Alkami Technology (ALKT) 2026年第三季度业绩电话会：营收增长19%，上调业绩指引

Alkami Technology（纳斯达克代码：ALKT）公布2026财年第三季度营收为1.349亿美元，同比增长19%；调整后EBITDA达到2630万美元。在上线ARR增长、客户上线和交叉销售的推动下，管理层上调了全年营收及调整后EBITDA指引。

核心要点

• 第三季度营收同比增长19%至1.349亿美元。订阅收入增长20%，占总营收的96%。
• 调整后EBITDA升至2630万美元，利润率扩大超过530个基点至19.5%。
• 上线ARR同比增长19%至5.33亿美元。Alkami还报告了约5600万美元的ARR积压订单，管理层预计其中大部分将在未来12个月内上线。
• 每客户平均ARR达到约170万美元，而在交叉销售、用户采纳率提升以及银行客户占比提高的推动下，ARPU增长5%至21.88美元。
• 管理层将2026财年全年指引上调至营收5.305亿-5.32亿美元，调整后EBITDA 9800万-9900万美元。
• 第三季度毛利率为63.1%，受到第三方产品成本增加的承压。管理层在其第四季度展望中纳入了持续的适度组合影响。

关键财务数据

业务与运营表现

Alkami在本季度结束时拥有323家上线数字银行客户和2440万注册用户。注册用户同比增长280万，增幅为13%。在过去12个月中，公司完成了36家客户的系统实施（涵盖140万用户），同时现有客户的采纳增加了另外150万用户。

公司在第三季度签约了5家新数字银行合作关系，包括3家银行和2家信用社。今年迄今数字银行新签约客户（new logos）达到16家。Alkami还签约了14家新MANTL客户，截至季末共有60家客户签约购买了所有三款DSSP产品。

Alkami目前共有544家签约数字银行或MANTL的独立客户，其中86家同时使用这两个平台。每客户平均ARR达到约170万美元，有56家客户产生的ARR至少达到200万美元，高于2021年底的18家。

实施活动保持高活跃度。Alkami在第三季度助力10家数字银行客户和26家MANTL客户上线。管理层还特别指出创下了单日上线4家数字银行客户的纪录，并透露在12个工作日内安排了9次上线。

过去三年间，数字银行ARR年化流失率一直保持在1%以下，流失通常是由于客户并购所致。管理层表示，公司的合同通常能提前多个季度提供有关客户流失的可见度。

AI仍是核心产品和投资重点。管理层表示，目前约10%的收入来自于组合中已有的AI产品（包括反欺诈管理）。Alkami有三款Smart Agent处于Beta测试阶段，分别用于KYC审查、文档审查以及通过MCP服务器进行的机构特定数据查询。公司还在开发其银行基础设施与通用AI助手之间的可控连接。

管理层业绩指引

管理层预计股权激励费用将保持在全年营收的14%以下。公司继续将2026年调整后EBITDA利润率扩大500个基点以上作为目标。

全年营收展望假设第四季度上线安排更为密集、交叉销售持续进行以及ARPU保持中单位数增长。管理层表示，第四季度的同比比较受到约80万美元主要属于核心系统转换收入提早移入第三季度的影响，以及略高的第三方成本影响。

Alkami未提供2027财年指引。管理层表示，其2027年计划将建立在当前增长动能之上，包括19%的上线ARR增长、5600万美元的ARR积压订单以及持续的ARPU扩大。公司还预计，加大对盈利能力和AI相关效率提升的关注将支持2027年的利润率扩大。

长期来看，管理层重申了到2030年实现“45法则”（Rule of 45）的发展路径。该框架假设毛利率趋近70%，年化调整后EBITDA利润率每年扩大约300个基点，且股权激励费用降至营收的10%以下。

风险与关注领域

• 管理层表示，关于Alkami所有权的炒作给现有客户和潜在客户带来了不确定性，拖累了新客户签约决策。尽管战略审查已于9月结束，但鉴于客户购买周期可能持续9到12个月，恢复正常的时间仍不确定。
• 大约三分之一的收入来自集成到Alkami平台中的第三方产品。产品组合的变化可能会造成季度毛利率的波动。
• 核心系统转换收入可能会在不同季度之间发生移动，因为实施日期取决于测试情况和客户准备就绪程度。
• ARPU增长可能会因新上线银行和信用社的结构组合而有所不同。银行入驻平台时的ARPU通常更高，而较慢的交叉销售或产品采纳也可能削弱ARPU增长。
• 管理层可能会优先考虑面向客户的安全和架构项目，而非近期的托管优化，这可能会影响毛利率改善的时间轴。

