What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-02-29 · 186 added, 315 removed, 724 unchanged (41% of the section changed)

6 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Alkami Technology, Inc.

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in redeemable convertible preferred stock and stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Description of the Matter

Accounting for Revenue Recognition

As disclosed in Note 4 to the consolidated financial statements, the Company provides subscription-based services to its customers through software-as-a-service (“SaaS”) arrangements.

The timing and amount of revenue recognized is dependent on multiple factors, including the product offering, user count, price, and implementation date.

Auditing the accounting for revenue recognition was complex due to the multiple manual inputs involved in the Company’s revenue recognition calculation.

For example, the Company inputs user count information from both internal and third-party sources into its revenue recognition calculation

How We Addressed the Matter in Our Audit

To test the Company’s accounting for revenue recognition, we performed audit procedures that included, among others, testing the completeness and accuracy of inputs to the revenue recognition calculation.

For example, we agreed pricing information to customer contracts and validated the implementation date through external confirmations with the Company’s customers.

/s/ Ernst & Young LLP

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February 28, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Alkami Technology, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Alkami Technology, Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Alkami Technology, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2024 consolidated financial statements of the Company and our report dated February 28, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Dallas, Texas

February 28, 2025

ALKAMI TECHNOLOGY, INC.

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Accounts receivable, net 38,739 35,499

Deferred implementation costs, current 10,329 7,855

Deferred costs, current 13,207 10,329

Prepaid expenses and other current assets 13,697 10,634

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Right-of-use assets 14,565 15,754

Deferred implementation costs, net of current portion 30,734 24,783

Deferred costs, net of current portion 37,178 30,734

Intangibles, net 29,021 35,807

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Current liabilities

Current portion of long-term debt $ — $ 3,188

Accounts payable (1)

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Total current liabilities 45,570 39,430

Long-term debt, net — 81,392

Deferred revenues, net of current portion 15,526 15,384

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The above financial statements should be read in conjunction with the Notes to the Consolidated Financial Statements.

(1) Includes related party accounts payable of $ 0.3 million and $ 0.3 million as of December 31, 2023 and December 31, 2022, respectively.

(1) Includes related party accounts payable of $ 0.3 million as of December 31, 2023.

ALKAMI TECHNOLOGY, INC.

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$ ( 40,835 ) $ ( 62,913 ) $ ( 58,600 )

cumulative dividends and adjustments to redeemable convertible preferred stock — — ( 277 )

Net loss attributable to common stockholders $ ( 62,913 ) $ ( 58,600 ) $ ( 47,099 )

Net loss per share attributable to common stockholders:

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(1) Includes amortization of acquired technology of $ 5.4 million, $ 5.4 million, and $ 3.9 million for the years ended December 31, 2024, 2023, and 2022, respectively.

(2) Includes fees paid to a related party of $ 6.2 million, $ 4.4 million, and $ 4.4 million for the years ended December 31, 2023, 2022, and 2021, respectively.

(2) Includes fees paid to a related party of $ 6.2 million and $ 4.4 million for the years ended December 31, 2023, and 2022, respectively.

ALKAMI TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND

STOCKHOLDERS’ EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data)

Redeemable Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)

Shares Amount Shares Amount

Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity

Shares Amount

Balance January 1, 2022 89,954,657 $ 90 $ 658,374 $ ( 313,853 ) $ 344,611

Stock-based compensation — — 45,395 — 45,395

Exercised stock options — — 5,801,124 6 9,106 — 9,112

Issuance of common stock upon restricted stock unit vesting 698,841 1 ( 1 ) — —

Common stock issued under Employee Stock Purchase Plan (ESPP) 323,905 — 2,906 — 2,906

Exercised warrants — — 211,323 — 645 — 645

Payment of Series B Dividend upon initial public offering — ( 4,969 ) — — — — —

Cumulative dividends and adjustments to redeemable convertible preferred stock — 277 — — ( 277 ) — ( 277 )

Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offerings costs — — 6,900,000 7 192,803 — 192,810

Conversion of redeemable convertible preferred stock to common stock upon initial public offering ( 72,225,916 ) ( 438,571 ) 72,225,916 72 438,498 — 438,570

Conversion of redeemable convertible preferred stock warrants to common stock warrants upon initial public offering — — — — 5,727 — 5,727

Cost in connection with initial public offering — — — — ( 5,674 ) — ( 5,674 )

Repurchase of common stock — — ( 218,917 ) — 6 ( 3,503 ) ( 3,497 )

Exercised stock options 1,135,346 1 2,398 — 2,399

Payments for taxes related to net settlement of equity awards — — ( 2,665 ) — ( 2,665 )

Net loss — — — ( 58,600 ) ( 58,600 )

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$ ( 40,835 ) $ ( 62,913 ) $ ( 58,600 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provide by (used in) operating activities:

Depreciation and amortization expense 10,508 10,631 8,075

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(Gain) loss on financial instruments — ( 532 ) 200

( 532 ) 200 3,035

Loss on extinguishment of debt — 409 18

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Accounts payable and accrued liabilities 3,322 91 ( 1,374 )

Deferred implementation costs ( 7,720 ) ( 7,846 ) ( 4,659 )

Deferred rent and tenant allowances — — ( 568 )

Deferred costs ( 8,603 ) ( 7,720 ) ( 7,846 )

Deferred revenues 2,736 3,629 522

Net cash used in operating activities

( 17,502 ) ( 38,045 ) ( 28,959 )

Net cash provided by (used in) operating activities 18,597 ( 17,502 ) ( 38,045 )

Cash flows from investing activities:

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Acquisition of business, net of cash acquired — — ( 131,839 )

— ( 131,839 ) ( 18,326 )

Net cash provided by (used in) investing activities 23,041 33,911 ( 223,751 )

33,911 ( 223,751 ) ( 22,023 )

Cash flows from financing activities:

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Proceeds from stock option exercises 20,241 12,983 2,399

Proceeds from exercise of warrants — — 645

Proceeds from ESPP issuance 4,736 4,124 2,906

Deferred IPO issuance costs paid — — ( 4,520 )

Debt issuance costs paid ( 363 ) ( 341 ) ( 773 )

Repurchase of common stock — — ( 3,497 )

Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions — — 192,810

Payment of Series B dividend — — ( 4,969 )

Net cash (used in) provided by financing activities

( 87,819 ) 61,179 192,273

Net (decrease) increase in cash and cash equivalents and restricted cash

Net cash provided by (used in) financing activities 11,794 ( 87,819 ) 61,179

Net increase (decrease) in cash and cash equivalents and restricted cash

53,432 ( 71,410 ) ( 200,617 )

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Cash paid for interest $ 283 $ 7,056 $ 3,612

Cash paid for taxes $ 332 $ 249 $ 32

Cash paid for taxes (states) (2)

$ 375 $ 332 $ 249

The above financial statements should be read in conjunction with the Notes to the Consolidated Financial Statements.

(1) See Note 3 for additional information regarding noncash investing activities for the years ended December 31, 2024, 2023, and 2022 related to capitalized software development costs.

(2) See Note 3 for additional information regarding noncash investing activities for the years ended December 31, 2022 and 2021, related to the acquisition of Segmint and MK.

(2) In 2024, material jurisdictions that are equal or greater than 5% of the total cash paid for taxes (in thousands) included Connecticut ($ 44 ), Idaho ($ 50 ), Minnesota ($ 35 ), New York ($ 31 ), New York City ($ 49 ), Pennsylvania ($ 34 ), and Texas ($ 58 ).

ALKAMI TECHNOLOGY, INC.

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The Company has no sources of other comprehensive income, and accordingly, net loss presented each period is the same as comprehensive loss.

Reclassification.

The Company has reclassified certain amounts on its consolidated statements of operations in the prior periods to conform to current periods presentation.

The Company has reclassified certain amounts in its notes to the consolidated financial statements in the prior periods to conform to current periods presentation.

Use of Estimates

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Actual results could differ from those estimates.

Significant estimates and assumptions include determining the timing and amount of revenue recognition, recoverability and amortization period related to costs to obtain and fulfill contracts, deferred implementation costs, revaluation of contingent consideration, and business combinations.

