$18.9 million for the three and six months ended MarchJune 31,30, 20262026, respectively, and net losses of $13.6 million and $21.4 million for the three and six months ended June 30, 2025, respectively, largely on the basis of significant continued investment in sales, marketing, product development and post-sales client activities.

Growing our FI Client Base. A key part of our strategy is to grow our FI client base. As of MarchJune 31,30, 2026, we served 307313 FIs through the Platform and 1000more than 1,000 clients when including unique clients only subscribing to one or a combination of ACH Alert, Segmint, or MANTL 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.

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 or member. The depth of our product suite is a function of technology and platform partnerships. Our platform model with more than 350 integrations as of MarchJune 31,30, 2026 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.”

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 47 and 11 client renewals in the three and six months ended MarchJune 31,30, 2026.2026, respectively. We expect client renewals to continue to play a key role in our future success.

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 24.6%24.2% and 27.5%24.4% of our revenues for the three and six months ended MarchJune 31,30, 2026 and 2025,2026, respectively. Our future success will depend on our continued leadership in innovation.

We derive substantially all of our revenues from SaaS subscription services charged for the use of our digital sales and service solution. Our client relationships are predominantly based on multi-year contracts for the Platform that have had an average contract life of approximately 70 months as of MarchJune 31,30, 2026. Subscription services are recognized over time on a ratable basis over the client agreement term beginning on the date our solution is made available to our client. The promised consideration may include fixed or variable amounts. Our clients with enterprise license contracts are invoiced on an agreed upon monthly rate throughout the contract term, which may include fixed monthly or annual rate escalations. Fixed dollar or percentage escalations that are not based on registered users are considered part of the fixed transaction price and recognized on a straight-line basis over the SaaS subscription period evenly. The majority of our client contracts are based on registered users, for which clients are invoiced a monthly contractual minimum fee for each licensed solution. In addition, to the extent clients exceed their contractual minimum commitments, we invoice a monthly subscription fee based on (i) the number of registered users on each licensed solution and (ii) the number of bill-pay and certain other transactions conducted through our Platform. Our pricing is tiered, with per-registered-user discounts applied as clients achieve higher levels of customer or member penetration, incentivizing our clients to internally market our products and promote digital engagement. Variable consideration earned for subscription fees in excess of contractual minimums is recognized as revenues in the month of actual usage. SaaS subscription services also include annual and monthly charges for maintenance and support services, which are recognized on a straight-line basis over the contract term.

The following table disaggregates our revenues for the three and six months ended MarchJune 31,30, 2026 and 2025 by major source:

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 efficiency and 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 MarchJune 31,30, 2026 was 56.8% and 202557.7%, wasrespectively, and 58.6% and 59.0%,58.8% for the three and six months ended June 30, 2025, respectively.

The major components of cost of revenues are represented in the following table as percentages of revenues for the three and six months ended MarchJune 31,30, 2026 and 2025, respectively:

Provision for (Benefit From) Provision for Income Taxes

As a result of our valuation allowance, provision for (benefit from) provision for income taxes consists primarily of current state income taxes, current foreign income taxes, and deferred taxes related to the tax amortization of acquired goodwill, offset by a deferred tax benefit attributable to the partial release of the Company’s pre-existing valuation allowance related to the MANTL business combination. See NotesNote 3 and 109 of the Notes to the Unaudited Condensed Consolidated Financial Statements for further information.

The results of operations presented below should be reviewed in conjunction with the Unaudited Condensed Consolidated Financial Statements and notes included elsewhere in this filing. The following table presents our selected Unaudited Condensed Consolidated Statements of Operations data for the three and six months ended MarchJune 31,30, 2026 and 2025.

(1) Includes amortization of acquired technology of $4.9 million andfor $1.9 million forboth the three months ended MarchJune 31,30, 2026 and 2025, and $9.8 million and $6.8 million for the six months ended June 30, 2026 and 2025, respectively.

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 (benefit from) provision for income taxes; interest expense (income),expense, net; depreciation and amortization; stock-based compensation expense; acquisition-related expenses; loss on impairment of intangible assets; and stockholder matters 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.

Comparison of Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Revenues increased by $28.3$17.8 million, or 28.9%,15.9%, and $46.1 million, or 22.0%, for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to the same periodperiods in 2025.

The increase of $28.3$17.8 million in revenues for the three months ended MarchJune 31,30, 2026 was primarily dueattributable to growth in our SaaS subscription services revenue, driven by user growth on our PlatformPlatform, from both existing client digital user growth and new client implementationsimplementations, and higher RPU from selling additional solutions to existing clients resulting in increased RPU. The revenue contribution from the MANTL acquisition was $14.9 million for the three months ended March 31, 2026.solutions.

