Good afternoon, ladies and gentlemen, and welcome to the Alkami Technology Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instruction will be provided at the time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I'd like to turn the conference over to Steve Calk, Vice President of Investor Relations. Steve, go ahead. Thank you, Operator. With me today on today's call are Alex Shootman, Chief Executive Officer, and Bryan Hill, Chief Financial Officer. During today's call, we may make forward-looking statements about guidance and other matters regarding our future performance. These statements are based on management's current views and expectations and are subject to various risks and uncertainties. Our actual results may be materially different. For a summary of risk factors associated with our forward-looking statements, please refer to today's press release in the sections in our latest 10-K entitled Risk Factors and Forward-Looking Statements. Statements made during the call are being made as of today, and we undertake no obligation to update or revise these statements. Also, unless otherwise stated, financial measures discussed on this call will be on a non-GAAP basis. We believe these measures are useful to investors in the understanding of our financial results. Reconciliation of the comparable GAAP financial measures can be found in our earnings press release and in our filings with the SEC. Now, I'll turn the call over to Alex. Thanks, Steve, and welcome, everyone. I'm pleased to report another quarter of strong performance for Alkami. In the second quarter of 2024, Alkami grew revenue 25%, once again ahead of expectations. In addition, we delivered $4.6 million in adjusted EBITDA, exceeding the high end of expectations. Since our last earnings call, we celebrated a significant product achievement. Alkami is the first digital banking solution company to be certified by J.D. Power for providing clients with an outstanding mobile banking platform experience. As the first provider in our space to earn this certification, Alkami had to pass J.D. Power's rigorous methodology for meeting high consumer expectations. Specifically, we exceeded J.D. Power's industry benchmark across a set of 146 best practices covering all aspects of mobile application development, design, and operational functionality. Additionally, we exceeded J.D. Power's voice of the customer benchmark, which ensures our clients' customers view our mobile banking experience as outstanding. This is meaningful to our business as research continues to show that the number one criteria for an FI selecting a new digital banking platform is the user experience for their customers and members. Our investment in user experience continues to drive success in the marketplace. In the second quarter, we signed eight new digital banking clients: four credit unions and four banks. One of our credit union wins is a Tier 1 credit union that will become one of our top clients in terms of ARR. One of our bank wins is a large Midwestern bank that has a commercial growth strategy. This bank is an existing ACH client who will be successfully cross-sold digital banking. As a reminder, we currently have over 500 ACH Alert clients under contract, and 80% of those are banks. We now have 34 banks under contract for our digital banking platform, representing approximately 1 million digital users. Based upon our current implementation schedule, by the end of Q1 2025, we will have approximately 30 banks live on the Alkami platform. In addition, our sales pipeline remains strong, with almost half in the bank market. Our current performance and product excellence reinforce my confidence in our 2026 targets. We continue to experience tailwinds in our market, with annual digital user growth among U.S. financial institutions averaging 5%-8%. On a base of more than 480 million users, that means every year more digital users are created than are live on the Alkami digital banking platform. This continues to drive our TAM and growth among our clients. An immutable factor driving tailwinds in our market is the evolution of our clients' customer base. In May, we published a study on generational trends in digital banking being driven by the greatest intergenerational wealth transfer in history. Some key findings include: first, 30% of millennials plan to grow the number of financial providers with whom they have a relationship over the next 12 months. This is 2.5 times more than the weighted average of Gen Xers and Baby Boomers who have been driving existing digital banking growth. Next, millennials have 14% more products with their FIs than Gen Xers and 28% more than Boomers. This can provide demand for additional products to be sold into our client base. And finally, millennials are 56% more likely than Gen Xers and Boomers to grow their relationship with their primary FI. This generation views their FI as a broader solution provider, which creates an opportunity for Alkami to deliver future innovations to our clients. Seat growth and demographic forces are driving demand in our market. While Alkami has to capitalize on this demand, we don't have to create the demand. These demand tailwinds reinforce my confidence in our 2026 targets. We continue to make operational improvements that create leverage in our business. One example is the results we're achieving from