分析师问答集锦

新客户需求：管理层表示，销售管道仍与历史水平保持一致，但所有权的不确定性影响了部分客户的决策。Alkami拒绝预测近期的新客户预订量，并表示第四季度业绩应能就压力是否有所缓解提供更多证据。

资金管理：Alkami确定了2024年需要改进的24至28项功能。管理层表示，大部分功能在第三季度已由客户开始使用，其中约有6项处于Beta测试阶段，预计目标功能集将在年底前基本完成。

ARPU驱动因素：新银行客户上线时的ARPU通常较高，而现有客户的扩展则由交叉销售和产品采纳所支撑。管理层提醒称，季度ARPU可能会根据新上线客户的组合情况而有所波动。

毛利率提升路径：管理层继续以长期实现约70%的毛利率为目标。主要的效率提升机会在于托管、实施和客户支持，预计AI将逐步做出贡献。

资本配置：Alkami将并购和股票回购描述为择机进行的。公司仍专注于整合MANTL、降低净杠杆，并利用过剩现金流资助回购。公司在第三季度回购了1000万美元的股票，截至2026年9月30日累计回购2000万美元。

银行市场中标率：管理层表示，Alkami在银行领域的赢单率达到了前三个季度的目标，并形容该领域是一个积极亮点，尽管战略审查带来了更广泛的不确定性。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good afternoon, ladies and gentlemen, and welcome to Alkami Technology Third Quarter 2026 Financial Results Conference Call. [Operator Instructions] I'd now like to turn the conference over to Steve Calk. Steve, you may begin.

Steve Calk

Thank you, operator. With me on today's call are Alex Shootman, Chief Executive Officer; and Cassandra Hudson, 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, please refer to today's press release and 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. A reconciliation of the comparable GAAP financial measures can be found in our earnings press release and in our filings with the SEC. I'd now like to turn the call over to Alex.

Alex Shootman

Good afternoon, and thank you for joining us today. In the third quarter, Alkami again delivered revenue growth and profitability ahead of our expectations. Our end market continues to invest in modernization, which gives us a consistent pipeline of opportunity. And the journey our market has taken from the ChatGPT moment at the end of 2022 to Opus 4.6 in February supports our DSSP strategy and creates new product possibilities. I'll come back to that later in the call.

In the third quarter, we signed 5 new digital banking relationships, 3 banks and 2 credit unions. 2 of the 5 also contracted for DSSP, our digital banking, account opening and data and marketing products together. This brings our year-to-date total to 16 digital banking new logos compared with an average of 21 through the third quarter since becoming a public company. Our digital banking pipeline is consistent with historical norms.

However, we believe speculation about Alkami's future ownership created uncertainty for customers and prospects and has been an overhang on our new logo business. Providing clarity to our end market was an important reason we publicly communicated the conclusion of our strategic review in September. The results of that review was a unanimous decision by the Alkami Board that executing our long-range plan as an independent public company was the best path to maximize shareholder value. With this behind us, we believe the business has the potential to return to its normal cadence.

Along with the digital banking new logos, we signed 14 new MANTL clients, 5 additional clients contracted for DSSP, bringing the number of clients contracted for all 3 DSSP products to 60. We also now have 544 unique clients contracted for digital banking or MANTL, including 86 contracted for both platforms. Core conversions are an example of the high-impact work we deliver. A core conversion is when an existing client switches their core banking system. We completed 7 this year, a record, including 6 of our largest clients representing more than 3.5 million digital users. Next year, we will nearly double that.

In Q3, we brought 10 digital banking clients and 26 MANTL clients live. And over the last 12 months, we added 2.8 million users to our digital banking platform. Last week, we launched 4 digital banking clients in a single day, a record for Alkami. 5 more follow, which will be 9 launches in 12 business days. From 2020 through the end of Q3 this year, we brought 229 financial institutions onto our digital banking platform, along with their 8.4 million account holders. I'm proud of our ability to execute critical client projects. When the real competitor is staying on a legacy platform, what changes an institution's mind is confidence that the migration will work.

I'm hearing much more clarity from our clients about where AI matters to them. People will still save, spend, borrow, move money and open accounts. Those jobs have been the same for 100 years. What changes is who does them. Today, the account holder navigates menus and completes each task. In the AI era, they'll describe a goal in plain language and the software will work out the steps and ask for permission to act. That shift shows up in 2 places, and we're building for both.

