Ladies and gentlemen, thank you for standing by and welcome to the Q1 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Mr. Rhett Butler, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Elaine. Good afternoon and welcome to Alkami's earnings call for the first quarter ended March 31st, 2021. With me on today's call are; Mike Hansen, Alkami's Chief Executive Officer; Stephen Bohanon, Alkami's Co-Founder and Chief Strategy and Sales Officer; and Bryan Hill, Alkami's Chief Financial Officer. During the course of today's conference call, we may make forward-looking statements including statements regarding trends, strategies and the anticipated performance of the company. These forward-looking statements are based on management's current views and expectations and are subject to various risks and uncertainties, including risks relating to our operating and financial performance. Our actual results may differ materially from those contemplated by these forward-looking statements and we can give no assurance that such expectations or any of our forward-looking statements will prove to be correct. Please refer to the Risk Factors included in our filings with the Securities and Exchange Commission, which are available on our Investor Relations website and the press release distributed earlier this afternoon regarding the financial results we will discuss today to review important factors that could cause actual results to differ materially from those reflected in the forward-looking statements. Forward-looking statements made during the call are being made as of today, May 11th, 2021, based on the facts available to us today, and we undertake no obligation to update or revise any forward-looking statements. Also, unless otherwise stated, all financial measures discussed on this call will be on a non-GAAP basis, because we believe these measures to be useful to investors in the understanding of our financial results. A reconciliation of each comparable GAAP metric can be found in today's earnings release, which is available on our website, investors.alkami.com. And as an exhibit to the form 8-K furnished with the SEC today. With that, thank you for joining us and I'll turn it over to Mike.

Well, thanks, Rhett. And thanks everyone for joining us today on our first quarterly earnings call as a public company. This is our first I'd like to start with a brief review of who we are, and then move right into some contexts around what has happened in the banking space over the last year or so and then a few comments about Q1. For those on this call that are new to us, Alkami is an 11-year old vertical SaaS company focused on one thing, democratizing digital banking technology for community and regional banks and credit unions. We call them generally financial institutions in the US. Alkami enables these financial institutions to level the digital playing field against the mega banks, neo banks and other technology advanced or a well-resourced competitors. In partnership with our clients and our partners, we believe we are ultimately contributing to long-term success of community and regional financial institutions, and thereby contributing to great - greater financial choice and results for consumers in businesses. We offer a single, highly configurable and cloud-based digital banking platform to financial institutions that delivers their unique brand or strategies or offerings to all of their consumers and all their business customers or members digitally. Like many of the most recognizable innovative technology platforms in the world, we employ a multitenant architecture, along with a single code-based, seamlessly orchestrating millions of combinations and permutations of systems and versions and configurations and vendors and data models and devices and user preferences and we utilize technologies allow us to deliver this innovation rapidly, continuously and at scale to more than 240 clients today. Bringing a speed to market advantage of scale to digital banking that we believe is unmatched. We serve what we estimate to be about a $7 billion addressable…

All right. Thanks, Mike. So as we look at our innovation focus and cadence for 2021, you know much of it will be centered around adding incremental feature functionality across our 8 product categories and 26 products, in addition to the architectural areas Mike mentioned. However, we do have some specific focus areas for '21, which are: expanding and enhancing our business banking solutions; our overall user experience with an emphasis on mobile; our data solutions and our extensibility solutions, namely our SDK and API offering. I'll highlight each area briefly before moving on to new sales performance. First, our business banking strategy is paying off. As we now have approximately half of the platform install based leveraging our business banking solutions. As Mike mentioned, we are extremely pleased that signed up one of the largest commercial banks for retail, small business and commercial banking solutions, is validation of our overall product progress and vision. Historically, Alkami has made big strides delivering functionality to the micro business and SMB banking segment. But recently we've invested functionality aimed at middle market and corporate cash management end users that we believe will enable us to legitimately compete for more sophisticated and demanding banks and credit unions that need these robust commercial banking capabilities. Second, we're always updating our user experience. We expect to incorporate some significant changes during 2021 to our mobile app experience. To that end, we are incorporating our design system called, Iris throughout the mobile experience. This will result in a refreshed, modernized, flexible and more customizable experience. Additionally, we believe this broader mobile initiative lays the foundation for us to significantly improve our development speed for mobile features going forward. We call it, mobile fast. Another important aspect of our focus on enhancing our mobile solution is enabling…