investments in our platform. At the end of Q2, almost half of our microservices have been converted to Linux and deployed to Kubernetes, which enables our platform to autoscale. We launched our centralized certificate management store, which allows thousands of certificates to be refreshed automatically rather than the previous manual process. This quarter, we conducted a successful pilot to modernize our observability framework, which will allow us to detect and troubleshoot issues more efficiently, reducing cost and improving client experience. Early in the quarter, we launched our new SDK Wizard, which is a user-friendly installation tool that allows clients and partners to set up their environment in less than 30 minutes. We also launched the Alkami Developer Portal, tailored for developers wanting greater control and visibility into their development process on the Alkami platform. Our new Wizard and Portal reduce the workload on the Alkami engineering organization, which allows us to work on capabilities such as our API infrastructure, which will enable us to be an API-first platform. These are some of the investments we've made in our platform that have reduced our cost per user, increased the availability, quality, and performance of the platform, and delivered new capabilities to our clients. Our ability to continue to drive operational improvements reinforces my confidence in our 2026 targets. Alkami continues to attract the best and brightest talent who will help us execute our vision. Over the last two years, we've added senior resources, including Deep Varma, who is Alkami's Chief Technology Officer, and Chief Customer Officer Wayne McCulloch, both of whom are respected technology leaders. In Q2, we were excited to welcome Guggan Kanjolia as Alkami's Chief Product Officer. Guggan brings more than 25 years of experience developing products for some of the most prominent financial institutions and fintechs in the country, including Capital One, OnDeck, and most recently, Silicon Valley Bank, where for the last 5.5 years, he was Chief Product Officer. Guggan is the right executive to help Alkami continue our momentum in the commercial banking market and refine our long-term strategic product roadmap, which will create an exciting future for Alkami and our clients. With the addition of Guggan, we now have in place the executive team necessary for the next phase of Alkami's growth. Our ability to attract people like Guggan to Alkami reinforces my confidence in our 2026 targets. I'm proud of the Alkami team, grateful for the Alkami clients that have trusted us with their digital future, and appreciative of the investors who have chosen to be part of the Alkami story. In closing, our current performance, product excellence, the tailwinds driving demand, our operational improvements, and our ability to attract great talent reinforce my confidence in our 2026 targets. With that, I'll hand the call over to Bryan. Thanks, Alex, and good afternoon, everyone. Our second quarter was another strong quarter for Alkami, beating expectations and continuing our progress towards our long-term financial objectives. For the second quarter of 2024, we achieved total revenue of $82.2 million, which represents year-over-year growth of 25%. Subscription revenue grew 28% and represented approximately 95% of total revenue. We increased ARR by 25% and exited the quarter at $321.3 million. We currently have approximately $52 million of ARR backlog for implementation, the majority of which will occur over the next 12 months. We implemented 10 new clients in the quarter, bringing our digital platform client count to 254. We now have 39 new clients in our implementation backlog, representing 1.6 million digital users. We exited the quarter with 18.6 million registered users live on our digital banking platform, up 500,000 sequentially, and up 2.7 million, or 17%, compared to last year. Over the last 12 months, we implemented 36 financial institutions supporting 1.3 million digital users. In addition, our existing clients increased their digital user adoption by 1.4 million users. As a reminder, because of the long-term nature of our contracts, we have three to four visibility into upcoming client attrition. In Fiscal Year 2024, we expect churn of less than 1%, and over the last 12 months, we have not experienced any digital banking client churn. Over the long term, we model digital banking ARR churn at 2%-3% per year. We ended the quarter with an ARPU of $17.29, up 7% compared to a year ago, driven by add-on sales success and the addition of new clients who tend to onboard with a higher average ARPU. We are seeing broad-based demand across our product portfolio. Our 2024 new sales performance continues to outpace 2023. For the year, we signed 14 new digital banking clients, including five banks, and our add-on sales effort represented over 46% of 2024 new sales. Key growth areas continue to be concentrated in data insights and marketing, fraud protection, customer service, and financial wellness product family categories. In addition to add-on sales, our client sales team is responsible for client contract renewals. We expect to renew over 30 client relationships in 2024. During the first half of 2024, we renewed 12 client relationships. Renewal terms have been consistent with historical norms in terms of pricing and add-on