Operating Segments

The Company operates as one operating segment.

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, which is the Company’s chief executive officer, in deciding how to make operating decisions, allocate resources and assess performance.

The Company’s chief operating decision maker allocates resources and assesses performance at the consolidated level.

Significant estimates and assumptions include determining the timing and amount of revenue recognition, recoverability and amortization period related to costs to obtain and fulfill contracts, deferred costs, revaluation of contingent consideration, and business combinations.

Operating Segment

The Company operates as a single operating segment and is a single-reportable segment entity.

The Company provides services to customers primarily under software-as-a-service arrangements.

The Company derives revenue from customers located in the United States, and the CODM manages the business activities on a consolidated basis (see Note 4 for additional information regarding revenues).

The measure of the Company’s single operating segment assets is reported on the consolidated balance sheets as total assets.

The Company's chief operating decision maker, or CODM, is the Chief Executive Officer.

The financial information reviewed by the CODM is presented on a consolidated basis for the single operating segment for purposes of allocating resources, evaluating financial performance and monitoring budget versus actual results based on net loss that is also reported on the consolidated statements of operations as net loss.

The significant expenses within net loss on which the CODM relies include those that are reported on the consolidated statements of operations.

The measure of the Company's single operating segment assets is reported on the consolidated balance sheets as total assets.

Substantially all of the Company's principal operations, assets and decision-making functions are located in the United States.

Fair Value of Financial Instruments

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Significant other inputs that are directly or indirectly observable in the marketplace.

Significant unobservable inputs which are supported by little or no market activity.

The Company’s financial instruments consist primarily of cash, restricted cash and cash equivalents, marketable securities, accounts receivable, accounts payable, long-term debt, stock warrants and contingent consideration.

The carrying values of cash, restricted cash and cash

equivalents, accounts receivable, and accounts payable approximate their respective fair values due to the short-term nature of these instruments.

The carrying value of long-term debt approximates its fair value due to the variable interest rate.

Significant unobservable inputs that are supported by little or no market activity.

The Company’s financial instruments consist primarily of cash, cash equivalents, marketable securities, accounts receivable and accounts payable.

The carrying values of cash, cash equivalents, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these instruments.

Cash equivalents include amounts held in money market accounts that are measured at fair value using observable market prices.

Marketable securities include debt securities that are measured at fair value using observable inputs.

The Company values contingent consideration related to business combinations using a weighted probability calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows.

See Note 10 for additional information regarding fair value measurements.

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See Note 10 for additional information regarding cash equivalent money market and marketable securities accounts.

Restricted Cash

The Company defines restricted cash as cash that is legally restricted as to withdrawal or usage.

The amounts included in restricted cash on the consolidated balance sheets at December 31, 2022 represents the additional cash proceeds in deposit with an escrow agent for satisfaction of holdback provisions related to the acquisitions of MK Decisioning Systems, LLC (“MK”) and Segmint Inc.

See Note 3 for further information.

(in thousands) 2023 2022

Cash and cash equivalents $ 40,927 $ 108,720

Restricted cash included in Prepaid Expenses and other current assets — 3,617

Total cash and cash equivalents and restricted cash $ 40,927 $ 112,337

Marketable Securities

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The Company analyzes the accounts receivable portfolio for significant risks and considers prior periods and forecasts future collectability to determine the amount of revenues that will ultimately be collected from its customers.

This estimate is analyzed quarterly and adjusted as necessary.

Identified risks pertaining to the Company’s accounts receivable include the delinquency level and customer type.

Future collectability is contingent upon current and anticipated macroeconomic conditions that could impact the Company’s customers such as unemployment, inflation and regulation matters.

Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers.

Historically, the Company's collection experience has not varied significantly, and bad debt expenses have been insignificant.

Historically, the Company's collection experience has not varied significantly, and credit loss expenses have been insignificant.

The Company maintains reserves for estimated sales credits issued to customers for billing disputes or other service-related reasons.

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The Company also maintains specific reserves for anticipated contract concessions.

Refer to Note 6.

Accounts Receivable for additional information.

Refer to Note 5 for additional information.

Property and Equipment

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Capitalized amounts do not include commissions that are contingent on continued employment over a substantive service period.

commissions are accrued as liabilities and expensed over the requisite employment service period.

Contingent commissions are accrued as liabilities and expensed over the requisite employment service period.

Deferred commissions are amortized over the benefit period of the client contract.

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The Company determines the expected benefit period based upon initial contract lengths, expected renewals and the expected benefit of the underlying technology.

Deferred implementation costs

Deferred costs to fulfill client contracts

The Company capitalizes certain costs to fulfill client contracts such as employee salaries, benefits, stock-based compensation and associated payroll taxes that are directly related to the implementation of its solutions and some third-party costs.

The Company only capitalizes implementation costs that it anticipates will be recoverable under the contract.

The Company begins amortizing deferred implementation costs ratably over the expected period of client benefit once access to the software-as-a-service (“SaaS”) solution is transferred to the client.

Deferred implementation costs are amortized over the benefit period of the client contract.

The Company begins amortizing deferred costs ratably over the

expected period of client benefit once access to the SaaS solution is transferred to the client.

Deferred costs are amortized over the benefit period of the client contract.

Revenue Recognition

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The Company recognizes variable consideration related to registered user counts in excess of the contractual minimum amounts each month.

SaaS subscription revenues also includes annual and monthly charges for maintenance and support services which are recognized over the subscription term.

SaaS subscription revenues also includes annual and monthly charges for maintenance and support services that are recognized over the subscription term.

As mentioned above, SaaS contracts include a single performance obligation that consists of a series of distinct SaaS services transferred over time that are substantially the same each month.

Standalone selling prices (“SSP”) is not required to allocate revenue amongst the distinct services within the series.

Standalone selling prices (“SSP”) are not required to allocate revenue amongst the distinct services within the series.

As a part of its SaaS subscription services, the Company provides certain services within the SaaS platform using third-party applications.

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Under this method, stock-based compensation expense is measured by the estimated fair value of the granted stock options at the date of grant using the Black-Scholes option pricing model and recognized over the vesting period with a corresponding increase to additional paid-in capital.

The determination of the grant date fair value of stock-based awards using the Black-Scholes option-pricing model is affected, for periods prior to the Company’s initial public offering ("IPO"), by the Company’s estimated common stock fair value as well as other subjective assumptions

including the volatility, risk-free interest rate, dividends, and weighted average expected life.

The assumptions used in the Company’s option-pricing model represent management’s best estimates.

These assumptions and estimates are as follows:

Fair Value of Common Stock.

Given the absence of an active market for the Company’s shares of common stock prior to its IPO, the fair value of the shares of common stock underlying the Company’s stock options was determined by the Company’s board of directors (the “Board”).

• Preliminary Offering Price and Options Granted Subsequent to December 31, 2020.

During February 2021, the Company granted stock options to purchase shares of its common stock.

The Company established the fair value of these grants based on a straight-line interpolation from its December 31, 2020 valuation and the mid-point of its initial price range in order to determine the appropriate stock-based compensation expense for financial reporting purposes.

• Initial Public Offering Price and Options Granted Subsequent to April 13, 2021.

The Company’s stock became actively traded upon the completion of its IPO in April 2021.

For grants issued upon or subsequent to its IPO, the Company establishes fair value based on the Company’s stock price.

Prior to the IPO, the Company did not have the necessary trading history for its common stock, the selected volatility used was representative of expected future volatility.

The Company based expected future volatility on the historical and implied volatility of comparable publicly traded companies over a similar expected term.

Risk-Free Interest Rate:

The Company bases the risk-free interest rate on the rate for a U.S.

Treasury zero-coupon issue with a term that closely approximates the expected life of the option grant at the date nearest the option grant date.

The Company has never declared or paid any cash dividends and does not presently intend to pay cash dividends in the foreseeable future, other than the aggregate accumulated dividends paid to holders of the Company’s Series B redeemable convertible preferred stock upon the effectiveness of the Company’s IPO.