Thanks, Stephen. And good afternoon, everyone. I echo Mike's comments as we have achieved a great deal so far in 2021. Now I'd like to thank all the Alkamists that not only continue to focus on the business, but also those that helped pave our way for a successful IPO. As a reminder, Alkami's long-term operating model is to achieve 25% revenue growth, 60% to 65% gross margin, and an adjusted EBITDA margin of at least 25%. Our financial model affords fantastic unit economics with long-term contracts that have averaged approximately 70 months, $830,000 in revenue per client, a net dollar retention of mid-to-high teens and an LTV to CAC at over 10. So the visibility provided by our financial model combined with our modern SaaS architecture gives us confidence and flexibility as we go after a very attractive market opportunity. Moving on to our financial performance for the first quarter at '21. Total revenues for the first quarter exhibited strong growth of 43% compared to the first quarter of '20. Our subscription revenue for the first quarter increased 47% and represented 95% of our total revenue. Our subscription revenue mix was over 200 basis points higher compared to the prior year period. This performance underscores further improvement and what historically has been a very high quality revenue mix. Annual recurring revenue or ARR of $134 million represented strong year-over-year growth of 39.5%, driven by registered user growth of 28% and ARPU expansion of 9%. We exit Q1 with nearly 10 million registered users on our platform. User growth was driven primarily from existing clients growing their digital users at approximately 15% that of attrition and represented just over half of our user growth. ARPU growth was driven by new clients added to the platform at $18 per registered user,…

Well, thank you, Bryan. Appreciate that. So in summary, I feel the start for 2021 in our life as a public company, it's gotten off to a quite solid start for us. I believe our singular and relentless focus on this mission critical, and I would say, even becoming even more mission critical aspect of banking, digital banking, represents both an important mission for us and a significant opportunity. The single focus is being the digital banking partner for community and regional financial institutions whose strategy is demand success with increasingly digital world. I also believe we have a focus strategy and plan to build on our current position and key ways, including one, to accelerate our clients' successes with their digital strategy, and win with them. To boldly invest in innovation through value creating, build, partner and buy initiatives to catalyze the expansion of our ecosystem and our role in it. Number four, to expand RPU through focus cross sell behavior and investments. And five, to augment our go-to-market activities with digital marketing increased resources as Stephen mentioned. Configure our fair share of this market opportunity ahead of us, we see a robust end market where digital banking technology is democratized for regional and community financial institutions and where financial choice is unlocked for consumers and businesses. And bringing the power of a vibrant FinTech ecosystem to our clients, we empower them to focus on their core competency, while remaining in step with the latest technology. Putting all together, a remarkable client base and attractive market opportunity, a singular mission, powerful unit economics, diversified growth drivers and defined competitive position, we believe this combination positions us to create shareholder value, and in Alkami that is uniquely our own. Just like to end there, and I'll open it up to Q&A. So I'd like to turn it over to the operator at this time.

[Operator Instructions] And you have a question from Saket Kalia from Barclays Capital.

Okay, great. Hey, guys. Thanks for taking my questions here and congrats on becoming a public company.

Thanks.

Thanks, Saket.

Hey -

Appreciate -

Sure. Mike, maybe for you just to start. Can you just talk a little bit about what your customers are saying about potentially opening, reopening physical branches? And how they may or may not change sort of what they've been doing on the digital side as a result?

I will second. I think I'll bring Stephen in on this a little bit too, because he'll probably have an opinion on this as we go through this, we both interacted with clients a lot. As you know, our client base ranges from essentially no branches, to a very physical footprint with a lot of branches. And they've navigated through the pandemic, doing what they can within their strategies. My sense is that and that many of them are going to wait and see on what changes they really make here. I haven't seen any specific adjustments in what one call the plan changes for the future. I think they're going to wait till the staff comes back, the workforce in the communities pick up, see how that works out and make adjustments is how it feels to me. Stephen, I don't know, would you add anything to that?

Yeah, the only thing I would say is that, you'll see more and more of a trend towards using those branches has actually in somewhat of a light training center for their digital tools. So as people come into the branch, one of the primary jobs of the employees in the branch is to actually try to move those transactions to the mobile app, right. So and we're already seeing this with some of our customers. And I think you're going to see a lot broader set of the FI base, adopt that mindset as a branch use to get people more comfortable with the digital tools so they can self-service.