product adoption. And finally, our remaining purchase obligation crossed over $1.2 billion, representing just under 4x our ARR and up 26% compared to a year ago. Now turning to gross margin. For the second quarter of 2024, we delivered non-GAAP gross margin of 63.2%, representing 450 basis points of expansion compared to the prior year quarter. We achieved gross margin expansion through continued improvement in our hosting costs per registered user, as well as operating leverage across our post-sale operations. As a reminder, our 2024 gross margin objective is 65%. We are rapidly approaching this goal and are now beginning to look beyond 2026 as our operational and financial models continue to strengthen. Moving to operating expenses. For the second quarter of 2024, operating expenses of $47.8 million, or 58% of revenue, represented operating leverage of 520 basis points. We derived operating leverage primarily in R&D and G&A, where we continue to realize operational scale. Related to R&D, we continue to invest in our platform while scaling this expense line. Investment-focused areas include initiatives to drive quality and cost efficiency of the platform, expand our product offering, improve extensibility, and enhance the product-market fit of our commercial banking offering. As for non-GAAP sales and marketing expenses, we continue to achieve a high level of sales team productivity and go-to-market efficiency. For the last 12 months, we increased ARR $64.5 million while investing $46.5 million in sales and marketing, representing an efficiency ratio of 1.4 to 1. We believe this ranks among the best in SaaS in terms of sales and marketing efficiency. Our adjusted EBITDA in the second quarter was $4.6 million, better than the high end of our expectations and represents our fourth consecutive quarter of positive adjusted EBITDA. We are very pleased with the progression, which is in line with our path to achieve an adjusted EBITDA margin of 20% in calendar year 2026. Related to our balance sheet, we ended the quarter with approximately $87 million of cash and marketable securities. On July 1st, we issued an 8-K disclosing that we amended our credit facility. The amendment expands the revolver from $60 million to $125 million, modifies certain covenants to be more consistent with our financial profile, and extends the term by one year to April 29th, 2027. Additional detail is provided in the 8-K. As of today, the facility is undrawn. Now turning to guidance. For the third quarter of 2024, we are providing guidance for revenue in the range of $83.8 million-$85.3 million, which represents 24%-26% total revenue growth. For Adjusted EBITDA, we are providing guidance in the range of $5.8 million-$6.8 million. For full year 2024, we are providing guidance for revenue in the range of $330.5 million-$333.5 million, representing total revenue growth of 25%-26% and subscription revenue growth of 26%-27%. We are also providing Adjusted EBITDA guidance of $22 million-$24 million. In closing, I'm excited about our financial performance this quarter. We're continuing to deliver strong growth while achieving best-in-class go-to-market efficiency, expanding our profitability, and increasing shareholder value. With that, I'll hand the call to the operator for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for the first question. Your first question comes from the line of Chris Kennedy from William Blair. Your line is now open. Good afternoon. Thanks for taking the questions. Alex, you alluded to it, but when you think about the next phase of growth for Alkami, can you talk about some of the key drivers that you're focused on? Yeah. Most of, if I go back to my script, what I was reflecting on is the factors that continue to reinforce my confidence in the 2026 targets that Bryan and I sent out. So most of my commentary, I'm not trying to be argumentative, wasn't really about a next phase of growth. What I continue to see, though, in the market, and I talked about the demand drivers, is that we've got underlying seed growth in the population in general. We've got demographic changes that are driving the need for digitization in almost any aspect of how a consumer deals with their banks. And so, Chris, I'm happy to go a little bit deeper, but we've got a lot of demand tailwinds that Alkami can tap into long-term. Yeah, Chris, I'll just add a couple more points. In the beginning of 2022, we laid out a plan to scale to 2026. In that, what we talked about was we're pretty competitive in the credit union side of the market. Our goal is by 2026 to achieve about 50% of the new client wins from banks to complement what we've been doing in credit unions. In addition to that, what we've also said is we would like 50% of the total contract value that we sell in 2026 to come from add-on sales, which in this, what we just reported year to date for 2024, we're at 46%, and most likely will be in that 40%-45% for the full year. I think we're making a lot of progress towards our 2026 goal, which is what we've outlined for the investment community back in 2022. Understood. Thank you. You guys are clearly on track there. Then just a quick follow-up. You talked about better leveraging the APIs. Can you just talk about the progress on that journey? Thank you. Yeah, thanks. There's two ways that our customers and our partners access the Alkami