As a result, the Company used a dividends assumption of zero.

Weighted Average Expected Life in Years:

The expected term of employee stock options reflects the period for which the Company believes the option will remain outstanding.

To determine the expected term, the Company applies the simplified approach in which the expected term of an award is presumed to be the mid-point between the vesting date and the expiration date of the award.

The determination of the grant date fair value of stock-based awards using the Black-Scholes option-pricing model is affected by the Company’s fair value of common stock, as well as other subjective assumptions, including the volatility, risk-free interest rate, dividends, and weighted-average expected life.

In addition to assumptions used in the Black-Scholes option-pricing model, the Company estimates a forfeiture rate to calculate the stock-based compensation expense for its option awards.

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Restricted Stock Units (“RSUs”)

RSUs issued upon and subsequent to the Company’s IPO vest upon the satisfaction of a time-based condition only.

These RSUs are generally earned over a service period of three to four years and the compensation expense related to these awards is based on the grant date fair value of the RSUs and is recognized on a ratable basis over the applicable service period.

RSUs issued vest upon the satisfaction of a time-based condition only.

over the applicable service period.

The Company estimates a forfeiture rate to calculate the stock-based compensation expense for its RSU awards.

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Accordingly, stock-based compensation expense is determined based on the grant-date fair value as estimated by applying the Black-Scholes option-pricing model and is recognized over the withholding period.

The Company uses only the historical volatility as an input in the Black-Scholes option-pricing model.

Basic and Diluted Loss per Common Share

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Diluted loss per share is calculated by giving effect to all potentially dilutive common stock, which is comprised of stock options, RSUs, and ESPP obligations, when determining the weighted-average number of shares of common stock outstanding.

Redeemable Convertible Preferred Stock Warrants

The Company’s warrants issued in connection with financing and other arrangements were classified as liabilities.

The warrants issued by the Company do not require net cash settlement, however, as the warrants were for the purchase of conditionally redeemable convertible preferred stock, which could have required the Company to transfer assets to the holder upon redemption, the Company recorded the warrants as liabilities on the accompanying consolidated balance sheets.

The fair value of these warrants was recorded on the consolidated balance sheets at issuance and marked to market at each reporting period.

The change in the fair value of the warrants was recorded in the consolidated statements of operations as a non-cash gain (loss) and was estimated based on the fair value of the redeemable convertible preferred stock to which the warrants related.

connection with the Company’s IPO in 2021, warrants converted from a liability instrument to an equity instrument resulting in a reduction of the warrant liability to $ 0 .

All warrants were subsequently exercised into the Company’s common stock as of December 31, 2021.

Research and Development

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General and Administrative

General and administrative expenses consist primarily of personnel-related costs for executive, finance, legal, human resources, information technology, security and compliance and other administrative employees, including salaries, bonuses, commissions, other incentive-related compensation, employee benefits and stock-based compensation.

General and administrative expenses also include accounting, auditing and legal professional services fees, travel and other unallocated corporate-related expenses such as the cost of facilities, employee relations, corporate telecommunication and software.

General and administrative expenses consist primarily of personnel-related costs for our executive, finance, legal, human resources, information technology, security and compliance and other administrative employees, including salaries, bonuses, commissions, other incentive-related compensation, employee benefits and stock-based compensation.

General and administrative expenses also include accounting, auditing and legal professional services fees, secondary offering costs, travel and other unallocated corporate-related expenses, such as the cost of our facilities, employee relations, corporate telecommunication and software.

Acquisition-Related Expenses, Net

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Concentrations of Credit Risk

Significant concentrations of credit risk arise from the Company’s revenues and accounts receivable.

Concentrations of credit risk arise from the Company’s revenues and accounts receivable.

Management believes that its contract acceptance, billing, and collection policies are adequate to minimize potential credit risk.

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For the years ended December 31, 2024, 2023, and 2022, no client represented more than 10% of revenues.

At times, cash held in financial institutions may exceed Federal Deposit Insurance Corporation (“FDIC”) limits.

At times, cash deposits may exceed federally insured limits, and the Company is exposed to credit risk on deposits in the event of default by the FIs to the extent account balances exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”).

Management periodically assesses the financial condition of the institutions to assess credit risk.

To date, the Company has not experienced such losses and believes it is not exposed to significant credit risk.

As of December 31, 2023 and 2022, cash exceeded FDIC limits by $ 39.0 million and $ 107.4 million, respectively.

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents and marketable securities.

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents and marketable

The Company invests its cash equivalents in highly rated money market funds.

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federal government.

Deposits may exceed federally insured limits, and the Company is exposed to credit risk on deposits in the event of default by the financial institutions to the extent account balances exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”).

The Company continues to monitor ongoing events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, including developments related to Silicon Valley Bank (“SVB”).

On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, and the FDIC was appointed as receiver.

On March 26, 2023, the FDIC announced that First-Citizens Bank & Trust Company would assume all SVB's deposits and loans as of March 27, 2023.

In light of the foregoing, the Company does not believe that it has exposure to loss as a result of SVB’s receivership.

Additionally, the Company’s overall liquidity and financing has not been impacted.

During the periods presented, the Company did not experience any losses on its deposits of cash, cash equivalents or marketable securities.

The Company recognizes deferred tax assets and liabilities based on the estimated future tax effects of temporary differences between the financial statement basis and tax basis of assets and liabilities given the provisions of enacted tax law.

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Goodwill represents the excess of the purchase price in a business combination over the fair value of net assets acquired.

Goodwill is not amortized, but rather the carrying amounts of these assets are assessed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable.

The Company performs a quantitative goodwill assessment and determines the fair value of the reporting unit using a combination of an income approach, employing a discounted cash flow model, and a market approach.

As the Company operates in a single reporting unit, the impairment test is performed at the consolidated entity level by comparing the estimated fair value of the Company to the carrying value of the Company.

Goodwill is not

amortized, but rather the carrying amounts of these assets are assessed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable.

The Company has the option of first analyzing qualitative factors to determine whether it is more likely than not that the fair value of any reporting unit is less than its carrying amount.

However, the Company may elect to perform a quantitative goodwill impairment test even if no indications of a potential impairment exist.

As the Company operates in a single reporting unit, the impairment testing is performed at the consolidated entity level.

During 2024, the Company performed a qualitative goodwill assessment.

The Company’s assessments indicated that there was no goodwill impairment for the Company’s single reporting unit as of its annual assessment date.

During 2023 and 2022, the Company performed a quantitative goodwill assessment.

The Company’s assessments indicated that there was no goodwill impairment for the Company’s single reporting unit as of its annual assessment date in each year.

Goodwill impairment, if any, is evaluated by comparing the reporting unit’s fair value to its carrying value.

There was no goodwill impairment for the years ended December 31, 2024, 2023, and 2022 .

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No.

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2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the impact the updated standard will have on its financial statement disclosures.

The Company adopted ASU 2023-07 for the year ended December 31, 2024.

See “Operating Segment” section within Note 2 for additional information.

In December 2023, the FASB issued ASU No 2023-09, “Income Taxes (Topic 740):

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however, retrospective application is permitted.

The Company is currently evaluating the impact the updated standard will have on its financial statement disclosures.

Business Combination

MK Decisioning Systems, LLC

On September 10, 2021, the Company acquired substantially all of the assets of MK for approximately $ 20 million in cash consideration due at closing subject to a $ 2 million holdback provision held in escrow with $ 1 million released at the 12 -month anniversary of close and the remainder to be released at the 18 -month anniversary of close.

The Company also agreed to assume certain liabilities associated with MK’s business.

The integrated set of assets and activities acquired from MK through the acquisition meets the definition of a business under ASC 805, as updated by ASU 2017-01.

In addition to the base purchase price, the MK acquisition also included a potential earn-out that is tied to revenue of MK from sales of its products and services within two 12 -month periods (the “First Earn-Out Period” and “Second Earn-Out Period”), with the First Earn-Out Period beginning on January 1, 2022 and ending on December 31, 2022 and the Second Earn-Out Period beginning on January 1, 2023 and ending on December 31, 2023.