The first is inside the institution's own app. Alongside the digital banking experience more than 24 million users rely on today, we're building an agentic conversational experience. It will spot a cash shortfall before a bill is due, suggest a safe amount to move into a CD or line up a card paydown that won't put rent at risk. These experiences need all 3 parts of DSSP. The agent reasons over the data and acts inside digital banking. Opening the account or originating the loan depends upon the institution's policy and where they want it, a human approval.

The second is outside the app because many account holders will also use general purpose AI assistant. I think those assistants will be excellent at conversation and limited at banking. To move money, open an account or approve a loan, an agent needs governed access, identity, entitlements, limits, approvals and the systems of record underneath all of it. Alkami runs that layer. We're building connectors into the leading AI assistants so that our clients' account holders can bank through whichever one they use. All of this comes back to control.

Our clients want to decide which agents are allowed in, what those agents can do and where a person has to sign off. Across more than 300 live clients, I hear the full range. Some want read-only access and nothing more. Others see agentic action with controls as the thing that lets them compete with a mega bank. Even the enthusiasts move in stages, assist first, then recommend, then prepare an action for someone to approve. Acting inside rules they set will come last. Here is why I think Alkami is positioned for this.

We run a single-codebase multi-tenant SaaS platform. Every institution on it configures roughly 4,000 policy settings of its own across approximately 25 systems of record that are integrated into Alkami. We built that so our clients could each run their own bank on shared infrastructure. It's also what an agent needs, one place to ask, one set of permissions to respect and a record of every action taken. We're doing this now.

There are 3 agents in beta inside our onboarding and account opening platform built for the people who run the institution. The KYC agent summarizes a manual review and recommends a disposition against the institution's own policy. A document review agent reads borrower documents, flags mismatches with the application and coaches the applicant on what to upload. Then an MCP server lets a financial institution ask a question from an AI assistant and get an answer grounded in their own application and account data.

The main conversation we are having with all of our clients is that every generation's front door to the bank has changed. It was a branch, became a drive-thru, then an ATM, the Internet and mobile devices. The next generation's front door will be an agent, and it will interact with digital banking the way the Internet and mobile do today. Beyond deciding how agents interact with their customers, our clients share 2 other priorities. The first is their own transformation through the application of AI technology. As I mentioned on our last call, we built an internal platform in daily use by more than 100 people across our company. It understands roles and skills, protect sensitive data, carries company context, works across teams and optimizes across models.

In our target market, financial institutions average fewer than 200 employees. We're already running our internal platform inside a company several times their size, and some are asking if they can use ours as their AI-powered enterprise workspace. The second is new Agentic applications. With SaaS, we build apps on rented infrastructure. With AI, we build apps on models. Our clients don't just want a helper agent stitched to our SaaS application. They want an AI app built on a foundation model that solves a problem SaaS applications can't solve.

An example is the combination of data analysis and workflow optimization necessary to fight fraud. Roughly 10% of our revenue today comes from AI products already in our portfolio, including fraud management. So this is an extension of something that already works. Both client priorities will shape where we invest in 2027, which we will discuss on our Q4 call early next year.

In closing, since our founding 17 years ago, Alkami has proven itself as an industry innovator while driving sustainable growth and expanding profitability. Our next chapter builds on that foundation as we become the technology partner of choice for regional and community financial institutions. I'll now hand the call to Cassandra to discuss our financial results.

Cassandra Hudson

Thank you, Alex. For the third quarter, we outperformed our guidance across revenue and adjusted EBITDA, enabling us to raise full year targets for both metrics. Our recurring revenue model continues to drive compounding expansion throughout our customer portfolio, translating into strong margin progression while continuing to invest strategically to support durable shareholder value creation.

I'll start with our outlook. For the fourth quarter of 2026, we expect revenue of $139.7 million to $141.2 million, representing growth of 15.6% to 16.9% and adjusted EBITDA of $30 million to $31 million or a 21.7% margin at the midpoint. Our fourth quarter guidance reflects the timing of onetime revenue that benefited the third quarter and will not recur in the fourth. It also reflects slightly higher third-party costs based on the mix we saw in Q3. Those items are why our Q4 outlook is slightly below where some of you may have modeled it. They don't change our view of the year, which is why we are raising our full year outlook.

