Alkami Technology (ALKT) risk factors, FY2025 10-K

Risks Relating to Our Business

1. 01Our business and operations have experienced rapid growth, and if we do not appropriately manage future growth, if any, or are unable to improve our systems and processes, our business, financial condition and results of operations may be adversely affected
2. 02If we are unable to attract new clients, continue to broaden our existing clients’ use of our solutions or develop and maintain resale agreements with favorable terms, our business, financial condition and results of operations could be materially and adversely affected
3. 03Growth of our business depends on a strong brand, and any failure to maintain, protect and enhance our brand could hurt our ability to retain or expand our base of clients
4. 04We may not accurately predict the long-term rate of client subscription renewals or adoption of our solutions, or any resulting impact on our revenues or results of operations
5. 05Our sales cycle can be unpredictable, time-consuming and costly, which could materially and adversely affect our business, financial condition and results of operations
6. 06If we are unable to effectively integrate our solutions with other systems used by our clients, or if there are performance issues with such third-party systems, our solutions will not operate effectively, and our business, financial condition and results of operations could be materially and adversely affected
7. 07If our clients are not satisfied with our digital banking solutions or our systems and infrastructure fail to meet their needs, our business, financial condition and results of operations could be materially and adversely affected22% rewritten
8. 08We depend on data centers operated by third parties and third-party internet hosting providers, principally Amazon Web Services, and any disruption in the operation of these facilities or access to the internet could adversely affect our business
9. 09Defects, errors or other performance problems in the Alkami Digital Sales & 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
10. 10We rely on our management team and other key employees, and the loss of one or more key employees could harm our business
11. 11Because competition for key employees is intense, we may not be able to attract and retain the highly skilled employees we need to support our operations and future growth
12. 12Shifts over time in the number of account holders and registered users of our solutions, their use of our solutions and our clients’ implementation and client support needs could negatively affect our profit margins
13. 13If we fail to provide high-quality client support, our business and reputation could suffer
14. 14Natural or man-made disasters and other similar events, such as the COVID-19 pandemic, could significantly disrupt our business, and materially and adversely affect our business, financial condition and results of operations
15. 15Our use and reliance upon technology and development resources in India may expose us to unanticipated costs and liabilities, which could affect our ability to realize cost savings from our technology operations in India
16. 16We are subject to various risks associated with environmental and social matters

Risks Relating to Cybersecurity, Data Privacy and Artificial Intelligence

1. 17A breach or other compromise of our security measures or those of third parties we rely on could materially and adversely impact our reputation, business, financial condition and results of operations
2. 18Privacy and data security concerns, data collection and transfer restrictions, contractual obligations and U.S. and foreign laws, regulations and industry standards related to data privacy, security and protection could materially and adversely affect our business, financial condition and results of operations92% rewritten
3. 19AI presents risks and challenges that can impact our business, including by posing security risks to our confidential information, proprietary information and personal data, increasing our regulatory and compliance burden and increasing competitionNew

Risks Relating to Our Industry

1. 20We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results of operations
2. 21We derive all of our revenues from clients in the financial services industry, and any downturn, consolidation or decrease in technology spend in the financial services industry could materially and adversely affect our business, financial condition and results of operations
3. 22If we fail to respond to evolving technological requirements or introduce adequate enhancements and new features, our digital banking solutions could become obsolete or less competitive
4. 23If 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 suffer, and our business, financial condition and results of operations could be materially and adversely affected

Risks Relating to Our Intellectual Property, Software and Third-Party Licenses

1. 24Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services and brand
2. 25Some of our products and services contain open-source software, which may pose particular risks to our proprietary software, products and services in a manner that could have a material and adverse effect on our business, financial condition and results of operations
3. 26We may be obligated to disclose our proprietary source code to our clients, which may limit our ability to protect our intellectual property and proprietary rights, reduce the renewals of our solutions and increase the risk of successful hacking attempts
4. 27Claims by others that we infringe upon, misappropriate or otherwise violate their intellectual property or other proprietary technology rights could have a material and adverse effect on our business, financial condition and results of operations29% rewritten
5. 28If we fail to comply with our obligations under license or technology agreements with third parties, we may be required to pay damages, and we could lose license rights that are critical to our business
6. 29If we cannot license rights to use technologies on reasonable terms, we may not be able to commercialize new products in the future

Risks Relating to our Financial Results, Operating History, Indebtedness and Capital Structure

1. 30Our quarterly and annual results of operations are likely to fluctuate in future periods
2. 31Because we recognize revenues from our solutions over the terms of our client agreements, beginning from live use of the service, the impact of changes in the subscriptions for our solutions will not be immediately reflected in our operating results
3. 32We have a history of operating losses and may not achieve or maintain profitability in the future28% rewritten
4. 33Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
5. 34Unanticipated changes in tax laws or regulations could have an adverse effect on our business and results of operations27% rewritten
6. 35Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under the 2030 Convertible NotesNew
7. 36The terms of our Amended Credit Agreement require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business61% rewritten
8. 37In March 2025, we issued $345 million principal amount of our 1.50% Convertible Senior Notes due 2030 (the “2030 Convertible Notes” or “Notes”) pursuant to an indenture (the “Indenture”), dated as of March 13, 2025, between the Company and U.S. Bank Trust Company, National Association, as trusteeNew
9. 38The accounting method for reflecting the 2030 Convertible Notes on our balance sheet and accruing interest expense for the 2030 Convertible Notes may adversely affect our reported loss and financial conditionNew
10. 39We are subject to counterparty risk with respect to the Capped CallsNew

Risks Related to Ownership of Our Common Stock

1. 40Transactions relating to our 2030 Convertible Notes may affect the value of our common stockNew
2. 41Substantial future sales of shares of our common stock could cause the market price of our common stock to decline
3. 42We are currently restricted in our ability, and for the foreseeable future do not intend, to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock
4. 43The principal stockholders of Alkami will continue to have significant influence over the election of the board of directors and approval of any significant corporate actions
5. 44Provisions in the Indenture could delay or prevent an otherwise beneficial takeover of usNew
6. 45Anti-takeover provisions contained in our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock
7. 46The trading price of our common stock has been and may continue to be volatileNew
8. 47Our business could be negatively affected as a result of actions of activist stockholders or othersNew
9. 48We incur significant expenses and administrative burdens as a public company, which could have a material adverse effect on our operations and financial resultsNew