The increase of $9.6 million in cost of revenues for the three months ended MarchJune 31,30, 2026 was primarily driven by $6.6$7.6 million in higher costs of our third-party partners where we resell their solutions as part of the digital platform, a $3.1 million increase in amortization of intangible assets, primarily related to the acquisition of MANTL,platform and $1.8$1.5 million in higher hosting costs.

Research and development expenses increased by $4.1 million, or 15.3%, for the three months ended March 31, 2026 compared to the same period in 2025. For the three months ended MarchJune 31,30, 2026, the increase was primarily due to a $4.5$0.8 million increase in personnel-related costs resulting from headcount growth in our engineering, information technology and product teams dedicated to platform enhancements and innovation.innovation and $0.5 million in higher hosting costs.

Sales and marketing expenses increased by $2.1 million, or 11.5%, for the three months ended March 31, 2026 compared to the same period in 2025. For the three months ended MarchJune 31,30, 2026, the increasedecrease was primarily due to a $2.8$2.1 million increasedecrease in personnel-related costs, resulting from headcount growth in our sales and marketing teams, partially offset by aan decreaseincrease in costs related to the timing of industry conferences and trade shows of $1.1$1.7 million.

General and administrative expenses decreased by $0.9 million, or 3.2%, for the three months ended March 31, 2026, compared to the same period in 2025. For the three months ended MarchJune 31,30, 2026, the decrease was primarily due to lower acquisition-related expenses of $2.0$2.2 million and lower stock-basedvarious compensationother expense of $1.4 million,costs, partially offset by an increase in stockholder matters related expenses of $2.2$1.1 million.

Amortization of acquired intangibles increasedwas by $1.1 millionconsistent for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025, primarily due to the acquisition of intangible assets as part of the acquisition of MANTL in March 2025 and related additional amortization.2025.

Non-operating expense increaseddecreased by $1.8$0.6 million for the three months ended MarchJune 31,30, 2026,2026 compared to the same period in 2025, primarily due to the increase inlower net interest expense related to the 2030payoff Convertibleof Notes.the revolver facility under the Amended Credit Agreement (the “Revolving Facility”) in March 2026.

Provision for (Benefit From) Provision for Income Taxes

The Company recorded income tax expensebenefit of $2.8$0.2 million and income tax benefitexpense of $7.3$2.5 million for the three and six months ended MarchJune 31,30, 20262026, respectively, resulting in an effective tax rate of 2.3% and (15.6)%, respectively, compared to income tax benefit of $4.3 million and $11.6 million for the three and six months ended June 30, 2025, respectively, resulting in an effective tax rate of (38.2)%24.0% and 48.2%,35.1%, respectively.

The Company’s effective tax rates for the three and six months ended MarchJune 31,30, 2026 and 2025 differ from the U.S. statutory tax rate primarily due to unfavorable permanent differences and changes in the valuation allowance recorded against the Company’s deferred tax assets. For the three and six months ended MarchJune 31,30, 2025, the effective tax rate was further impacted by a deferred tax benefit resulting from the partial release of a pre-existing valuation allowance in connection with the MANTL business combination.

As of MarchJune 31,30, 2026, we had $77.6$81.0 million in cash and cash equivalents and marketable securities, and an accumulated deficit of $533.8$542.7 million. Our net losses have been driven by our investments in developing our Digital Sales & Service Platform, expanding our sales, marketing and implementation organizations, and scaling our administrative functions to support our rapid growth.

We funded the acquisition of MANTL through the issuance of the 2030 Convertible Notes, borrowings on our revolving facility under the Amended Credit Agreement (the “Revolving Facility”),Facility, and cash from our balance sheet.

We have financed our operations primarily through cash generated from the sale of SaaS subscription services. Our future capital requirements will depend on many factors, including revenue growth and costs incurred to support client usage and growth in our client base, increased research and development expenses to support the growth of our business and related infrastructure, increased general and administrative expenses associated with being a publicly traded company, investments in office facilitiesfacilities, repurchases under our stock repurchase program, and other capital expenditure requirements and any potential future acquisitions or other strategic transactions.

Net Cash Provided by (Used In) Operating Activities

During the threesix months ended MarchJune 31,30, 2026, net cash usedprovided inby operating activities was $4.8$17.2 million, which consisted of a net loss of $10.0$18.9 million, adjusted by non-cash charges of $26.2$52.6 million and net cash outflows from the change in net operating assets and liabilities of $21.1$16.5 million. The non-cash charges were primarily comprised of depreciation and amortization expense of $8.1$16.4 million and stock-based compensation expense of $17.3$34.8 million. The net cash outflows from the change in our net operating assets and liabilities were primarily due to a $15.7$5.8 million decrease in accounts payable and accrued liabilities, a $3.6$5.2 million increase in accounts receivable, a $2.4 million increase in deferred costs, and a $2.1 million increase in prepaid expenses and other assets, and a $1.0 million increase in deferred costs.assets.