That's how it feels -

Got it. Got it. That makes a ton of sense. Maybe it's my follow-up for you, Bryan. You know, it was a helpful stat in the call, I think. I think you said 6 wins in the quarter with about 215,000 net new subscribers. I guess the question is, how do you think about those subscribers layering into that registered user count that you report. I guess, is that something that's going to happen here, you know in the second quarter or is that something that could take a little bit longer to sort of layer into that user count? Does that make sense?

Now, it does. And, yeah, we felt like we had a pretty good, pretty strong first quarter of sales. I mean, and Liberty Bank coming in, obviously, is a great validation point for us. But as we think about the registered users that we report, those are for live users on the platform. And as Stephen mentioned in his prepared comments, it takes between 6 months and 12 months to implement a new financial institution. And that's dependent on the complexity of the integrations and the size of the institution, and you know, many other factors. So you will not see those users come in until these financial institutions are live. What they do though, is they go into our backlog for implementation. So these 215,000 users are now part of the 1.6 million that we have in implementation and those will roll out through the course of '21. And what's interesting about how users come in, if you look at 2020, our implementations and digital users, it was more of a first quarter, second quarter bias, the story of '21 will be scheduled implementations, but the majority of those occurring in Q2 and Q3 of '21. So each year will have its own theme and timing of when digital users will come on to the platform.

That's very helpful. I'll get back in queue. Thanks, folks.

Okay, good. Thanks, Saket.

And you have a question from Pat Walravens from JMP Securities.

Great, thank you. I'll start with one for you, Bryan, and then a bigger picture one for the team. So obviously, your business momentum is really good. And you landed that big deal. But when you look at the guidance, it's sort of in line with where we were. And I'm sure there's a rationale of that. But I'm just trying if you could lay out for us what it is?

Yeah. So on a full year basis, we rolled through our $1 million revenue beat, which we were pretty proud of for the quarter and for the full year. You know, as we look out 12 months past, the implementations during the quarter are pretty much vague or during the remainder of the 12 months. They're scheduled, we know when we're going to come online. And so we know when that incremental revenue will come online. So the variations that can occur from quarter-to-quarter are related to cross sell activity, and the speed at which we can implement those add on products. And then also the pace at which our clients are growing their users organically. So that's the variation we have. And it's pretty narrow. So the guidance that we provided for the full year is at the midpoint around a 30% organic revenue guide. You know that's 500 basis points above our longer-term objective, 25%-plus, so we feel based on near-term visibility, it's good guidance, it's credible guidance and that was the approach that we took.

Okay. So super ratable model, right. And we just, in general, we shouldn't expect a lot of variability. Is that a fair -

I mean and that's right, Pat. I mean, we have 95% subscription revenue, which is from my seat, a fantastic model to be responsible for. So it's very ratable, what you're not going to see is guidance that is, you know, too conservative and you can't see guidance that's overly aggressive, because it's a very, very predictable revenue model.

All right, great. And then Steve, maybe for you what, and you touched on this a little bit, I think when you're talking about the cash management, but what are sort of the two or three pieces of functionality that you don't have yet, but you'd like to see added to the platform to make, how can you even better fit for banks?

Well, Pat, if I told you that I'd be given you - I'd be given the keys to our competitors there. We don't want to give away the secrets. So no, I would say that the - I would just say generally describe them, because I don't think you can actually point to two or three features because it really quite honestly depends on who the prospective client is, and who their ultimate commercial customers are. So I would say, I'll generally describe them and say, as you go up into the higher end of the commercial banking kind of stratosphere, you - now you're dealing with holding companies conglomerates are dealing with people that may have, you know, 15 to 20 EINs across a holding company. We're going to manage all of those from a single login they want to have daily cash reporting or intraday cash reporting. They want to have all kinds of money movement, whether it be wire, international wire, ACH, same day ACH all mixed together. So I thought what you're just seeing is just a very complex kind of management and money movement and reporting type features that those large commercial clients demand. Those are the areas I would say that we're, if you'd say generally that we're focusing on to ensure that we have something that is on par with the other kind of traditional leaders in the space.

All right, super interesting. Thank you.

And you have a question from Ms. Sterling Auty from JP Morgan.

Hey, guys, I'm actually going to go in the opposite order as that. I'm going to start high level and then go granular. So on a high level, you know, with interest rates going up, I would imagine that net interest margins will start to improve for a lot of your core customers. And wondering if that has them more encouraged or more optimistic about doing, you know, system transformations and adopting more solutions?