application today. They can access it through an API, or they can access it through an SDK. The feedback that we've gotten from our customers is that they want to be able to access more parts of the platform so that they can either get different pieces of information out of the platform or put other pieces of information back into the platform. And so that's what we're going through from an API redesign standpoint, is how do we allow other pieces of information to come out of the platform so that our customers can do unique things for their customers and members, and then how do we allow them to put information into the platform. Then ultimately turning it into an API-first platform so that they no longer have to use an SDK if they want to integrate a third-party capability into the platform. What this will all result from is lower effort inside of Alkami to connect partner software of the third-party software into the platform. And it will enable more stickiness of the platform because there will be more information in and out of the platform in service to the customer. Great. Thank you. Appreciate it. Your next question comes from the line of Mayank Tandon from Needham. Your line is now open. Thank you. Good evening, Alex, Bryan, and Steve. I wanted to start, Bryan or Alex, with the comment around the add-on sales momentum. Great to hear the positive momentum there. Could you maybe unpack that a little bit in terms of which areas are seeing the most traction, which might be lagging a little bit? Just any sort of color on where the momentum lies within the add-on products. Yeah. There's 4 areas where we're seeing some significant progress. One is what we refer to as data insights and marketing, which in large part, that's our Segmint acquisition. So not just from an add-on sales perspective, but also from a new logo or new client win perspective, we're seeing a lot of adoption within Segmint. In fact, today, approximately 28%-30% of our total install base, so the 254 live digital banking clients, have adopted Segmint, which we think is pretty fantastic. And then you move into fraud protection, which again is principally driven by another one of our acquisitions, which is ACH Alert. ACH Alert has been sold on four of the five bank deals that we sold this year. And ACH Alert also represents about 30% adoption in our overall live digital banking clients. And then you move into customer service and financial wellness areas. Those two areas are then followed by money movement. So it's just the fact that today our clients average 13 products, and we offer 33. So depending on what the client is interested in from a business operation and strategy point of view, really drives what products are adopted. But definitely within the marketing, data insights, and fraud area, we're seeing quite a bit of traction. Yeah. Maybe I'll just take that up a level besides specific product performance. I'll give you an anecdote of our customer advisory board meeting. We had our customer advisory board together a couple of weeks ago. That represents 10 financial institutions, both banks and credit unions, a total of a little under $50 billion in assets with close to about 1.5 million digital users across those customers. And there were three topics that they wanted to talk about. One which was, "Look, we're coming to the point where we're going to be able to drive loan volume again, and we really need to digitize the front end of our lending platform. We've got a lot of legacy platforms that are connected to our back office. We'll probably leave those in place, but we really need a modern digital-first experience for attracting either a new customer or providing a new product. So they want to talk a lot about what does the digitization of the front end of the loan process look like. Bryan already talked about it. Very sophisticated thoughts around data. How do I use data for fine-grained analytics to understand specific people that I could make a specific offer? How do I use it to deliver a personalized offer in channel, in the mobile channel itself? And then there was a reason around AI, where it's just clear that there's two big use cases for our customers for AI. One would be think about generative AI in the contact center to be able to help them respond to their customers more quickly. And then second would be more predictive AI in terms of battling fraud. So you got Bryan's perspective on the specific products and then just an overview from a section of our customer base in terms of what they're interested in. That's very helpful. Just for a quick follow-up, maybe Bryan on the model. Just want to get a better sense of the expectations for the back half and then what's really sustainable for your fiscal 2026 targets in terms of user growth and our approach. Should we use the recent trajectories as maybe a guide to what you should expect for the next several quarters? Is that a good sort of framework to think about the model? No, it is. I wouldn't break away from what we've been saying for the last several years on how we achieve 25% revenue growth. 