For the full year, we now expect revenue of $530.5 million to $532 million, representing growth of 19.6% to 19.9% adjusted EBITDA of $98 million to $99 million or an 18.5% margin at the midpoint and stock-based compensation of less than 14% of revenue. Our revenue outlook reflects a heavier fourth quarter launch schedule, continued cross-sell momentum and mid-single-digit ARPU growth. For the year, we continue to expect over 500 basis points of margin expansion, driven by operating leverage and cost discipline, while we continue to invest in product innovation and AI.

Alex's remarks on our future reinforce our path to Rule of 45 by 2030, which assumes gross margin approaching 70%, roughly 300 basis points of annual adjusted EBITDA margin expansion and stock-based compensation falling below 10% of revenue. We will provide our full 2027 outlook with our fourth quarter results. We are sharpening our focus on profitability, and we expect that focus to drive margin expansion in 2027. AI is also changing how we build products, support our platform and serve our customers. We expect those efficiencies to show up across our cost structure in 2027. Our 2027 plan will be built on the momentum we see today, 19% live ARR growth this quarter, a backlog of approximately $56 million of ARR that we expect to mostly go live over the next 12 months and continued ARPU growth driven by strong cross-sell and sustained interest in our DSSP offering.

Now turning to third quarter results. Revenue was $134.9 million, up 19% year-over-year and above the high end of our guidance. Subscription revenue grew 20% and represented 96% of total revenue. Our year-over-year growth was primarily driven by new customers going live and expansion within existing customers. Growth also benefited from an easier prior year comparison and from higher third-party and core conversion revenue than expected. We increased live ARR by 19% to $533 million. Our $56 million ARR backlog represents 31 new clients and roughly 1 million digital users, and the majority is expected to go live over the next 12 months.

As Alex noted, the strategic review created some uncertainty for customers and prospects this year. With the review concluded, our teams are fully focused on winning new business and executing for our clients. Our strategy is increasingly centered on expanding value per client, and our results reflect continued progress. In the third quarter, average ARR per client reached approximately $1.7 million, and we now have 56 clients at or above $2 million in ARR, up from 18 at the end of 2021. This illustrates the central premise of our long-term model as megabanks and fintechs continue to innovate, our clients adopt more of the platform.

We continue to see strong momentum with DSSP, which makes our clients more competitive and drives higher quality long-term revenue for Alkami. We exited the quarter with 323 live digital banking clients and 24.4 million registered users, an increase of 2.8 million users or 13% year-over-year. Over the past 12 months, we implemented 36 clients supporting 1.4 million digital users and existing clients increased their digital adoption by 1.5 million users. Digital user growth has been higher than we expected this year, and our clients continue to grow faster than the overall market. This is a testament to how our product helps our clients grow.

Our digital banking contracts provide strong visibility into attrition, typically several quarters in advance. Over the past 3 years, we have churned less than 1% of our digital banking ARR annually, usually resulting from a client merger. ARPU increased to $21.88, up 5% year-over-year. Growth was driven primarily by cross-sell execution, increased user adoption among existing clients and the increase in live banks, which tend to onboard at higher ARPUs given the commercial to retail mix. Remaining performance obligations were approximately $1.7 billion or 3.2x live ARR, providing strong visibility into long-term revenue.

Third quarter gross margin was 63.1%, below our expectations and driven primarily by higher third-party product costs. Our cost of revenue includes third-party product costs, which fluctuate with product mix. Hosting costs to run our platform and the cost to implement and serve our customers. Roughly 1/3 of our revenue is third-party products that are fully integrated into the Alkami platform, so gross margin can move with mix. We remain committed to expanding gross margin as we scale and improve the efficiency of hosting, implementation and client support. We expect AI to contribute to those improvements over time with the benefits building gradually.

Third quarter operating expenses were $59.4 million or 44% of revenue, representing approximately 600 basis points of year-over-year improvement. That improvement was driven by personnel cost efficiencies as we achieved new levels of scale, and it was realized across all areas of operating expense. Adjusted EBITDA was $26.3 million, above the high end of our expectations with an adjusted EBITDA margin of 19.5% and an expansion of over 530 basis points year-over-year. Revenue grew faster than cost of revenue and operating expenses, which drove the expansion.

In the third quarter, we generated operating cash flow of nearly $22 million, driven by improved profitability and disciplined working capital management. We ended the quarter with $85 million in cash and marketable securities. We also repurchased $10 million of stock for a total of $20 million through September 30, 2026. We remain committed to a disciplined and balanced approach to capital allocation across acquisitions, debt reduction and opportunistic share repurchases funded by free cash flow.