You know, Sterling, this is Mike. The discussions I've had with the CEOs, I do see some of the interest margin discussions you mentioned here, of course, obviously, there's also some loan dynamics, you know, mortgage and card and consumer. And so, you know, I'm not feeling a big shift or change going into 2021 in terms of investments, non-interest expense from the seats that I'm interacting, you know, obviously, the balance sheets look pretty solid for the institutions in general. So I feel like their abilities support out either asset growth or investments or things that could happen, but I don't feel a big shift or change that is, would alter the game plan as we see it right now. Stephen, do you see anything on this?

No, no.

No, okay.

All right. Understood. And then down to the granular level. You know can you give us a sense of when you look at the cross sell, what of the incremental modules are you seeing the greatest interest in at the moment? And do you think, you know, that's going to change as we move throughout '21?

Yeah, so good question. I think that the business banking side of things is important. And sometimes it may be a little ironic, because a lot of times people think of credit unions as just consumer focus. But actually, what we're seeing is that, there is a more heightened sense of not only awareness, but appetite for getting more and more into the commercial banking side of things, even with acquisitions of traditional banks by the credit union segment. So I think you have that force that's driving. And I mentioned this kind of earlier in my prepared remarks of, how many of our customer base actually had our business banking solutions. So I think that is one that will continue to see growth, as more and more of what may be traditionally consumer models or I'm sorry, consumer base financial institutions kind of expand out and get into the commercial banking side. I think the other one would be, two that are kind of mixed together, data and then I would say financial wellness. So on the data side, which ultimately helps financial wellness, but on its own, what we're seeing is that, that clients as I mentioned, have big internal projects. And with another one, they use the data in our system or maybe leverage our products to do custom extracts out to their data warehouse systems that they have or use our data for, you know, cross sell or fraud mitigation, those are all various products that we have that we are seeing, I would say a lot of interest in. And then the last one like I mentioned, kind of intimated was the financial wellness side, we're seeing actually a big increase in the amount of interest in this, it's not being used as just some…

It makes a lot of sense, but the excitement about all those solutions, you know, you could smell the enthusiasm and the opportunity. So thank you.

Yeah.

And you have a question from Josh Beck from KBCM.

Thank you for taking the question and congrats on the successful public journey. I wanted to just kind of ask a higher level with the surge in digital engagement that we've seen in the last year. I think banks have worked through a lot of the PPP and forgiveness items that were really time-consuming in 2020. So have you seen maybe a new urgency to consider modernizing their digital banking platform, just curious, the CEO, CIO types of discussions you're having?

Hey, Josh, this is Stephen, I'll try to attempt on that one. I would say that you know keep in mind that the market itself is somewhat throttled, meaning that, that this is a 100% replacement market. And those contract terms that are coming up with their existing providers, there's a certain kind of pace to those. So it's harder to tell at least within a three or four month period, you know, kind of coming out, I would say we're kind of emerging as a country kind of over the last couple of three months. Whether or not we're going to see the trend which we've seen, which is obviously very positive in terms of overall deal activity, whether or not that's going to kind of level out over the year or it's going to continue on that pace. So it's kind of hard to say as far as net new logo kind of TCB. But what we can definitely tell you is that, of the customers that are obviously already clients, the client sells activity, the amount of demonstrations and sales meetings we're having to go over kind of the broader feature set, we're absolutely seeing that people are more and more interested in having a, I guess, a more holistic, more complete digital offering there. And so I think it's probably kind of maybe unleased some of that, where they're saying, okay, that the basic things of digital banking, you know, accounts, transactions, transfers and bill pay like, this is now absolutely table stakes probably was that several years ago, to be quite honest. So I think that what we're seeing is that the uptake of those additional products, as well as the demand for us to create more products is the overall trend that we see. Overall RFPs and total deal activity, yes, it all looks very positive. But it's interesting to see if this is almost just like a post-pandemic surge, you know, kind of coming out of this, and then it kind of flattens out the rest of the year or if it's going to kind of maintain this high level, you know, time will tell, and we'll probably be having a more informed view of that probably in the fourth quarter of this year.

Really helpful, Stephen. And maybe a question for you, Bryan. The new client RPU, I think was close to $18. So certainly, you're getting strong product adoption among your newer clients. How should we think about those two factors? Not really expecting specific guidance, but just as we model out revenue and think about users and RPU, how should we be thinking about those for the balance of the year?