Pursuant to the terms and conditions set forth in the purchase agreement, the earn-out amount payable, if any, to the former owners, will be a maximum of $ 7.5 million and $ 17.5 million for the First Earn-Out Period and Second Earn-Out Period, respectively, contingent on achievement of certain revenue milestones.

In certain circumstances within both Earn-Out Periods, the earn-out amounts are payable in a mix of cash and shares (based on a reference price of $ 35 and limited to $ 20 million in earn-out shares) of the Company’s common stock, subject to the election of the former owners.

Earn-out amounts, if any, would be payable no later than 170 days after the end of each Earn-Out Period.

The Company classified the amounts held in escrow as restricted cash on the consolidated balance sheets.

The fair value of the contingent earn-out both upon acquisition and as of December 31, 2021 was $ 15.5 million, for which the balance was included in Other non-current liabilities on the consolidated balance sheets.

This initial estimated fair value was included as contingent consideration in the total purchase price.

The Company remeasures the fair value of the contingent consideration on an ongoing basis and records the adjustment to the consolidated statements of operations.

As of December 31, 2023 and December 31, 2022, the fair value of the contingent earn-out was zero .

Assumptions used to estimate the fair value of contingent consideration include various financial metrics (revenue performance targets and stock price forecasts) and the probability of achieving the specific targets using a geometric binomial model.

Based on the final purchase accounting, the Company estimated that approximately 62 % of the maximum $ 25 million contingent consideration would be paid to the seller in accordance with the terms of the purchase agreement.

As of December 31, 2022, the Company determined that 0 % of the maximum $ 25 million contingent consideration would be paid to the seller in accordance with the terms of the purchase agreement, as a result of changes in the expected timing of new customer sales and implementations.

The Company’s determination has not changed as of December 31, 2023.

Transaction costs included in the consolidated statements of operations for the year ended December 31, 2021 were $ 0.5 million.

For the year ended December 31, 2021, the Company had noncash investing activities of $ 17.5 million related to unpaid consideration and holdback for the acquisition of MK.

On April 25, 2022, the Company consummated its previously announced merger with Segmint pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), dated March 25, 2022 with Segmint surviving as a wholly owned subsidiary of the Company.

Segmint operates a marketing analytics and messaging delivery platform with patented software that enables FIs and merchants to understand and leverage data, interact with customers and measure results.

The aggregate consideration paid in exchange for all of the outstanding equity interests of Segmint was approximately $ 135.0 million (the "Merger Consideration").

A portion of the Merger Consideration of approximately $ 2.6 million was placed into escrow to secure certain post-closing indemnification obligations in the Merger Agreement.

As of March 31, 2023, the allocation of the purchase price for Segmint had been finalized.

The preliminary purchase price allocations were based upon the preliminary valuation of assets and liabilities.

These estimates and assumptions were subject to change as the Company obtained additional information during the measurement period.

The following table summarizes the fair value amounts recognized as of the acquisition date for each major class of asset acquired or liability assumed, as well as adjustments made during the measurement period:

(in thousands) Preliminary Fair Value as of April 25, 2022 Measurement Period Adjustments Adjusted Fair Value as of March 31, 2023

Cash $ — $ 601 $ 601

Trade accounts receivables 1,788 7 1,795

Other current assets 323 ( 8 ) 315

Property and equipment 35 — 35

Goodwill 99,310 649 99,959

Intangible assets 35,400 1,100 36,500

Total assets acquired $ 136,856 $ 2,349 $ 139,205

Accounts payable $ 768 $ ( 282 ) $ 486

Accrued liabilities 188 371 559

Deferred revenues, current 145 — 145

Deferred tax liability — 2,350 2,350

Other non-current liabilities 625 — 625

Total liabilities assumed 1,726 2,439 4,165

Net assets acquired $ 135,130 $ ( 90 ) $ 135,040

Less cash acquired — ( 601 ) ( 601 )

Total cash consideration for acquisition, less cash acquired $ 135,130 $ ( 691 ) $ 134,439

The measurement period adjustments were related to post-closing working capital adjustments, cash account amounts received as part of assets, revised estimates for intangible assets, and assumption of deferred tax liabilities.

The table below outlines the purchased identifiable intangible assets:

Weighted Average Amortization Period Total

(in years) (in thousands)

Customer relationships 15 $ 15,200

Developed technology 5 20,600

Trade names 10 700

Total identifiable intangible assets $ 36,500

Goodwill resulted from the acquisition as it is intended to augment and diversify the Company’s single reportable segment and provide a complimentary solution to its existing platform offering.

The Company accounted for the acquisition as a business combination.

As a result of the acquisition of the stock of Segmint, the goodwill is not deductible for tax purposes.

For the year ended December 31, 2022, the Company recognized $ 1.2 million related to the acquisition of Segmint.

For the year ended December 31, 2022, the Company had noncash investing activities of $ 2.6 million related to funds held in escrow for the acquisition of Segmint.

The Company has elected to early adopt ASU 2023-09 as of December 31, 2024.

See Note 9 for the expanded disclosures.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU No.

2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses" (“ASU 2024-03”).

The amendments in the ASU require disclosures about specific types of expenses included in the expense captions presented on the Consolidated Statements of Income, as well as disclosures about selling expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact of adoption on our financial disclosures.

Property and Equipment, Net

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Software 2 to 5 years

$ 920 $ 1,031

Capitalized software development costs 5 years

19,728 12,263

Computers and equipment 3 years 2,379 6,359

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Property and Equipment, net $ 22,075 $ 16,946

For the years ended December 31, 2023 and 2022, the Company had non-cash investing activities of $ 0.8 million and $ 0.3 million, respectively, and none for the year ended December 31, 2021 for capitalized stock-based compensation related to capitalized software development costs.

Additionally, the Company recognized stock-based compensation expense on the amortization of capitalized stock-based compensation associated with capitalized software development costs of $ 0.1 million for the year ended December 31, 2023 and none for the years ended December 31, 2022 and 2021, respectively.

For the years ended December 31, 2024, 2023, and 2022, the Company had non-cash investing activities of $ 0.8 million, $ 0.8 million, and $ 0.3 million, respectively, for capitalized stock-based compensation related to capitalized software development costs.

Additionally, the Company recognized stock-based compensation expense through the amortization of capitalized stock-based compensation associated with capitalized software development costs of $ 0.2 million and $ 0.1 million for the years ended December 31, 2024 and 2023, respectively, and none for the year ended December 31, 2022.

Revenues and Deferred Costs

The Company derives the majority of its revenues from recurring monthly subscription fees charged for the use of its software-as-a-service (“SaaS”) subscription services.

Subscription revenues are generally recognized as revenue over the term of the contract as a series of distinct SaaS services bundled into a single performance obligation.

Clients are usually charged a one-time, upfront implementation fee and recurring annual and monthly access fees for the use of the online digital relationship banking solution.

Implementation and integration of the digital banking platform is complex, and the Company has determined that the one-time, upfront services do not transfer a promised service to the client.

As these services are not distinct, they are bundled into the SaaS series of services, and the associated fees are recognized on a straight-line basis over the subscription term.

Other services includes professional services and custom development.

The following table disaggregates the Company's revenue by major source for the years ended December 31, 2024, 2023, and 2022:

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The Company recognized approximately $ 8.6 million of revenue during the year ended December 31, 2024 that was included in deferred revenue in the accompanying consolidated balance sheets as of the beginning of the reporting period.

For those contracts that were wholly or partially unsatisfied as of December 31, 2023, minimum contracted subscription revenues to be recognized in future periods total approximately $ 1.1 billion.

The Company expects to recognize approximately 46.2 % of this amount as subscription services are transferred to customers over the next 24 months, an additional 34.6 % in the next 25 to 48 months, and the balance thereafter.

For those contracts that were wholly or partially unsatisfied as of December 31, 2024, the Company’s remaining performance obligation totaled approximately $ 1.4 billion.

The Company expects to recognize approximately 47.3 % of these remaining performance obligations as revenue over the next 24 months, an additional 35.1 % in the next 25 to 48 months, and the remaining balance thereafter.

