If a CFO is buying shares in their own company, it’s often worth taking a closer look. CFOs have deep insight into their firms’ financials and some studies have found that these insiders earn higher profits following their purchases of company stock than CEOs.
In this report, we are going to highlight a large CFO purchase at Alkami Technology Inc (ALKT:US). Alkami provides cloud-based solutions for the digital banking industry. Its solutions include account opening and loan origination, card experience, client service, extensibility, financial wellness, security and fraud protection, marketing and analytics, and money movement. The company is listed on the Nasdaq and currently has a market cap of approximately $1.24 billion.
Insider Buying at Alkami Technology
2iQ data shows that on December 5, Alkami CFO Bryan Hill purchased 40,000 shares at a price of $12.97 per share. This trade cost the insider $518,800 and increased his holding to 228,507 shares.
This trade is worth highlighting for a couple of reasons.
Firstly, it is large in size. Our records show that it is the largest insider purchase at Alkami since the company went public in April 2021.
Secondly, it has boosted the size of Mr. Hill’s holding by 21%.
The fact that the insider has invested over half a million dollars in company stock, and upped his stake by over 20%, suggests that he is very confident the stock is set to move higher.
It’s worth noting that Mr. Hill is not the only top-level insider to buy stock here recently. Back in May, CEO Alex Shootman also took part in legal insider trading activity by buying just under $500,000 worth of stock at slightly lower levels.
Strong Top-line Growth
Alkami is generating solid growth at present.
For the third quarter of 2022, revenue came in at $53.4 million, an increase of 34% year on year, and above analysts’ forecast of $52.14 million. Meanwhile, adjusted EBITDA was -$4.6 million, compared to -$6.1 million a year earlier.
During the quarter, the company added 10 new logos to the Alkami digital banking community, bringing its year-to-date new logo sales count to 15 credit unions and seven banks, substantially outpacing the same period last year. The company exited the third quarter with 13.7 million digital banking users on its platform, up 20% year on year.
“In the third quarter, we continued to see strong market demand for Alkami’s innovative end-to-end digital solutions along with our commitment to client service,” said CEO Alex Shootman. “Nearly 80% of Americans prefer to bank digitally and financial institutions are answering the call by putting the digital banking experience first,” he added.
In light of this growth, and the fact that the company’s valuation has come right down in 2022, we see the insider trade here as a bullish indicator.