Yeah, sure. No. ARPU expansion during the quarter was 9% of the prior year, which was a great quarter for us. About 50% of that came from new clients that were added to the platform at the $18 that you just referenced. And the other half, which is what we're very excited about came from cross sell activity over the last 12 months. So we're really now seeing both of those levers starting to really pay dividends for us. But as I think about ARR growth in 2021, you know where would I expect that to come from? So between 20% to 25% will be user growth and 5% to 10% expansion in ARPU, that's over the prior year. So for the fourth quarter 2020 that's the right way to model and think about it.

Really helpful. Thanks, Steve.

And you have a question from Andrew Smith from Citi.

Hey, guys. Thanks for taking my questions here and congrats from me as well on public company status. I want to ask a question about organic user growth. It's good to see the momentum continue into 2021. What - what's the expectation for the remainder of the year, especially as we lap COVID? Is that a lever for potential upside relative to kind of what you're modeling? And then kind of secondarily, what's the right way to think about existing user growth over the longer-term? Thanks.

So I'll take the latter part of that question first. You know, our view on the market is it's growing digital users between 5% and 8% each year, and so as we scale and grow our business beyond, you know, much higher than the 10 million users that are presently on our platform, we feel over time will probably, you know, converge back to the market growth. And you see that in the mega banks, when they report digital users, you see at some of our competitors, where they report digital user growth, so we fill that just naturally [technical difficulty] will go. Now, the clients that we have today, they're very digital banking, leaning in clients that are participants in the market. So we're benefiting from their success as Mike mentioned, because of our revenue model being a digital user base model. And so in 2021, we think will grow our users between 20% and 25%, in total for the full year. And you should expect roughly half of that to come from organic user growth from our clients. It was 17% for clients that still existed at Q1, but net of attrition, it was 15%, which again, that's running well ahead of where the market is today. And we haven't modeled that in for the full year. So that would present an upside opportunity to the model to the extent they beat where we're at.

Got it. That's really helpful context. Thank you for that. And then on the inorganic strategy, I wonder if you just articulate, you know, kind of what - you know how we should expect that to play out over time. Clearly a good pickup with ACH Alert, good cross sell opportunity, you got a number of banks that came with that, but especially with the fresh capital, post-IPO, talk about kind of how you think about sort of M&A inorganic growth? Thanks.

So first which is, you know ACH Alert, we think that's the perfect prototype acquisition for us. They were a partner of ours. So we resold their service offering, we got to know them, they have great functionality, they're performing very well. In fact, our sales force has sold. It's just under 10 ACH Alert deals since acquisition and they have some large banks in the pipeline right now. They brought on a new reseller, a large reseller that's providing some nice deal flow. So we couldn't be more excited about ACH Alert and what it's doing for Alkami. And if we could just repeat that, from an acquisition perspective, I think we'll be doing great in terms of inorganic growth. But the areas of focus, it's really a, you know, do we build new functionality? Do we acquire functionality? Or do we partner or some combination of those three, so it's really a part of our overall development strategy. And then it's also a capital allocation strategy, as you might imagine, so they have to - our potential acquisition has to fit our financial model in terms of accretion for revenue growth, you know, SaaS gross margins, ability to scale beyond a 30% adjusted EBITDA margin. And typically, that will target a 25% IRR on these type transactions. ACH Alert just so happens to probably be much better than that, which we're super excited about. But that's the way we're thinking about the approach to the market, there's a lot of disparate, I would characterize them as point solution providers, that would extend our platform, extend our addressable market. And that is the focus. That's not to say we would not, you know, acquire a small competitor to gain additional digital users. But that would have to be at a very compelling financial return in order for us to do something like that, because we think we're going to win those users over the longer run anyway. Areas of functionality and focus, account openings is clearly an area that we would really like to focus on, you know, security and fraud, that's another area. Marketing and data analytics, that's another area of high interest for us where we think we can drive a lot of value for our clients. So again, we win when our clients win. But that's the way we're thinking about acquisition opportunities.

I would only add one area to the four on the wheel that you're talking about a new account opening data and fraud but it would be in the business banking area, payment moving, trash management and Treasury, that would be the fourth area I think would fit into our five build partner, R&D/inorganic strategy as well. And there's a great opportunity so there's nothing, Andrew.

That's great to hear. Thanks, Mike. Thanks, Bryan. Congrats again. Appreciate it.

Thank you.

Thank you.

And you have a question from Mayank Tandon from Needham.