This estimate does not include estimated consideration for excess user and transaction processing fees that the Company expects to earn under its subscription contracts.

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The Company capitalized $ 9.9 million, $ 8.7 million, and $ 8.3 million in deferred commissions costs during the years ended December 31, 2024, 2023, and 2022, respectively, and recognized amortization of $ 5.1 million, $ 3.8 million, and $ 2.9 million during the years ended December 31, 2024, 2023, and 2022, respectively.

A portion of the increase in deferred commissions from 2021 to 2022 was driven by a change in the Company’s commission plan in 2022, which eliminated a requisite service period condition and resulted in an increase in the portion of commissions that were capitalized.

Amortization expense is included in sales and marketing expenses in the accompanying statements of operations.

Deferred commissions are considered costs to obtain a contract and are included in deferred implementation costs in the accompanying consolidated balance sheets in the amount of $ 21.2 million and $ 16.2 million as of December 31, 2023 and 2022, respectively.

Amortization expense is included in sales and marketing expenses in the accompanying consolidated statements of operations.

Deferred commissions are considered costs to obtain a contract and are included in deferred costs in the accompanying consolidated balance sheets in the amount of $ 25.9 million and $ 21.2 million as of December 31, 2024 and 2023, respectively.

The Company capitalized implementation costs of $ 10.2 million, $ 8.4 million, and $ 6.9 million during the years ended December 31, 2024, 2023, and 2022, respectively, and recognized amortization of $ 5.6 million, $ 4.9 million, and $ 3.9 million during the years ended December 31, 2024, 2023, and 2022, respectively.

Amortization expense is included in cost of revenues in the accompanying consolidated statements of operations.

These deferred costs are considered costs to fulfill client contracts and are included in deferred implementation costs in the accompanying consolidated balance sheets in the amount of $ 19.8 million and $ 16.4 million as of December 31, 2023 and 2022, respectively.

These deferred costs are considered costs to fulfill client contracts and are included in deferred costs in the accompanying consolidated balance sheets in the amount of $ 24.5 million and $ 19.8 million as of December 31, 2024 and 2023, respectively.

The Company periodically reviews the carrying amount of deferred costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit.

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Unbilled receivables 6,086 5,975

Other receivables — 747

Total receivables 38,952 36,086

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$ 38,739 $ 35,499

The Company charged less than $ 0.1 million to credit loss expense for the year ended December 31, 2023 and relieved the allowance for

credit losses balance in the amount of $ 0.4 million.

The Company charged $ 0.1 million to credit loss expense for the year ended December 31, 2022.

Accrued Liabilities

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Accrued tax liabilities 634 1,166

MK and Segmint acquisition holdback provision — 3,618

ESPP liability 757 682

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Total accrued liabilities $ 24,520 $ 19,763

On June 27, 2023, the Company entered into a First Amendment (the “First Amendment”) to the Company’s Amended and Restated Credit Agreement dated as of April 29, 2022 (as amended by the First Amendment, the “Amended Credit Agreement”), with SVB, Comerica Bank, and Canadian Imperial Bank of Commerce.

The First Amendment provided for Citibank, N.A.

to join as a new lender, increased the amount of the Revolving Facility (as defined below) commitment by $ 20.0 million and extended the maturity date of the Amended Credit Agreement to April 29, 2026, as well as other changes discussed below.

The Amended Credit Agreement, inclusive of changes established by the First Amendment, includes the following, among other features:

• Revolving Facility:

The Amended Credit Agreement provides $ 60.0 million in aggregate commitments for secured revolving loans (“Revolving Facility”), of which there were no outstanding borrowings as of December 31, 2023.

A term loan of $ 85.0 million (the “Term Loan”) was borrowed on April 29, 2022, the proceeds of which were used to replenish cash used to fund the acquisition of Segmint, which closed on April 25, 2022.

On December 29, 2023, the Company paid the remaining outstanding principal balance of its term loan of $ 82.9 million.

The Company recorded a loss on extinguishment of debt of $ 0.4 million related to the payoff of the term loan, which was included in non-operating income (expense) within the consolidated statements of operations.

• Accordion Feature:

The Amended Credit Agreement also permits the Company, subject to certain conditions, to request additional revolving loan commitments in an aggregate principal amount of up to $ 50.0 million, of which there were no outstanding borrowings as of December 31, 2023.

On July 1, 2024, the Company entered into a Second Amendment (the “Second Amendment”) to the Company’s Amended and Restated Credit Agreement, dated as of April 29, 2022 (as amended, the “Amended Credit Agreement”), with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as administrative agent, and other lenders party thereto.

The Second Amendment, among other things, (i) extended the maturity date of the revolving commitment (“Revolving Facility”) from April 29, 2026 to April 29, 2027, (ii) increased the amount of the Revolving Facility commitment by $ 65.0 million, for a total Revolving Facility of $ 125.0 million, (iii) increased the accordion feature from $ 50.0 million to $ 100.0 million, (iv) modified certain existing covenants, including increasing the minimum trailing four quarters free cash flow requirement to $( 25.0 ) million, and (v) for any fiscal quarter ending after the financial covenant trigger date (which was extended to April 28, 2026 or such earlier date as designated by the Company) (the “Financial Covenant Trigger Date”), replaced compliance with a fixed charge coverage ratio with compliance with a minimum interest coverage ratio of 3.0 x.

Revolving Facility loans under the Amended Credit Agreement may be voluntarily prepaid and re-borrowed.

Principal payments on the Term Loan are due in quarterly installments equal to an initial amount of approximately $ 1.1 million, beginning on June 30, 2023 and continuing through March 31, 2024, and increasing to approximately $ 2.1 million beginning on June 30, 2024 through the Amended Credit Agreement maturity date.

Once repaid or prepaid, the Term Loan may not be re-borrowed.

Debt issuance costs paid for the execution of the Amended Credit Facility were $ 0.9 million, of which $ 0.1 million was included in prepaid expenses and other current assets and $ 0.2 million was included in other assets on the consolidated balance sheets.

Debt issuance costs paid for the execution of the First Amendment were $ 0.3 million, of which $ 0.1 million was included in prepaid expenses and other current assets and $ 0.1 million was included in other assets on the consolidated balance sheets.

Upon the payoff of the Term Loan on December 29, 2023, debt issuance costs of $ 0.4 million were written off and recorded as a loss on extinguishment of debt which was included in non-operating income (expense) within the consolidated statements of operations.

The First Amendment added additional covenants that begin each fiscal quarter ending on or after April 29, 2025 (the “Financial Covenant Trigger Date”).

Before the Financial Covenant Trigger Date, borrowings under the Amended Credit Agreement bear interest at a variable rate based upon the Secured Overnight Financing Rate (the “SOFR”) plus a margin of 3.00 % to 3.50 % per annum depending on the applicable recurring revenue leverage ratio.

After the Financial Covenant Trigger Date, borrowings under the Amended Credit Agreement bear interest at a variable rate based upon the SOFR plus a margin of 1.50 %, 2.00 %, 2.50 % or 3.00 % per annum depending on the applicable consolidated total leverage ratio.

If the SOFR is ever less than 0 %, then the SOFR shall be deemed to be 0 %.

The Amended Credit Agreement is subject to certain liquidity and operating covenants and includes customary representations and warranties, affirmative and negative covenants and events of default.

The Company is required to pay a commitment fee of 0.25 % per annum on the undrawn portion available under the Revolving Facility and variable fees on outstanding letters of credit.

The Company has a standby letter of credit in the amount of $ 0.3 million, which serves as security under the lease relating to the Company’s office space that expires in 2033.

The Amended Credit Agreement previously provided for a term loan, which was fully repaid in December 2023 and cannot be re-borrowed.

The Company has no outstanding borrowings as of December 31, 2024 related to the Amended Credit Agreement.

Obligations under the Amended Credit Agreement are guaranteed by the Company’s subsidiaries and secured by all or substantially all of the assets of the Company and its subsidiaries pursuant to an Amended and Restated Guarantee and Collateral Agreement.