In closing, our third quarter reflects the strength of our client base, disciplined execution and a clear focus on profitability. Our clients' growth is driving ours, and we are building on that momentum as we convert growth into margin and create long-term value for our shareholders. We are excited about what lies ahead.

With that, operator, please open the line for questions.

Operator

[Operator Instructions] with that, your first question comes from the line of Chris Kennedy with William Blair.

分析师问答

Cristopher Kennedy

New sales activity was very stable throughout the year. But Alex, you did mention some uncertainty kind of pressured new logo wins. Can you just provide a little bit more color on that and the pipeline?

Operator

One moment as we reconnect the speaker line. Ladies and gentlemen please continue to stand by as we reconnect the speaker line.

[Technical Difficulty]

Chris, would you mind if you could repeat your question?

Cristopher Kennedy

New sales activity was pretty stable throughout the year, but you did mention kind of strategic uncertainty did pressure new logo wins. Can you just give a little bit more clarity as to that comment and talk about the pipeline?

Alex Shootman

Sure. This is Alex. Thanks for the question. As I mentioned in my opening comments, our pipeline remains consistent with other years. If you think about a customer decision when they are looking to switch off of a legacy digital banking platform onto a new digital banking platform, they're signing a 5- to 7-year contract for what you could argue is the most strategic system that they have. And if they're looking at multiple options and one of the options, the company within the market, there has been for sale sign put around its neck and a lack of clarity in terms of the company's future, it's a very reasonable thing for a bank or credit union CEO to make another selection that doesn't have as much risk for them as the perceived risk that they would have making a selection in a company that they don't know the future ownership of that company. I know this is -- I know this, Chris, because this is conversations that I had with CEOs while they were making decisions, and it was unfortunate.

Cristopher Kennedy

Understood. Okay. And then Cassandra, you did mention ARR growth, the backlog, continued ARPU growth. Is there any way to kind of bracket potential revenue growth as we think about 2027?

Cassandra Hudson

Yes. No problem. Thanks for the question, Chris. I'm not ready to guide for 2027 just yet. But we do feel that our plan will be based on the trends that we're talking about on this call today. We have 19% growth in ARR this quarter, which was really strong. We have about $56 million in backlog that will likely go live over the next 12 months, and we're still driving really good ARPU growth. So kind of the underlying and fundamental drivers of our business will hold in 2027, and that's our expectation today, and we look forward to updating you further on next quarter's call with our '27 guidance.

Operator

And your next question comes from the line of Aaron Kimson with Citizens.

Aaron Kimson

It seems like there was some management turnover in 3Q. Your CTO, Deep appears to have left and had rolled into the Chief Product Officer's role. Chief Accounting Officer left, the Chief Customer Officer for MANTL segment and ACH Alert, who came over in the MANTL acquisition left in the first week of October. The question I'm getting from investors is whether this is having any effect on the day-to-day of the business, I'd love any perspective you can offer there.

Alex Shootman

Yes. All 3 of those are very unrelated. With the situation, Deep was a great hire for Alkami and made a massive contribution to the company. If you're the CTO of a digital banking platform with 24 million users, you are an emergency room doctor 24/7. And that was just a situation with Deep where he wanted to make a personal decision. There's 2 different organization models, one where you've got a CPO and a CTO and one where you combine them. What I decided to do is combine those 2 organizations so that we could be more fully aligned in terms of customer delivery. So that was an organizational design decision. But these are -- we've got a bunch of talented executives, and we've got a good bench when somebody like Deep leaves, and I'm excited about Ben taking over the combination of the 2.

Aaron Kimson

That's helpful. And then as a follow-up, can you talk about progress you've made with the features and functionality around your treasury management solutions and how close you are to getting that where you need to be to compete more effectively with larger banks?

Alex Shootman

Yes. Thank you for that question. Just to kind of recap, we -- in the middle of 2024, we benchmarked our treasury management software against what we consider to be the 2 or 3 leading contenders if a community bank in our ICP was making a decision to buy digital banking. And at that time, we determined that there were somewhere between 24 and 28 features that we wanted to build. Once again, those were not necessarily a new feature. It was a level of sophistication on a particular feature that would be necessary. For example, householding and how a community bank did their householding.