Thank you. Good evening. Congrats on the quarter. I wanted to start with just maybe more of a topical question in terms of the commercial banking opportunity. I think, Stephen, you talked about some of the increased functionality to really make a dent in that market. There seem to be several incumbents already in there. What are the sticking points for many of the banks who might be reluctant to move to a cloud-based offering like Alkami's and sort of stick with that legacy provider? So what are some of the challenges you face that you try to shift that market more to Alkami's strengths?

Yeah, good question. The idea that cloud-based is really not I mean, I'm not saying that there, you couldn't find someone out there, that says, hey, I'm not comfortable with, you know, having the system in the cloud. But I would say that we really kind of crossed over that threshold, at least for the large majority of prospective clients out there. So the underlying technology in terms of where it's hosted, I don't think is at all a barrier. I think the biggest thing that you get into is, the number one thing is, this is a big disruptive event to a highly profitable segment of their customers. And so you know it's very risky, right. So it needs to be worth it. So whenever we go and we talk with these clients, I mean, they're, they ultimately have to believe that the risk of staying still is a higher risk, and potentially worse for them long-term than actually converting to a new system. And that's what we saw with Liberty Bank. I mean, they had obviously, a lot of offerings today, they had some really significant commercial clients, but they wanted to go bigger, and they wanted to go faster. And they ultimately made the determination that the legacy solution just wouldn't cut it. So I think that, you know, every - each one has its own story based upon who they are, who they compete with, what their current system is. But really is a matter of, it just a kind of reinforcing the theme that the digital is where the where the competitive playing field is. And if you don't have a leading digital solution with self-service functionality for these institutions, you know you'll start to lose them or you won't be able to win the business. So I'm not sure if that answered your question or not. But I'm trying to, you know, kind of paint the general picture there about what drives the decision to move.

I know that. Very helpful color, Stephen. Thank you for that. And a really quick follow-up, and I apologize if you already shared this data. But what - can you refresh us on what the number of products today the customers are using? How do you see that trending over time? And then, is it conceivable that some customers may use all 26 products across your 8 categories? Or that sort of really more of a long-term target?

Yeah. So we have examples of clients using you know every product that we have. And so our products are, we feel the majority of them are relevant for each segment of the market in terms of the financial institution size. And so, you know, we think there's the ability to you know penetrate all of our products into the base longer-term. On average today, our client base has a little over 9 products per client. And what's interesting is the recent trend in new sales cohort from 2018, 2019 to 2020, we're seeing a progression of more products being sold on the initial order, it's going from like 10 in '18 to 11 in 2019 and it jumped up to 15 in 2020, and on a trailing 12 month basis for the first quarter of '21, we're still around that 14 to 15 average products per client. So as what we're finding in that and what the takeaway is, as we have more products to sell, our Salesforce is becoming more competent and better at selling more products on that initial order, which is very important for us.

That's helpful, Bryan. Thank you so much.

And you have a question from Bob Napoli from William Blair.

Thank you, appreciate it. And congratulations on the IPO.

Bob. Thanks, Bob.

I guess, you know, one thing that I think that you view as a key competency is the pace of innovation. And you know, so I was just wondering if you could give us some view on how you think about that and how you think about the pace of innovation. I think your engineers are almost half of the staff at the organization over 250. And there was a new products, the rate of new product development has been pretty impressive. So how do you think about the innovation and pace of innovation? And is that a key asset of the company?

Well why don't I start a little bit here, share the framework of that and then maybe Bryan you could talk a little bit of the allocation of how we allocate the economics around that. And Stephen, you can pick on the target areas there. Well, Bob, think of it as I think we have like 20 cross functional teams across the company addressing element of our product from end-to-end and the platform itself. So imagine 20 teams of roughly 10 or 12 people each of designers, developers, scrum masters, QA talents, architects, driving each part of the product forward. And they're doing that based on customer input, client input, feedback groups or advisory board. And so you can imagine a wave of 20 activities going on side-by-side, very agilely going forward, which are either customer-oriented ideas, market-oriented ideas, our own created ideas that advances all those things along. And well, we can turn on a dime on what we allocate those 20 teams do in priorities based on market opportunities. And those are continuously delivered into our single codebase. So our mechanism is fairly agile to navigate opportunities, needs and relative, we always say the words that 90% of the work we do every sprint turns goes to 90% of our clients every 90 days. And so the fact that we can deliver that very quickly to all of our clients very fast, is a very effective part of kind of our arsenal in the market opportunities that we have. So that's - think of that as the wave of what's going on there. Bryan could kind of tell you how we allocate it between, you know, realization versus new market opportunity versus platform allocation. And Stephen, you could talk about some of the key areas [technical difficulty].