The Company has a standby letter of credit in the amount of $ 0.3 million, which serves as security under the lease relating to the Company’s office space that expires in 2033.

The Amended Credit Agreement contains customary affirmative and negative covenants.

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(i) an annual recurring revenue growth covenant requiring the loan parties to have recurring revenues in any four consecutive fiscal quarter period in an amount that is 10 % greater than the recurring revenues for the corresponding four consecutive quarter period in the previous year;

and (ii) a liquidity (defined as the aggregate amount of cash in bank accounts subject to a control agreement plus availability

under the Revolving Facility) covenant, requiring the loan parties to have liquidity, tested on the last day of each calendar month, of $ 20.0 million or more.

and (ii) a liquidity (defined as the aggregate amount of cash in bank accounts subject to a control agreement plus availability under the Revolving Facility) covenant, requiring the loan parties to have liquidity, tested on the last day of each calendar month, of $ 20.0 million or more.

After the Financial Covenant Trigger Date, the existing annual recurring revenue growth and liquidity financial covenants are no longer applicable, and the following covenants take effect:

(i) a consolidated total leverage ratio requiring the ratio, as calculated at the last day of such fiscal quarter for the period of 12 consecutive months then ending, to be less than 3.50 :1.00;

and (ii) a consolidated fixed charge ratio requiring the ratio, for any fiscal quarter ending as calculated at the last day of such fiscal quarter for the period of 12 consecutive months then ending, to be more than 1.25 :1.00.

The First Amendment also added, applicable beginning June 30, 2023, a free cash flow covenant requiring, as calculated at the last day of such fiscal quarter for the period of 12 consecutive months then ending, free cash flow to be not less than $( 75.0 ) million for the fiscal quarters ended June 30, 2023 and September 30, 2023, respectively, and $( 50.0 ) million for the fiscal quarter ended December 31, 2023 and each fiscal quarter ending thereafter.

and (ii) a consolidated interest coverage ratio requiring the ratio, for any fiscal quarter ending as calculated at the last day of such fiscal quarter for the period of 12 consecutive months then ending, to be more than 3.00 :1.00.

The Second Amendment revised the free cash flow covenant, as calculated at the last day of each fiscal quarter for the period of 12 consecutive months then ending, requiring free cash flow to be not less than $( 25.0 ) million for the fiscal quarter ended September 30, 2024 and each fiscal quarter ending thereafter.

The Amended Credit Agreement also contains customary events of default, which if they occur, could result in the termination of commitments under the Amended Credit Agreement, the declaration that all outstanding loans are immediately due and payable, in whole or in part, and the requirement to maintain cash collateral deposits in respect of outstanding letters of credit.

The Company was in compliance with all covenants as of December 31, 2024.

On March 26, 2023, the FDIC announced that First-Citizens Bank & Trust Company would assume all of SVB’s deposits and loans as of March 27, 2023.

This resulted in no impact to the Company’s consolidated financial statements or changes to the terms of the Amended Credit Agreement.

Summary of Significant Accounting Policies - Concentration of Credit Risk for additional information.

Long-term Debt

The following table summarizes long-term debt obligations as of December 31, 2023 and 2022 (in thousands):

December 31, 2023 December 31, 2022

Term Debt $ — $ 85,000

Less unamortized debt issuance costs — ( 420 )

Net amount — 84,580

Less current maturities of long-term debt — ( 3,188 )

Long-term portion $ — $ 81,392

Stockholders' Equity

In connection with its IPO, the Company's certificate of incorporation was amended and restated such that the total number of shares of common stock authorized to be issued was increased to 500,000,000 shares and the total number of shares of preferred stock authorized to be issued was reduced to 10,000,000 shares.

Repurchase of Common Stock

For the year ended December 31, 2021, former employees obtained a third-party offer for the purchase of shares of common stock held in the Company of 0.2 million.

As the Company had the right of first refusal for the sale of these shares, the Company repurchased the shares for $ 3.5 million from the former employees at the price offered.

Redeemable Convertible Preferred Stock

As of December 31, 2020, the Company was authorized to issue seven classes of stock:

common stock, Series A redeemable convertible preferred stock, Series B redeemable convertible preferred stock, Series C redeemable convertible preferred stock, Series D redeemable convertible preferred stock, Series E redeemable convertible preferred stock and Series F redeemable convertible preferred stock.

These preferred shares were classified as temporary equity within the Company’s consolidated balance sheet as of December 31, 2020.

Immediately prior to the effectiveness of the Company’s registration statement relating to its IPO, the Company’s outstanding shares of redeemable convertible preferred stock converted into an aggregate of 72,225,916 shares of common stock.

With the proceeds from its IPO, the Company paid in full accumulated dividends on its previously outstanding shares of Series B redeemable convertible preferred stock, which totaled approximately $ 5.0 million.

As of December 31, 2023, 2022, and 2021, there was no preferred stock issued or outstanding.

In conjunction with financing arrangements with prior lenders, the Company issued warrants for the purchase of shares of the Company’s redeemable convertible preferred stock.

All of the Company’s outstanding warrants exercisable for shares of redeemable convertible preferred stock converted into warrants exercisable for 212,408 shares of common stock and were classified as equity immediately prior to the effectiveness of the Company’s registration statement relating to its IPO.

All warrants were exercised for aggregate proceeds of $ 0.6 million during the year ended December 31, 2021.

In April 2021, the Company's certificate of incorporation was amended and restated such that the total number of shares of common stock authorized to be issued was increased to 500,000,000 shares and the total number of shares of preferred stock authorized to be issued was reduced to 10,000,000 shares.

Equity Compensation Plans

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No options were granted for the years ended December 31, 2024, 2023, and 2022.

The fair value of options granted was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions for the year ended December 31, 2021:

(i) expected term of 5.5 years, (ii) expected volatility of 36.3 %, (iii) risk-free interest rate 0.67 %, (iv) expected dividend yield of 0 % for all periods.

The total fair value of stock options vested during the years ended December 31, 2024, 2023, and 2022 was $ 3.7 million, $ 4.5 million, and $ 15.8 million, respectively.

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Certain stock option grants provide the option holder the right to exercise their stock options before they vest.

As of December 31, 2023 2022 and 2021, 0.2 million, 0.3 million, and 0.7 million options, respectively, were exercisable that were not yet vested by the option holder at a weighted average exercise price of $ 2.35 , $ 2.46 , and $ 3.37 per share, respectively.

As of December 31, 2024, there were no options exercisable that were not yet vested.

As of December 31, 2023 and 2022, there were 0.2 million, and 0.3 million options, respectively, that were exercisable that were not yet vested by the option holder at a weighted average exercise price of $ 2.35 , and $ 2.46 per share, respectively.

A summary of the status of non-vested options is as follows:

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4,787,787 $ 6.10

Granted 2,811,098 8.53

Forfeited ( 675,375 ) 5.36

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Balance, December 31, 2023

1,831,068 5.36

Forfeited ( 33,630 ) 8.41

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The special provisions call for the accelerated vesting of a portion of the options granted to the employee under certain circumstances.

On November 5, 2021, the Company entered into a separation agreement with the former Chief Executive Officer of the Company.

The agreement resulted in a modification of the former employee's 438,783 outstanding stock options and 50,000 RSUs, which accelerated certain vesting, resulting in the recognition of $ 1.9 million of incremental stock-based compensation expense for the year ended December 31, 2021.

An additional $ 8.2 million of expense was recognized ratably over the remaining requisite service period, through December 31, 2022.

Restricted Stock Units

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Total stock-based compensation expenses $ 59,437 $ 51,231 $ 44,592

The amount of stock-based compensation capitalized as part of deferred implementation costs was $ 0.7 million and $ 0.6 million for the years ended December 31, 2023 and December 31, 2022, respectively, and insignificant for the year ended December 31, 2021.

On November 5, 2021, the Company entered into a separation agreement with the former Chief Executive Officer of the Company.

The agreement resulted in a modification of the former employee's 438,783 outstanding stock options and 50,000 RSUs, which accelerated certain vestings, resulting in the recognition of $ 10.1 million of expense, which was recognized ratably over the remaining requisite service period, through December 31, 2022.