We built those features with our customers. So we had a group of customers that actually sat through and reviewed every single sprint cycle to make sure that we were building them well. And the majority of those, I think, with the exception of maybe 6 went into customer usage through the third quarter, and we've got another 6, I think, that are in beta right now. But by the end of the year, we should be largely complete with what we consider to be the feature set that allowed us to be able to be selected and have a happy customer within our ICP, which is community banks somewhere between $500 million and $10 billion in assets.

Operator

And your next question comes from the line of Jacob Stephan with Lake Street Capital Markets.

Jacob Stephan

Cassandra, I just wanted to touch on the Q4 adjusted EBITDA guide a little bit. I know you talked about some third-party costs pressuring gross margins a little bit, but maybe help us understand a little bit more in detail what those third-party costs are? And do you expect them to kind of continue over the next couple of quarters?

Cassandra Hudson

Sure. I mean those costs are related to about 35 different products that we fully integrate into the Alkami platform and sell to our customers. And from time to time, we can see mix shifts that happen that move the margin a little bit. And that did happen in Q3, and I've forecasted that to continue in Q4.

In addition to that, I would just call out that we did have some onetime revenue that I had expected in Q4 that actually ended up coming in Q3. So there was a little bit of shift that way. So just a little bit of timing. But on the whole, we feel really good about the year, which is why we raised why we raised our guidance for revenue and adjusted EBITDA. And on the timing of revenue, some of that is related to core conversions. And we've done a high number of those this year, and they've gone very well, which has been great, but the timing of which can be somewhat difficult to predict. So that's what drove the shift between the quarters, and that also had an impact on adjusted EBITDA.

Jacob Stephan

Okay. Got it. Maybe just on capital allocation as we eclipse the review period here. I guess, how are you kind of thinking about buyback pace versus delevering or if M&A is even part of that equation right now?

Cassandra Hudson

I mean we -- I would describe our posture on M&A as opportunistic, right? Our net leverage ratios are coming down, but we're still focused on fully integrating the MANTL business and making that a very successful part of our DSSP. So we don't want to distract from that strategy. In terms of share buybacks, it really is opportunistic when the share price is attractive, and it will be funded by excess cash flow. So we do intend to use our authorization, and we'll do that when it's prudent.

Operator

And your next question comes from the line of Jeffrey Van Rhee with Craig-Hallum.

Jeff Van Rhee

A few for me. On the -- I realize you're not going to give a '27 outlook, but you printed a 5% ARPU growth this quarter. I'm curious, as you look into '27, kind of what -- how do you think about factors that might accelerate that? And how do you think about factors that might decelerate, at least give us some things to think about when we're building a plug for '27.

Cassandra Hudson

Sure. I guess in terms of things that would accelerate it, it would really be around our new customers going live. Right now, we see those customers coming on at a really high ARPU. And one thing I would just point out is there can be variability quarter-on-quarter on new customers going live in terms of that ARPU. And just for an example, when we onboarded new customers in Q2, their ARPU was nearly double, the new customers that went live in Q3. So there can be some meaningful swings on the new customer side.

Growth from existing customers in ARPU is much more steady, right? We just see that steadily tick up quarter-on-quarter, and that's really driven by our very successful cross-sell motion and expansion of existing customers. So that is another lever that we have that would continue to drive growth and potentially accelerate it would be the pace at which our customers adopt new products and our ability to deliver that to them.

Jeff Van Rhee

And on the inverse, just things that might be a pressure to ARPU?

Cassandra Hudson

Pressure to ARPU would be our success in the bank market, which has been going very well, banks tend to onboard at a much higher ARPU. So if we saw more of a shift to credit unions next year, you could see ARPU growth slow down. I think overall, we net-net be fine because they tend to have very similar ARR overall, but it could drive a change in the ARPU growth as a result. And then conversely on existing customer growth, if we saw the pace of cross-sell and product adoption slow, that would impact our ARPU growth.

Jeff Van Rhee

Got it. Got it. And then, Alex, on the prospects taking a pause during the strategic review, can you just revisit that? There have been on again, off again at a minimum rumors about possible sales for quite a while. When did you really see the prospects start to delay in a meaningful way? And then on the deals that were affected by it, were those deals pushed or have, in fact, most of them gone ahead, closed and just gone with another provider?

Alex Shootman

If you think about a customer's buying cycle, it could be 9 to 12 months. The public commentary about Alkami started in December of last year. I've had many conversations with existing customers and with prospects. And I respect the questions that they're asking. The questions that they're asking are making a long-term investment. Can you categorically tell me exactly what's going to happen? And you know better than I as a public company. There's not a lot of commentary that you make about interest in the company or lack of interest in the company.