Yeah, just real quickly, Bob, and this is I think we educated a lot of the investors on this sort of, but it's good to revisit it, but the way that we think about capital allocation in terms of R&D spend about 50%. Today, we target for either realizing our existing TAM meaning, some improvement in functionality to better penetrate areas of the TAM or maybe today, we haven't had as much success. I think business banking is a great example of that, where we've invested a lot of dollars in that over the last 12 months to 18 months. And that's starting to result in wins like Liberty and us being very active in bank deals. In fact, you know, it's one-third of our present sales pipeline. So that's the way we think about that part. Also, within that 50% is expanding our TAM. So it's just new products. We have about 9 products that will be coming online over the next 18 months, we need to do a little bit more market research on where we're going to actually price point some of these products, but we feel it will take us well above the $34 that we have today in addressable market opportunity and probably, you know, well above $40 of revenue per user. So that's the return for those investment dollars. And then you kind of move over to maintenance activities, it's about 25%. Our scope is to try to bring that down, our objective is to scope that down over time to then take those dollars that are allocated to maintenance activities and move that more to TAM expansion and TAM realization. And then finally, as you know, split pretty evenly between one-time client projects, which ultimately rolls into the code and benefits our entire client community. And it also included in that last component is efficiency activities. So where we're making modifications to the platform to help the manner in which we support or implement our clients. That's the more holistic approach on how we're allocating dollars to those various teams that Mike just mentioned, to either improve the platform or expand our addressable market.

Thank you. That's really helpful. And just if you could, I guess back on the revenue per user, the $18 was you know stronger than what we thought and can you - which I think you touched on the products of device, but in the product pipeline, what are the areas of focus in which of those could have a bigger effect on RPU?

Stephen, I think you're probably the best seed of the 9 things that are in the next 18 months. What you're kind of focusing on that kind of broadly go back into the same -

Yeah, it's really, I know, we've kind of hit on a couple of times throughout the kind of third march in the questions, but it's same themes there, Bob, it's really on the commercial banking side of things, the data side of things, the security and fraud protection and then extensibility. So I think those are kind of, I would say the general kind of areas of that. I think what you're asking for is, what are the kind of the net new products that you think are going to drive the kind of the largest percentage of the net new revenue from those products and those would be the categories I put them in.

Thank you. Appreciate it.

Sure, Bob. Thank you.

And your last question comes from Chris Merwin from Goldman Sachs.

Great. Thanks for taking my question. So I wanted to ask a bit about some of the deals with the larger banks. Obviously, it's impressive when this quarter with Liberty. I know for some of these larger regionals though they sometimes require high degree of customization you know, in order to win the business. Can you talk a bit about your willingness to do that level of customization and sort of how you see the market evolving over time, and if some of these banks will move away from that and more towards taking the high quality out of the box SaaS solutions? Thanks.

Yeah, sure. Hey, Chris, thanks for the question. This is Stephen, I'll attempt to answer that. One, you know, we hear we call it - we at Alkami say customers kind of a bad word. And but I understand it's a word that's used a lot. What we've done is been able to is to create a platform that's built out of the box to be customized without leveraging custom code, right, without having separate branches that are built and we do that through a high degree of configurability and configuration, we have all kinds of natural extension points within the system, we obviously, you probably heard earlier, we talked about kind of our SDK and API set that allows our customers to go and modify and build their own extensions, their own apps, their own widgets within the platform. So that's how we kind of accomplish the quote, customization, I know just kind of a general term that you use. And that's how we feel comfortable actually being able to go and really kind of be able to satisfy into service these larger financial institutions. You know, on the commercial banking side, obviously, Liberty is a significant client, but on the credit union side, you know, we have clients that are multiples of their size, quite honestly, in terms of users and some sometimes in certain cases, complexities in terms of when it comes to third-party integration. So we've been kind of doing this for a while. But I think that, what we don't want to say is that you have to kind of customize our system, you're able to almost personalize it to your needs, but you don't have to use custom code to do it. And that's one of the things that Alkamist, we believe, is really…

Perfect. Thank you so much.

This concludes today's conference call. Thank you for participating. You may now disconnect.