5%-7% percentage points will come from AARPU expansion. AARPU expansion is driven by both the fact that new sales cohorts are coming on in a much higher ARPU. Part of that's driven by more banks included in that mix, but also credit unions are coming in with more average products and a much higher ARPU. So we think that's a good driver, and we have good visibility in what that can do for us in the future. Then secondly, AARPU expansion comes from the cross-sell that we're seeing. And quite honestly, I'm very excited about what we're seeing come through our client sales organization, whether it's at the time of renewal or if it's midstream in an MSA. We're seeing nice adoption of our product portfolio. As I mentioned, that's 46% total contract value for our year-to-date 2024 new sales. 5%-7% from AARPU expansion, and the balance 18%-20% will come from user growth. Now, within any quarter, it could be a percentage point or two different or variability in user growth versus AARPU expansion, but we don't see any reason to break away from the revenue calculus that we've been providing. Thank you. Congrats on the quarter. Appreciate it. Your next question comes from the line of Pat Walravens of Citizens JMP. Your line is now open. Oh, great. Thank you very much. Congratulations, you guys. Hey. So I guess I have two questions. The first is, Alex, I'm reading this press release about the Millennials versus the Gen X and Baby Boomers. And I mean, it's super interesting. I'd love you to expand a little bit on why it is the Millennials are so up for grabs and why they're expanding their number of financial providers. Is it just as they get more wealth, they need more providers, or is there something more to it? And then my second question is I would love to hear your thoughts on how you guys feel about doing M&A and sort of what the parameters would be for that. Yeah. Well, Pat, thanks for the question. On the first question, we set out to do that study in partnership with the Center for Generational Kinetics because of the facts that you and I both know, which is this huge wealth shift from the Baby Boomer generation to the Millennial generation. We set out to do this study as kind of an advisory to our customers. Much of what you read in it is what we discovered. First of all, yeah, half of the millennials use a very large bank, but that means half of the millennials are up for grabs to a regional and community financial institution to be their primary institution. In that, we learned things that are very interesting, which is, for millennials, it's not about the most important thing for them is not that that's where their paycheck is deposited, but that it's a really good digital experience. And then some of the other aspects, I don't think I can divine. I'm not a millennial whisperer, so I can't divine the reason why it might be. But what it told us is there's an opportunity for our customers to tap into that generation that's going to inherit a lot of wealth. And then there's an opportunity for Alkami in terms of having more products and the ability to be more innovative. So you've read it. It's pretty exciting for us, and our customers have appreciated the research. In terms of M&A, our philosophy has been we will grow through organic products, we'll grow through M&A, and we'll grow through relationships with third-party intellectual property that we bake in, we build into our product. From an M&A perspective, if we were to do M&A, you would expect it to have a couple of characteristics. You would expect it to make sense to our customers, that they would look at whatever we would do and say, "That makes sense to me that Alkami brings that to the table," much like the Segmint acquisition makes sense to our customers. And you would expect that it would fit into our financial profile, right? So the things that we're trying to accomplish financially on behalf of the shareholders, you would expect us to do something that fits into that financial profile. And I don't know if you want to add anything, Bryan. Yeah. I'll add a couple of points, Pat. And we've talked about this in the past. I mean, our view is M&A is an opportunity to expand our product mix. Where we are today in terms of scale, we don't view M&A as a way to move away from digital banking. So what we're good at is the digital experience. And to the extent we can add to the digital experience either through money movement, financial wellness, or maybe fraud and protection on the back end of that, or even complementing data and marketing, I mean, those are attractive areas for us. From our financial model, we put a lot of work, a lot of hard work into our financial model. I mean, this is our fourth straight quarter of positive Adjusted EBITDA. We're very proud of that. What comes with that is we are not willing to take a step back. If we acquired something that was initially at an EBITDA loss, we'd have to bring it very quickly to EBITDA positive. We're not looking to acquire something that would be diluted to our growth rate. So as I kind of go through this criteria, the scope of what's really available starts to become much smaller, but we're looking for very high-quality assets. Then finally, what I'll mention is the move on our credit facility. That was very intentional with the thought that it's been two years since our last M&A transaction. The company is organizationally prepared to complete another transaction. So let's start making room. Not that we have any acquisition target that's imminent, but let's start thinking ahead and make moves and create the right capital alternatives and options for us as an opportunity