And so as follow-ups with some of those customers that made a different decision, I talked to them, and they said this weighed heavily on them because they have -- look, there's 3 or 4 really good companies in this space. Alkami has got great software. We've got great people. We've got customers that stay with us. Other companies have the same thing. And when faced with making a strategic multiyear decision, like I said, a 5- to 7-year decision, I can empathize with the customer decision-maker, and I can understand the decision that they make when there's a set of uncertainty around the company. That's why it was so important that we issued the press release that we issued.

We issued that really for our end market to understand that the Board of Directors made a unanimous decision that the company should pursue creating shareholder value as a stand-alone company. So those have gone away for good, Jeff. And like I said, I spent a lot of time with those decision-makers, and I understand why they made the decision and I respect it.

Jeff Van Rhee

Yes, that's helpful. So should we -- as I'm thinking ahead in terms of new bookings then in terms of pipeline, should we expect a quarter or 2 of continued light, new client bookings just as you weren't maybe putting people into the funnel and working them through? I'm trying to think about how that air gap might present.

Alex Shootman

Yes. I think it would be irresponsible for me to forecast a number of new logos. I think our job is to continue to try to sell and give you a solid update after Q4, and that will show whether it's been continued headwinds for us or we've -- we're able to compress that. When you think about it, your question has a lot of logic to it because it's basically where are customers in their buying cycle? And are they early enough in their buying cycle that this can change the mind? Or are they so late in their buying cycle that they've already decided. So your question has a lot of logic to it. I think it would be irresponsible for me to forecast something right now. We just need to be heads down, close out Q4, and then we can spend time reviewing Q4 and kind of give you a view of the 2027 opportunity set.

Jeff Van Rhee

Yes. Okay. Fair enough. Maybe one last quick one for you, Cassandra. On the onetime items in the quarter, can you size the onetime revenue that shifted from one quarter to another? And just what was that related to?

Cassandra Hudson

It was about $800,000 or so and most of it was tied to core conversion revenue. And these are projects that we do on behalf of our customer when they have to -- when they're switching to a new core, we have to do work in our digital banking application to make that work. And we've had a high number of those this year, and there can be variability into when they actually get completed.

Alex Shootman

Those core conversion projects, we may go through 4 or 5 different mocks because there -- essentially, over the weekend, they're switching out their back-end core, and we have to come up live on Sunday and Monday morning. And so based upon how that testing goes, we'll either extend out the work for the conversion to happen 2 weeks later or we'll be doing really well on the conversion, and we'll decide together with the customer to convert 2 weeks earlier. So we have a schedule, but because it has to go so right, just like a logo has to go, there is some variability in terms of the date that we actually do the conversion versus the original go-live is going to happen.

Jeff Van Rhee

Yes. Yes. Well, I mean, judging from the go-lives that you outlined in the very recent past year, it sounds like you've really found your rhythm there. So I'll leave it there.

Operator

And your next question comes from the line of Ella Smith with JPMorgan.

Eleanor Smith

So first for Alex, can you please remind us how you're thinking about the database conversion that moved from this year into 2027? Are you expecting any duplicative costs next year? And does it change your margin expansion targets in any way?

Alex Shootman

That's still something that we investigate and we'll make a decision to do that when we feel like it's the right time to do that. This year, we also pushed through -- there's a new PCI compliance, PCI 4.0, and we made some significant architectural enhancements to the way that we handle PII data on behalf of our customers. And so that was a thing that we decided that was more important for our customers than doing the database conversion. So right now, I wouldn't forecast you that we are or aren't going to do that conversion in 2027.

Eleanor Smith

Very clear. And for Cassandra, I was hoping to hear your philosophy surrounding buybacks. Are your buybacks spent to offset dilution? Or is it purely opportunistic in the market?

Cassandra Hudson

I guess it's both. Yes, we're opportunistic. We're very focused on managing cash flow. We obviously have had a good year for cash flow generation, especially as our profitability has really ramped up, which has been great. But we still have less than $100 million of cash. So we have to be mindful of that. In addition to it, the nice benefit of buybacks is that it does offset dilution. So it really is those 2 goals in mind. And yes, I think that's the answer to your question.

Operator

And I'm showing no further questions -- one moment. We do have another question coming from the line of Andrew Schmidt with KeyBanc Capital Markets.