During the threesix months ended MarchJune 31,30, 2025, net cash used in operating activities was $5.7$4.5 million, which consisted of a net loss of $7.8$21.4 million, adjusted by non-cash charges of $12.8$36.7 million and net cash outflows from the change in net operating assets and liabilities of $10.6$19.8 million. The non-cash charges were primarily comprised of depreciation and amortization expense of $3.4$11.2 million, stock-based compensation expense of $16.1$35.6 million (exclusive of $3.9 million of stock-based compensation expense for unvested equity awards settled in cash related to MANTL acquisition), and loss on impairment of intangible assets of $1.7 million, and net other non-cash charges of $0.2 million, partially offset by deferred taxes of $8.3 million and net other non-cash charges of $0.1$12.0 million. The net cash outflows from the change in our net operating assets and liabilities were primarily due to a $6.6$7.5 million increase in accounts receivable, a $5.4$15.8 million increase in prepaid expenses and other current assets (inclusive of $3.0$2.9 million of prepaid stock-based compensation related to the acquisition of MANTL), a $2.0 million decrease in accounts payable and accrued liabilities, and a $0.2$2.3 million increase in deferred costs, partially offset by a $3.5$4.2 million increase in accounts payable and accrued liabilities and a $1.5 million increase in deferred revenues. The increase in prepaid expenses and other assets was primarily due to a $9.1 million pending vendor refund receivable as of June 30, 2025. The Company received the $9.1 million vendor refund in full in July 2025, subsequent to the period end.

During the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $4.2$4.6 million, primarily consisting of $17.6 million in purchases of marketable securities and $2.2$4.1 million related to capitalized software development costs,costs. partiallyOur offsetinvesting byactivities $16.0included millionpurchases in proceeds fromand sales, maturities, and redemptions of marketable securities.securities in the ordinary course of managing our investment portfolio, which did not have a material net effect on cash flows.

During the threesix months ended MarchJune 31,30, 2025, net cash used in investing activities was $389.4$392.4 million, primarily consisting of $375.5 million related to our acquisition of MANTL, $21.9$12.8 million in net purchases of marketable securities, $1.4$3.2 million related to capitalized software development costs and $0.5$0.9 million related to capital expenditures related to updates for computers and other equipment, partially offset by $9.9 million in proceeds from sales, maturities, and redemptions of marketable securities.equipment.

For the threesix months ended MarchJune 31,30, 2026, net cash used in financing activities was $14.0$30.6 million, which was primarily due to $15.0 million of payments on the revolving loan under the Revolving Facility, $15.0 million in repurchases of common stock, and $5.0 million for payments related to net settlement of equity awards, partially offset by $1.0$3.1 million in proceeds from issuances under the exerciseEmployee ofStock stockPurchase optionsPlan to purchase 0.1 million shares of our common stock.(“ESPP”).

For the threesix months ended MarchJune 31,30, 2025, net cash provided by financing activities was $362.4$354.9 million, which was primarily due to proceeds of $335.5 million from the issuance of convertiblethe senior2030 notes,Convertible Notes, proceeds of $60.0 million from revolver loan borrowings, and$2.9 $1.5million in proceeds from issuances under the ESPP, $2.3 million in proceeds from the exercise of stock options to purchase 0.20.3 million shares of our common stock, partially offset by $33.9 million paid for the Capped CallsCalls, $10.0 million of payments on revolving loan, and $0.8$1.9 million of debt issuance costs paid.

On February 27, 2025, the Company entered into the Third Amendment to the Amended Credit Agreement (“Third Amendment”) and subsequently borrowed $60 million on the Revolving Facility during March 2025, with the proceeds used for the acquisition of MANTL.MANTL, Thewhich Companywere fully repaid the remaining $15.0 million outstanding during the three months ended March 31, 2026. As of MarchJune 31,30, 2026, there were no borrowings outstanding under the Revolving Facility. Refer to Note 87 of the Notes to the Unaudited Condensed Consolidated Financial Statements for more information regarding the Amended Credit Agreement.

Total interest expense, including commitment fees and unused line fees, was $2.3 million and $0.8 million for the three months ended March 31, 2026 and 2025, respectively. Interest expense related to the 2030 Convertible Notes and Revolving Facility was $1.8 million and $0.2$0.1 million, respectively, for the three months ended MarchJune 31,30, 2026, and $0.4$3.6 million and $0.3 million, respectively, for the six months ended June 30, 2026. Interest expense related to the 2030 Convertible Notes and Revolving Facility was $1.7 million and $1.2 million, respectively, for the three months ended MarchJune 31,30, 2025, and $2.1 million and $1.5 million, respectively, for the six months ended June 30, 2025.