Alkami Technology Inc. today announced the launch of its initial public offering, which is set to see the financial software provider sell shares to investors for between $22 and $25 apiece.

The IPO could reportedly value Alkami at more than $2 billion.

Alkami will raise $150 million if it reaches the top end of its IPO pricing range. The banks underwriting the offering have the option to buy an additional 900,000 shares at the listing price, which could boost the total funding haul to more than $170 million before factoring in underwriting discounts and commissions.

The capital Alkami is set to raise will come on top of the nearly $400 million it has raised from private investors over its 11 years in business. The company’s backers include General Atlantic and Franklin Templeton Investments.

Alkami provides a set of more than two dozen cloud services that banks can use to develop digital services for their clients, such as mobile account management apps. Alkami’s services help banks with tasks such as building personal finance planning features into their applications and onboarding new users. The breadth of the company’s product portfolio is a core part of its pitch to potential IPO investors.

In its IPO prospectus, which was released last month, Alkami stated that banks usually adopt a limited number of products when they first become customers and then buy more over time. This strategy has helped the company achieve a net dollar revenue retention rate of 117% as of Dec. 31, a metric that shows customers typically increase spending on its software over time.  

More than 150 financial institutions with a combined $222 billion on their balance sheets have adopted Alkami’s products to date. 

Alkami generated revenue of $112.1 million from those customer accounts in the 12 months ended Dec. 31, compared with $73.5 million the year prior and $48.2 million in 2018. That adds up to a compound annual growth rate of 53% from 2018 to 2020.

Moreover, Alkami noted in its prospectus that its market opportunity is growing at a brisk pace: The company estimates that the size of its addressable market more than doubled from $3 billion in 2015 to $7 billion last year.

Alkami is not yet profitable, having closed 2020 with a loss of $51.4 million that management attributed mainly to “significant continued investment in sales, marketing, product development and post-sales client activities.” The success of the IPO will depend partly on whether investors will be willing to overlook Alkami’s losses in light of its strong growth and expanding addressable market.

Another factor that should strengthen the company’s pitch to investors is that, thanks to its cloud-based business model, 94% of its revenue comes from subscriptions.

Alkami is set to list on the Nasdaq stock exchange the ticker symbol “ALKT.” Goldman Sachs, JP Morgan and Barclays are acting as lead underwriters. 

Photo: Alkami