does arise so we can move very quickly. But generally, you know I like to buy companies, and in my past, I've bought many. We're looking at IRRs north of 25% from a financial point of view, but a product that we feel will help sustain our organic growth for a very long period. All right. That's super helpful. Thank you both. Your next question comes from the line of Jacob Stephan from Lake Street. Your line is now open. Yeah. I appreciate it. Thanks for taking the questions. Congrats on the quarter. Just wanted to start out, Bryan, you talked a little bit about users added through implementation versus from existing clients, and that mix was about 50/50 over the last 12 months. Maybe could you just kind of talk about how you expect that to trend moving forward if we can see kind of a similar pattern or if you expect it to change? Jacob, it's a similar pattern. We're not seeing anything that would lead us to believe that there's going to be a significant movement one direction or the other. I mean, it's all dependent upon the timing of when we sign new clients, the mix of those clients versus credit unions and banks, because as you are aware, the profile of a bank generally has fewer retail users than a credit union of a similar asset size. So there's no reason to make a change on that, but there will be some variability from quarter- to- quarter on what drives the mix in any one quarter. Okay. And then just on the ACH, it sounds like you guys won a nice bank contract there that was an ACH client. I'm just curious how common that situation is where you've got an ACH client. It sounds like there's 30% of your total customer base is ACH clients, but how common is that situation where you essentially take somebody from ACH and onboard them to the digital banking side? I mean, ACH is a—I mean, it's a fantastic product. The client base of ACH goes from small financial institutions to very large financial institutions, financial institutions such as Silicon Valley Bank or Regions Bank, Trustmark, some of those type of financial institutions. So today, it's not meant to be the tip of the spear for us to then follow and draft off of ACH's success through a cross-sell of the digital banking platform. In part, that is where we are in our bank market penetration and the product-market fit. But over time, it could be a very good source for additional banks to join the Alkami digital banking platform. But today, it's not a main strategic point for us. Here's why it's important. Today, we've moved forward. When you think about going into a new market, any company going into a new market, you look for several things in terms of entering and being successful in that market. One is, are potential customers aware of you? So today, if you looked at aided awareness, Alkami is either number 1 or number 2 in the credit union space. If you look at aided awareness, Alkami is number seven in the bank market. And so the reason why ACH Alert is important to us, both as a standalone product and then entering the bank market, is in situations like this, the customer that we ended up selling to was not aware that Alkami was a participant in the bank market because we're number seven in aided awareness. Through the ACH relationship, they became aware that Alkami was in the digital banking market, and then we ultimately proved to them that we could serve their needs. That's what's really exciting to us, is seeing that potential, and now we've got to go figure out if we can replicate that more times. Yeah. I mean, that's a direction. Jacob, the general direction today is when we sell a bank, we draft ACH Alert into that transaction. And if you look at 2023 and then the five banks that we've sold in 2024, there's a very high adoption rate of ACH Alert in those transactions. Okay. Got it. That's really helpful. Appreciate all the color. Your next question comes from the line of Alexei Gogolev from J.P. Morgan. Your line is now open. Good evening. This is Ella Smith on for Alexei Gogolev. Thank you so much for taking our question. So first, I know that you're very confident about the secular tailwinds driving your business, but we are wondering if there are any "missing pieces" that you're planning to add to your product portfolio in order to be more competitive in RFPs for banking customers. Thank you. Yeah. Thanks for the question. When we look at our bank product market fit and our ability to be increasingly competitive in that space, the bank product market fit is not necessarily about there's a large piece of capability that we don't have that we need to add into our product line. It tends to be more around a bank's customer might have so let's say the ability to process wire transactions at the end of the day. We have the ability to process wire transactions at the end of the day, and we have the ability to serve a very large portion of the market with our capability to process wire transactions at the end of the day. But there may be a bank that has an individual customer that has a very complex need around wire payments, for example, and we want to enable that bank to be able to serve that customer. So when we think about product market fit for the commercial segment for Alkami, we already have pretty good product market fit. Our next steps are not necessarily adding some large additional piece of functionality that we don't have. Our