Alkami Technology: Oversold and Buyout-Ready

Summary

Alkami Technologies (ALKT) merits a strong buy recommendation, featuring a potential 25–30% premium from mergers and acquisitions activity alongside substantial independent growth prospects. The company demonstrates impressive 30% revenue expansion, with 96% of its revenue stemming from subscriptions, a remarkable 113% net retention rate, and a sturdy per-user Software-as-a-Service (SaaS) framework that remains protected against disruptions from artificial intelligence technologies.

The company’s recent acquisition of MANTL effectively resolves previous shortcomings in customer onboarding processes, paving the way for enhanced average revenue per user (ARPU) and fortifying its competitive advantages within the digital banking sector. Mounting pressure from activist investors, combined with an ongoing strategic review, points to a substantial likelihood of the company being sold. Nevertheless, even without any acquisition, Alkami’s access to an underpenetrated total addressable market (TAM) and its powerful cross-selling initiatives provide a solid foundation for meaningful appreciation in value.

Introduction

Over the last year, Alkami Technologies (ALKT) has experienced a sharp decline in its stock price. The so-called SaaSpocalypse—a widespread sell-off in software stocks driven by fears surrounding artificial intelligence—has inflicted severe damage, with investors selling off shares without much discrimination. Although certain software companies indeed confront serious existential challenges from AI advancements, Alkami stands out as notably resilient and shielded from these predominant threats.

Alkami’s business model centers on delivering cloud-based digital banking solutions tailored primarily for financial institutions across the United States. This focus positions the company advantageously in a market where community banks and credit unions are accelerating their shift toward modern, tech-enabled platforms to meet evolving customer demands for seamless mobile and online banking experiences.

The core strength of Alkami lies in its high-margin, recurring subscription revenue, which forms the backbone of its financial stability. With such a dominant subscription component, the company enjoys predictable cash flows that support ongoing investments in innovation and platform enhancements. The impressive net retention rate further underscores the stickiness of its offerings, as existing clients continue to expand their usage and spend more over time.

Regarding AI risks, Alkami’s platform integrates advanced analytics and personalization features that could actually benefit from AI enhancements, rather than being supplanted by them. The per-user SaaS economics ensure scalability without proportional cost increases, making the model particularly durable in fluctuating economic conditions.

The strategic acquisition of MANTL represents a pivotal move to bolster onboarding capabilities, a historical weak point. By streamlining how new users activate and engage with banking services, Alkami can accelerate ARPU growth while deepening client relationships and erecting higher barriers to entry for competitors.

Activist involvement has intensified scrutiny on Alkami’s undervaluation, prompting a formal strategic review process. This development heightens the prospects for a buyout by larger fintech players or strategic acquirers seeking to capture Alkami’s established client base and technological edge. Independent of any deal, the company’s vast untapped market potential—particularly among smaller financial institutions—and robust cross-sell opportunities into adjacent services like payments and wealth management—promise considerable organic expansion.