The amount of stock-based compensation capitalized as part of deferred costs was $ 0.7 million for both the years ended December 31, 2024 and December 31, 2023, and $ 0.6 million for the year ended December 31, 2022.

The components of the provision (benefit) for income taxes are as follows:

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(in thousands) 2024 2023 2022

Income (loss) before income tax provision (benefit):

US $ ( 40,527 ) $ ( 62,869 ) $ ( 59,061 )

Foreign — — —

Total income (loss) before income tax provision (benefit) $ ( 40,527 ) $ ( 62,869 ) $ ( 59,061 )

Current income tax provision (benefit):

Federal $ — $ — $ —

State 199 76 229

Total current 76 229 87

Total current income tax provision (benefit) 199 76 229

Deferred income tax provision (benefit):

Federal 89 145 ( 213 )

State 20 ( 177 ) ( 477 )

Total deferred ( 32 ) ( 690 ) 85

Total deferred income tax provision (benefit) 109 ( 32 ) ( 690 )

Total provision (benefit) for income taxes

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(in thousands) 2024 2023 2022

Computed tax at federal statutory rate applied to pre-tax loss $ ( 13,203 ) 21.0 % $ ( 12,403 ) 21.0 % $ ( 9,797 ) 21.0 %

State income tax, net of federal tax benefit ( 2,567 ) 4.1 % ( 2,437 ) 4.1 % ( 3,927 ) 8.4 %

US federal statutory tax rate $ ( 8,511 ) 21.0 % $ ( 13,203 ) 21.0 % $ ( 12,403 ) 21.0 %

State and local income taxes, net of federal income tax effect (1)

( 2,800 ) 6.9 % ( 2,567 ) 4.1 % ( 2,437 ) 4.1 %

Changes in valuation allowances 17,908 ( 44.2 ) % 14,142 ( 22.5 ) % 11,289 ( 19.1 ) %

Nontaxable or nondeductible items:

Stock-based compensation ( 17,400 ) 42.9 % ( 1,539 ) 2.4 % 1,815 ( 3.1 ) %

Other permanent differences, net 469 ( 0.7 ) % 279 ( 0.5 ) % 388 ( 0.8 ) %

Executive compensation 10,620 ( 26.2 ) % 2,970 ( 4.7 ) % 1,008 ( 1.7 ) %

Exercise of warrants — — % — — % 1,162 ( 2.5 ) %

Meals & entertainment 460 ( 1.1 ) % 362 ( 0.6 ) % 185 ( 0.3 ) %

Other 288 ( 0.7 ) % 107 ( 0.1 ) % 94 ( 0.2 ) %

Other adjustments:

Return to provision adjustments ( 257 ) 0.6 % ( 187 ) 0.3 % ( 54 ) 0.1 %

Other — — % ( 41 ) — % 42 ( 0.1 ) %

Change in valuation allowance 14,142 ( 22.5 ) % 11,289 ( 19.1 ) % 27,429 ( 58.8 ) %

Total $ 308 ( 0.8 ) % $ 44 ( 0.1 ) % $ ( 461 ) 0.7 %

(1) In 2024, state taxes in California, Connecticut, Wisconsin, and New York made up the majority (greater than 50 percent) of the tax effect in this category.

Significant components of the Company’s net deferred tax assets and liabilities were as follows as of December 31, 2024 and 2023:

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Intangible assets ( 4,625 ) ( 6,183 )

Deferred implementation costs ( 1,550 ) ( 1,286 )

Deferred costs ( 1,835 ) ( 1,550 )

Total deferred tax liabilities ( 15,276 ) ( 16,242 )

Deferred income tax liabilities, net of deferred tax assets $ ( 1,822 ) $ ( 1,713 )

At December 31, 2023 and 2022, the Company had federal net operating loss carryforwards of $ 303.6 million and $ 316.9 million, respectively, of which $ 75.6 million and $ 92.3 million, respectively, is subject to limited carryforward periods and begin to expire in 2034.

At December 31, 2024 and 2023, the Company had federal net operating loss carryforwards of $ 298.5 million and $ 303.6 million, respectively, of which $ 70.5 million and $ 75.6 million, respectively, are subject to limited carryforward periods and will begin to expire in 2034.

At December 31, 2024 and 2023, the Company had various apportioned state net operating loss carryforwards of $ 228.3 million and $ 211.3 million, respectively, which are subject to varying carryforward periods that begin to expire in 2025.

Additionally, the Company had $ 0.3 million of federal general business credit carryforwards as of December 31, 2023 and 2022, which begin to expire in 2035.

Additionally, the Company had $ 0.3 million of federal general business credit carryforwards as of both December 31, 2024 and 2023, which will begin to expire in 2035.

The Company’s ability to utilize net operating loss carryforwards and other tax attributes to reduce future federal taxable income is subject to potential limitations under Internal Revenue Code Section 382 (“Section 382”) and Section 383 and its related tax regulations.

The utilization of these attributes may be limited if certain ownership changes by 5% shareholders (as defined in Treasury regulations pursuant to Section 382) and the effects of stock issuances by the Company during any three-year period result in a cumulative change of more than 50% in the beneficial ownership of the Company.

Upon completion of the 382 analysis related to the Segmint acquisition, the Company waived $ 8.9 million of time-constrained net operating loss carryforwards unutilizable due to Section 382 limitation in order to preserve stock basis in Segmint, pursuant to Treasury Regulation 1.1502-32(b)(4).

At December 31, 2022, these net operating loss carryforwards were fully reserved with a valuation allowance.

At December 31, 2024, $ 24.3 million of the Company’s combined federal net operating loss carryforwards remain subject to the annual Section 382 utilization limitation, of which $ 9.5 million begin to expire in 2034.

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The valuation allowance increased by $ 17.9 million and $ 12.9 million during the years ended December 31, 2024 and 2023, respectively.

The change in valuation allowance during the year ended December 31, 2023 includes a decrease of $ 1.9 million resulting from the waived time-constrained net operating loss carryforwards

During the year ended December 31, 2022, the acquisition of Segmint resulted in the recognition of a net deferred tax liability of $ 2.3 million.

See Note 3 for further information.

Prior to the business combination, the Company had a full valuation allowance on its net deferred tax assets.

The net deferred tax liability generated from the business combination is considered an additional source of income to support the realizability of the Company’s pre-existing deferred tax assets.

As a result, the Company released a portion of the pre-existing valuation allowance against the deferred tax assets and recorded a provisional deferred tax benefit of $ 2.1 million during the year ended December 31, 2022.

A deferred tax expense of less than $ 0.1 million was recognized during the year ended December 31, 2023 to reflect the final allocation of the purchase price.

The Company files income tax returns in the U.S.

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For the years ended December 31, 2024 and 2023, the Company did not recognize any interest or penalties.

On August 17, 2022, President Biden signed into law the Inflation Reduction Act of 2022.

The Inflation Reduction Act, among other things, includes provisions relating to the corporate alternative minimum tax and an excise tax on corporate stock buybacks.

The Company does not expect there to be a material impact on its financial statements and will continue to assess in future periods.

Fair Value of Financial Instruments

The carrying values of cash, restricted cash and cash equivalents, accounts receivable, and accounts payable approximate their respective fair values due to the short-term nature of these instruments.

The carrying value of long-term debt approximates its fair value due to the variable interest rate.

The Company’s financial instruments consist primarily of cash, cash equivalents, marketable securities, accounts receivable and accounts payable.

The carrying values of cash, cash equivalents, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these instruments.

Cash equivalents include amounts held in money market accounts that are measured at fair value using observable market prices.

Marketable securities include debt securities that are measured at fair value using observable inputs.

The significant unobservable inputs used in the fair value measurement of contingent consideration related to business acquisitions are forecasts of expected future annual revenues as developed by the Company's management and the probability of achievement of those revenue forecast.

Significant increases (decreases) in these unobservable inputs in isolation would likely result in a significantly (lower) higher fair value measurement.

The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

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Significant other inputs that are directly or indirectly observable in the marketplace.

Significant unobservable inputs which are supported by little or no market activity.

Significant unobservable inputs that are supported by little or no market activity.

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period.

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Commercial paper 1,580 — 1,580 —

government-sponsored enterprise securities 3,500 — 3,500

Treasury debt securities 15,427 15,427 — —

International debt securities 2,144 — 2,144 —

Total marketable securities 21,375 15,427 5,948 —

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Commercial paper 7,279 — 7,279 —

government-sponsored enterprise securities 3,500 — 3,500 —

Treasury debt securities 22,067 22,067 — —

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Total Assets $ 85,659 $ 56,530 $ 29,129 $ —

(1) Includes cash sweep account, money market account, and money market funds that have investments primarily in U.S.

(1) Includes insured cash sweep account, cash sweep account, money market account and money market funds that have investments primarily in U.S.

Government Agency debt, U.S.

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Earnings Per Share

Net loss attributable to common stockholders used in computing basic and diluted earnings per share (“EPS”) has been calculated as the net loss less Series B cumulative dividends and other adjustments to redeemable convertible preferred stock of $ 0 , $ 0 , and $ 0.3 million for the years ended December 31, 2023, 2022, 2021, respectively.

All of the Company’s outstanding series of redeemable convertible preferred stock are considered to be participating securities.

The holders of the Company’s redeemable convertible preferred stock do not have a contractual obligation to share in the Company’s losses;

therefore, no amount of total undistributed loss is allocated to redeemable convertible preferred stock.

Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period.

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Net Loss $ ( 40,835 ) $ ( 62,913 ) $ ( 58,600 )

cumulative dividends and adjustments to redeemable convertible preferred stock

Net loss attributable to common stockholders $ ( 62,913 ) $ ( 58,600 ) $ ( 47,099 )

Weighted average shares of common stock outstanding - basic and diluted 98,892,692 94,080,797 90,956,521

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The Company expects these types of disputes may continue to arise in the future.

Based upon present information, the Company believes that its liability, if any, arising from such pending legal proceedings, asserted legal claims and known potential legal claims which are likely to be asserted, is not reasonably likely to be material to the Company’s financial position, results of operations, or cash flows, taking into account established accruals for estimated liabilities.

The Company leases office space under non-cancellable operating leases for its corporate headquarters in Plano, Texas pursuant to a 10 -year lease agreement under which the Company leases approximately 125,468 square feet of office space with an initial term that expired on August 31, 2028, with the option to extend the lease for either two additional terms of five years each or one additional term of 10 years.

Renewal options were not included in the ROU asset and lease liability calculation.

The Company elected the practical expedient to not provide comparable presentation for periods prior to adoption.

Based upon present information, the Company believes that its liability, if any, arising from such pending legal proceedings, asserted legal claims and known potential legal claims that are likely to be asserted, is not reasonably likely to be material to the Company’s financial position, results of operations, or cash flows, taking into account established accruals for estimated liabilities.

On September 5, 2023, the Company entered into an amendment to its office lease, which, among other things, reduces the leased space in Plano, Texas from approximately 125,468 square feet to 83,939 square feet, effective December 31, 2023, and also extends the term for the remaining reduced leased space to August 31, 2033.

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(in thousands)

2024 2023 2022

Operating lease expense

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Short term lease expense and other (1)

1,026 960 1,165

Total lease expense

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(1) Other lease expense includes variable lease expense, sublease income, and gain on lease modification.

Operating rent expense was $ 4.6 million for the year ended December 31, 2021.

The Company elected the practical expedient to not provide comparable presentation for periods prior to adoption.

Supplemental lease information

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Cash flow information (in thousands)

2024 2023 2022

Cash paid for operating lease liabilities

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Right-of-use assets obtained in exchange for operating lease obligations (1)

$ — $ — $ 16,918

Non-cash adjustment to operating lease right-of-use assets from lease modification (2)

$ — $ 3,108 $ —

(1) For the year ended December 31, 2022, right-of-use assets obtained in exchange for operating lease obligations is related to the Company’s adoption of ASU No.

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Employees can defer a portion of their annual gross compensation up to limits established by the Internal Revenue Code.

The Company currently matches employee contributions at 25 % of employee contributions up to 8 % of salary.

The Company currently matches employee contributions at 25 % of employee contributions up to 8 % of their salary.

Matching contributions vest based on the employees tenure with the Company.

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There were no indications of impairment of goodwill or intangibles noted for the years ended December 31, 2024 and 2023.

Goodwill has a carrying value of $ 148.1 million and $ 148.0 million as of December 31, 2023 and 2022, respectively.

Goodwill has a carrying value of $ 148.1 million as of both December 31, 2024 and 2023.

Total intangibles, net, consisted of the following as of December 31, 2024 and 2023:

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Related Party Transactions

Todd Clark, who served as President and Chief Executive Officer of CU Cooperative from 2016 to 2023, is a member of the Board.

For the years ended December 31, 2023 and 2022, CU Cooperative Systems, Inc.

(“CU Cooperative”), a vendor, was paid fees of $ 6.2 million, $ 4.4 million, and $ 4.4 million, respectively, which relates to services resold to the Company’s clients.

As of December 31, 2023 and December 31, 2022 the Company had $ 0.3 million due to CU Cooperative included in accounts payable.

Todd Clark, who served as President and Chief Executive Officer of CU Cooperative from 2016 to 2023, is a member of the Board and was designated to serve as a member of the Board by CU Cooperative.

(“CU Cooperative”), a vendor, was paid fees of $ 6.2 million, and $ 4.4 million, respectively, which relates to services resold to the Company’s clients.

As of December 31, 2023, the Company had $ 0.3 million due to CU Cooperative included in accounts payable.

Subsequent Events

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The Board limited the effect of the evergreen provision in the ESPP, and, effective January 1, 2025, the number of shares issuable thereunder increased by 500,000 shares for a new total of 3,025,043 shares available for issuance.

Acquisition of MANTL

On February 27, 2025, the Company entered into an agreement to acquire Fin Technologies, Inc.

MANTL provides onboarding and account opening solutions that allow financial institutions to acquire commercial, business, and retail customers through a variety of channels for many deposit account types.

Pursuant to the terms of the Merger Agreement, the Company has agreed to acquire MANTL for approximately $ 380 million, subject to customary purchase price adjustments.

The Company is currently evaluating the impact of the acquisition on its financial statements.

See Form 8-K filed on February 27, 2025 for additional information.

Third Amendment to Amended and Restated Credit Amendment

In connection with the acquisition of MANTL, on February 27, 2025, the Company entered into a Third Amendment (the “Third Amendment”) to the Company’s Amended and Restated Credit Agreement dated as of April 29, 2022 (the “Credit Agreement”), with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as Administrative Agent, and the other lenders party thereto.

The Third Amendment, among other things, (i) extends the maturity date of the revolving commitment from April 29, 2027 to February 26, 2030, (ii) increases the amount of the revolving loan commitment by $ 100 million, for a total revolving commitment of $ 225 million, (iii) extends the Financial Covenant Trigger Date to December 31, 2026 or such earlier date as designated by the Company, (iv) reduces the applicable interest rate margins (1) prior to the Financial Covenant Trigger Date, from SOFR plus 3.00 % to 3.50 % per annum to SOFR plus 2.75 % to 3.25 % per annum, in each case based on the recurring revenue leverage ratio and (2) on or after the Financial Covenant Trigger Date, from SOFR plus 1.50 % to 3.00 % per annum to SOFR plus 1.25 % to 2.50 % per annum, in each case, based on the total net leverage ratio, (v) permits the Acquisition of MANTL pursuant to the terms of the Merger Agreement, (vi) permits certain Permitted Convertible Indebtedness and Permitted Equity Derivative Transactions (as such terms are defined in the Credit Agreement, as amended by the Amendment), subject to certain restrictions, and (vii) modifies certain covenants.

The Company is currently evaluating the impact of the amendment on its financial statements.

Except as amended by the Third Amendment, the remaining terms of the Credit Agreement remain in full force and effect.

See Form 8-K filed on February 27, 2025 for additional information.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data