next step, specifically banks have one or two customers that have a complex need, our ability to serve that complex need. That's very clear. Thank you so much. For a quick follow-up, you've previously discussed how about 20 of your top 10 largest clients are accounting for 22% of your digital user base. Are you seeing continued in-market consolidation given the tougher external environment, or do you expect the concentration of your base to reduce as you add more banks rather than credit unions? Yeah. I'm not clear on the stats that you just added, but just to kind of back up and just more generally, how is market consolidation impacting us? Generally, we benefit from market consolidation. In fact, we had two consolidation events that occurred this quarter where we picked up some digital users, which was a positive. Also, later in the year, as we've been discussing for the last couple of quarters, we do have a financial institution that's leaving us in the fall as the result of M&A activity. So M&A activity does not. I mean, it's averaged around 3% over the last couple of decades. There's been some periods of time where it might be a little more or a little less, but the 3% is pretty consistent, and we don't see that changing significantly in the future. Now, the good news for Alkami and others that have a pricing protocol that's driven by digital users, a consolidation doesn't really mean now you're going to have fewer users. I mean, the consolidation activity is normally about gaining market share and gaining additional accounts, and we would typically benefit from that. All clear. Thank you all so much. All right. All right. Your next question comes from the line of Jeff Van Rhee of Craig-Hallum Capital Group. Your line is now open. Hey. Thanks for taking my question. This is Daniel on for Jeff. Just on the implementation backlog, it looks like 1.6 million users. I think you said highest. It's been a little while, real strong, even though the client count in implementation backlog is down a bit. So it looks like the clients coming in are getting larger. Just anything we should read there in terms of, is there a major opportunity to be moving up market here we're beginning to see, or is this just an incremental shift? It's just an incremental shift based on the story of the quarter. For example, the one tier one credit union that Alex mentioned we won during the quarter was almost 300,000 digital users. That's obviously still in our backlog given we just signed that client. So you're going to see nuances like that from quarter to quarter, and it's just driven by the mix of business that we've sold in the preceding two to three quarters. Okay. And then just one follow-up for me. On banks and the bank backlog there with 30, now I think you said expected to be implemented by Q1 2025, really nice pace of signing and expected implementations there. Just any thoughts? Has that just been broken open wide by getting more implementations under your belt, or is there some other factor we should be looking at for what's driving the acceleration there? First of all, we're pleased with the progress that we're making in the bank market. As Bryan said earlier, the ultimate scorecard of our progress in the bank market is our expectation that over time, half of our new logos will come from banks and half will come from credit unions. What we look at internally, probably a more fulsome answer than you asked, but what we look at internally is to be successful in a market, number one, are we driving demand? Number two, do we have product market fit? Number three, do we have the skills internally to be able to be successful? Then number four, particularly in the kind of market that we're in, because there's a concentration of back-end cores in the bank market, are we being successful bringing customers onto those cores so that we've got experience bringing them onto those cores so that when a new customer looks at us and says, "Hey, I really like your product, kind of a risk to do a conversion," and we're able to walk them through, "Well, we've done it six or seven times. You're not going to be the first." So on all of these areas, we're making progress. I'll let Bryan give you a couple of statistics in terms of the demand side and then the number of cores. Yeah. Great. So in terms of the demand, there's a couple of factors that we're looking at, a couple of metrics that we're looking at. One is the number of deals that we're participating in. Over the last 12 months, we've participated in 90 bank processes, and we've won about 16% of the TCV that was available to be acquired during those bank processes, which is good. If you look at 2023, it was 70 that we participated in. And then the other area is, well, what's going to happen in the future? So we're looking into our sales pipeline, and that is continually moving up the bank representation, and now it's close to 50%, as we mentioned in the prepared comments of this call. So that's good movement. Other areas like core integrations. By the end of Q1 of 2025, we're going to have over 30 or right at 30 implementations, and that's going to represent 7 cores with multiple integrations into each of those cores. What's great about that is the point Alex just made where any other financial institution that happens to have one of those 7 cores, it will no longer be the first