Andrew Schmidt

Apologies, I hopped on a little bit late, but maybe you could talk through just the gross margin visibility here. I think there was a question on this, but also about the exit rate. Are we still thinking about the 65% exit rate? And I guess, just stability on a go-forward basis. And I know some of this is database costs moving around, some other things, but just thoughts on gross margin progression going forward.

Cassandra Hudson

No problem. So we did have a small impact to our gross margin in Q3 with some of the third-party product mix. We have factored that into our Q4 guide. So expecting that to continue to have a small impact. Over the long term, we do expect to continue to drive gross margin expansion. For us, we really have 3 main categories of spend that impact our gross margin.

One is our third-party product costs. We know that about 1/3 of our revenue is driven by that line. So if there is a shift in mix, that can definitely have an impact. And we largely expect that to be stable. We're not banking on huge improvement from third-party gross margin in order to hit our gross margin targets. The next largest category is our hosting costs that we use to run our platform. And we do expect to get more efficient with that over time. And that's an area that we've had a lot of success in becoming efficient over the past 3 or 4 years.

And then lastly is around how we support and implement our customers. This is another area that we get more efficient, especially with being able to leverage AI more meaningfully in how we operate those 2 functions. We do expect that those improvements and efficiencies will show up gradually over time.

Alex Shootman

Andrew, this is Alex. Let me give you some insight into how -- into our thinking. We -- let's take hosting cost. We have done a really good job over a number of years of improving our posture from a hosting cost perspective. And we have a good sense of other things that we can do to improve our hosting costs. Those are all engineering activities, right? So we can say here's a series of things that we can do to improve our hosting cost on the way to the target that Cassandra laid out, which is a long-term model of about 70% gross margin.

But in any particular quarter, we're going to make decisions based upon the priority of the business. So as I said earlier on the call, we believe it was more important to make an architectural change in the way that we handle PII data on behalf of our customers than do an engineering project that might further optimize gross margin. So the thinking process of the management team is we've got a view of how we get to the long-term gross margin target. We've got projects that we can do to get there, but we might make a decision in any one quarter to prioritize something that's customer-facing versus something that gets us the next point of gross margin.

Andrew Schmidt

Got it. Very helpful. And then maybe I could just ask about win rates. And I think this was discussed earlier to some extent. But obviously, I think as you noted, the strategic review does tend to affect those. I'm curious now that, that's concluded, this probably takes time to sort out. But have you seen sort of any changes in terms of pipeline conversion, win rates, things like that? I'm just curious how more recent conversations progressing as we move past the strategic review, understanding it's still a little bit early.

Alex Shootman

Yes. I would tell you a bright spot for us is our win rate improvement in the bank market. So we set some targets for the first 3 quarters of the year in terms of our win rate, and we've hit those targets in the bank market. So we're very excited about the progress that we've made in the bank market. And as I may -- as I said on earlier comments, I understand the decision that customers made. And I think that starts to change with some of the uncertainty getting behind us. But certainly, the win rates in the bank market were a bright spot for us.

Andrew Schmidt

Got it. And if I could just ask one last product-related question. Obviously, fraud, cyber, hot topic in everyone's minds. You have the ACH Alert product, which is helpful. But can you talk about maybe just any ambitions to sort of build beyond that? You are in a good position to bring those products, whether it's through your own products through partners. But just curious how you're thinking about sort of the fraud opportunity.

Alex Shootman

Yes. Thanks. Actually, I was at a customer site yesterday. And I'll just share the conversation that we have with them, and these were in some of my prepared remarks. What our market is looking for is an AI product that solves a problem that because it's built on a foundation model that a SaaS product couldn't solve. And one of the big challenges for our customers when they're doing -- when they're managing fraud is the fact that the combination of the analytics to figure out what the threat vector is, and then there's usually about 4 to 5 different functions in the company that are trying to sort out what their role is in addressing this particular fraud vector.

And so if you think about the combination of a high degree of analytics over a pretty big surface area of data, along with dynamic workflow, that is the kind of thing that building an AI application on top of a model solves very differently than how we would build a SaaS application in the past. So that's an area that's a high degree of interest to us. It's a high degree of interest to customers. And so Andrew, that would be the kind of thing that we'd be doing research with 6 build customers to understand if we can truly solve the problem, which is the combination of data analytics and dynamic workflow management.

Operator

And thank you. We have no further questions at this time. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect