Alkami (ALKT) Q1 2026 earnings review
Operating Leverage Shines as Top-Line Growth Normalizes
Alkami delivered a robust first quarter marked by excellent profitability, with Adjusted EBITDA surging 85% year-over-year to $22.3M. The company is successfully cross-selling its Digital Sales & Service Platform (DSSP), which now accounts for half of all new logos and drives a 30% ARR uplift. However, the days of 30%+ revenue growth appear to be over. Revenue growth decelerated to 28.9% in Q1, and Q2 guidance implies a further slowdown to roughly 15%. While the business model is proving its scalability, the narrative is shifting from hyper-growth to disciplined execution and margin expansion.
🐂 Bull Case
The integration of MANTL is a massive success. DSSP clients made up 50% of Q1 new logos, driving larger deal sizes and increasing win rates against legacy providers.
Adjusted EBITDA margin reached 17.7% in Q1, well ahead of expectations. Management's long-term 'Rule of 45' target (approaching 70% gross margins by 2030) appears highly credible.
🐻 Bear Case
Remaining Performance Obligation (RPO) growth slowed to 12% YoY (down from 26% in FY25), and FY26 revenue guidance suggests growth will settle below 20%.
A sudden doubling of third-party database license costs is capping near-term gross margin expansion. GAAP Gross Margin actually contracted slightly YoY to 58.6%.
⚖️ Verdict: ⚪
Bullish leaning. The top-line deceleration is a natural evolution for a maturing SaaS business, but Alkami's exceptional unit economics, low churn (<1%), and success in penetrating the bank market make it a highly durable asset.
Key Themes
DSSP is the Core Go-To-Market Engine
The combination of Digital Banking, Data & Marketing, and Onboarding (MANTL) into a unified Digital Sales & Service Platform is fundamentally changing Alkami's deal dynamics. Financial institutions are shifting from buying point solutions to integrated suites. DSSP deals carry a 30% ARR uplift, and half of all Q1 new logos adopted the full suite, increasing both stickiness and initial deal size.
Forward Indicators Show Deceleration
While current quarter revenue grew 29%, leading indicators are cooling. Remaining Performance Obligation (RPO) grew only 12% YoY to $1.75B, a sharp drop from the 31% RPO growth seen a year ago. Furthermore, management previously noted that DSSP deals require longer implementation cycles (up to 12 months vs 6 months), which will structurally delay revenue recognition in coming quarters.
Aggressive Bank Market Penetration
Historically dominant in credit unions, Alkami is successfully taking share in the regional bank market. With 78% of banks still utilizing legacy core-provided systems, the runway is vast. Alkami signed 14 new MANTL logos and 6 new digital banking logos in Q1, proving its technology stack appeals across institutional lines.
Vendor Costs Capping Gross Margins
A third-party database vendor unexpectedly doubled its license costs late last year. This is actively suppressing Alkami's gross margin expansion. GAAP Gross Margin fell slightly from 59.0% to 58.6% YoY. While management plans to migrate off this database, it remains a near-term drag on an otherwise pristine profitability narrative.
$100M Share Repurchase Program
In a signal of growing maturity and cash flow confidence, the Board authorized a $100M share repurchase program. For a company that generated negative Free Cash Flow in Q1 (-$7.4M), this indicates strong conviction in the back-half cash generation and the long-term margin profile. It shifts the capital allocation narrative from pure growth/M&A to returning shareholder value.
Other KPIs
ARR grew 22% YoY, continuing a pattern of deceleration from the 33% growth seen in Q1 2025. Still, this provides immense revenue visibility, with 96% of Alkami's total revenue now coming from subscriptions.
Stable. Grew 12% YoY, adding 2.5 million users over the last 12 months. Growth remains highly resilient, driven by a mix of new logo implementations and organic expansion within existing clients, insulated from macro volatility.
Decelerating significantly. RPO grew just 12% YoY, compared to 31% growth in the year-ago quarter. This represents 3.5x live ARR, slightly down from 3.9x a year ago, reflecting the normalization of the post-pandemic booking surge.
Guidance
Decelerating. The midpoint of $128.5M implies ~14.6% YoY growth (vs $112.1M in 25Q2). This is a sharp sequential drop from Q1's 28.9% growth rate, reflecting the lapping of the MANTL acquisition and the impact of longer implementation cycles for larger DSSP deals.
Decelerating sequentially. The midpoint ($18.3M) represents a ~14.2% margin, down from 17.7% in Q1. This likely reflects the continued absorption of elevated database costs and the timing of operating expenses, though it remains significantly higher than the $11.9M reported in 25Q2.
Decelerating. The midpoint ($529M) implies ~19.2% YoY growth compared to FY25's $443.6M. This confirms management's prior warnings about a step-down in growth driven by lower termination fees and changing implementation timelines.
Accelerating significantly. The $96.4M midpoint implies a full-year margin of 18.2%, a vast improvement over FY25's $59.1M (13.3% margin). Alkami is successfully proving the operating leverage in its model.
Key Questions
Database Migration Timeline
You noted temporary gross margin pressure from a third-party database vendor doubling its costs. What is the specific timeline and estimated one-time expense to fully migrate off this platform?
RPO Deceleration
RPO growth slowed to 12% this quarter. Is this purely a function of lapping the MANTL acquisition and multi-year contract renewals, or are you seeing hesitation in the broader deal environment?
DSSP Implementation Bottlenecks
With DSSP deals pushing implementation cycles closer to 12 months, how are you scaling your internal services teams to ensure this doesn't create a permanent drag on revenue recognition?
MANTL LOS Status
Is the MANTL Loan Origination System still limited to 'lighthouse' accounts, or is there a timeline for General Availability that could act as a catalyst in H2 2026?