implementation with that core, but those 7 cores represent close to 80% of the bank market that we would view in our target market. Lots of progress in many different areas, which we're, again, we feel and we understand the ultimate scorecard is in 2026, are we achieving our 50% new client wins from the bank market? I'll leave it there. Congrats on the quarter. Your next question comes from the line of Andrew Schmidt from Citi. Your line is now open. Hey, Alex. Hey, Bryan. Good results here. Good to speak with you this evening. I wanted to maybe tap on to a previous question, just talking about the average ARR of the, apologies if I missed this, the average ARR of the clients you signed this quarter between the banks, which should maybe take more modules and then just generally more penetration. How is just the average contract ARR trending, let's call it, versus a year or two years ago? Thanks a lot. Yeah. The average ARR, regardless of a bank or credit union, is coming in over the last couple of years and even this year between $700,000 and $800,000. This year, it's trending up slightly above that. That's slightly below our overall average for all of our live clients. But what you have to take into consideration is our top 10-15 clients have a significant amount of ARR, much more multiples of that in terms of average ARR because we do have some very, very large clients. But we're not seeing a dramatic change there. What we're seeing is a higher ARPU. So some of the number of users that are associated with the more recent cohorts are lower and resulting in a higher ARPU with the ARR still trending upwards. Got it. That's helpful. And the other thing if I step away from the ARR for just a second, Andrew, one of the things we are seeing is customers being thoughtful. So the customers see the entire buffet of digital products that they'd like to consume, but they're doing a conversion, and they're being very thoughtful about if I'm doing like-for-like in a conversion, what's that portion of the buffet? And then what additional capability can I bring on that my team can handle from a change perspective, knowing that there's still maybe two more tranches of digital capability that I want, but I'm going to push that out for a little bit after the conversion just to be able to have my team handle the digital transformation, if you will. I just talked to a CEO the other day, and they went through a renewal cycle. They're very happy right now. She said to me, "I really like," they call it home banking, but she said, "I really like the progress that we've made in home banking." But in the renewal cycle, they added six projects, six discrete projects that were new digital initiatives for them that get staged out over a period of a year. So we are seeing people be thoughtful about, "There's a lot that I want to consume, but I need to stage it out over a period of time so that my team can handle the change. Got it. That makes sense. Thank you, Alex. Thank you, Bryan. Maybe just you may have addressed this already, but just the gross margin was nicely higher than what we forecast in our model. Was that due to mix? Were there other, in terms of highe subscription revs? Were there other factors? And then what's the right way to think gross margin for the remainder of this year? Thank you very much. We're seeing some fixes in the investments that we're making in our platform, which ultimately how that drives gross margin is a lower cost per user for our hosting costs. So that's one area I would expect that trend to continue through the remainder of this year. And then the other area is Wayne McCulloch is doing a great job within our clients' experience organization, Client Experience Group. They're responsible for our post-sale operations. So that's everything from implementation to client success through client support in other areas. And we're seeing nice improvements in utilization on the implementation front and productivity. That's also resulting in some nice gross margin expansion. Quite honestly, 63.2% this quarter and 450 basis points of year-over-year expansion is really good. It exceeded our expectation. I think we'll likely settle in that range for the remainder of the year and exit the year. For the full year, just under 63% with another year to go before we achieve our goal of 65% in 2026. As I mentioned on the call, it's not now if we can hit 65%. It's when will we hit 65% and where can we take it from there, which we'll have that conversation once we achieve 65%. You've been pretty consistent to say, "Here's how the gross margin is going to progress. That's right. This amount per quarter. Sometimes it's a little higher. Sometimes it's a little lower. I mean, what we've provided in our long-term outlook is right around 200, 250 basis points per year of gross margin expansion. And when we first set our—just to be clear, when we first set the objective for 2026, we were not factoring early success with our investment in our platform, which that's what's really driving the acceleration towards the ultimate goal in 2026 and also gives us confidence that we can achieve higher than 65% beyond 2026. Got it. Yeah. I know Deep's been doing a lot of work there, so kudos. Good job, guys. Thanks for the time. Sure. Speakers, we don't have any questions over the phone. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.