Hello, and welcome to Alkami's Second Quarter 2022 Financial Results Conference Call. My name is Andrea, and I'll be your operator for today's call. Please note, this event is being recorded. I will now turn the call over to Steve Calk.

Thank you, operator. With me 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 different materially. For a summary of risk factors associated with our forward-looking statements, please refer to today's press release and the section in our latest Form 10-K and 10-Q entitled Risk Factors and Forward-Looking Statements. The statements made during the call are being made as of today, and we undertake no obligation to update or revise any forward-looking 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 comparable GAAP financial measures can be found in our earnings press release and in our quarterly filings with the SEC. I'll now turn the call over to Alex.

Thank you, Steve, and thank you all for joining us today. I am pleased to report another quarter of strong performance. In the second quarter of 2022, Alkami grew revenue by 38%, once again ahead of expectations. We also exited the quarter with 13.3 million live registered users on the Alkami Platform, up by 2.6 million users compared to the prior year. This past quarter, we continued to make progress on our key priorities, which we shared with you at the beginning of the year. The first two are to become the digital banking provider of choice for banks, which is similar to our position with credit unions, and to increase our add-on sales. In the first six months of 2022, we have outperformed our expectations in both of these areas. We signed seven new platform logos in the quarter, including two more banks. This brings our first half new logo wins to six banks and six credit unions. The six bank wins so far this year outpaced the five wins we had during all of 2021, and our momentum continues to build. Our qualified pipeline for the next 12 months remains at an all-time high, and almost 30% of the pipeline is with banks. In Q2, add-on sales reached an all-time high as a percentage of new sales. Customers want to add products to their banking platform that allow them to offer a differentiated digital experience for their customers, and they demand ease of integration into their platform and fast implementations. This has been a focus of Alkami, and our add-on sales results indicate that we are meeting the market's requirements. Our results are evidence of the continued passion our Alkamists have to help create the greatest digital bankers on the planet and serve their members and their customers with a flawless experience. Thank you to my fellow Alkamists, you truly are the best. I continue to get questions on the macro environment from the investment community. So let me share some thoughts. At our user conference a few months ago, where we interacted with over 300 clients and prospects, and in the weeks following with dozens of customer interactions, I continue to hear some common themes. First, despite volatility in the economy, our clients require modern banking solutions at a level of functionality that you see in online shopping and entertainment. They consider it a mandatory innovation. More than ever, people want a bank where the technology is seamless, full-service, and secure. And for many, they need this more than they need a local branch, effectively making the digital platform the front door of the financial institution. Our own research confirms this, with consumers ranking the digital experience as the most important attribute in selecting a new financial institution ahead of branch convenience and ATM locations. Among many of the thousands of financial institutions serving the US, user counts are on the rise, as evidenced by the double-digit user growth we continue to see among our clients. Some of that is demographically driven, but there are other factors. For instance, historically, we managed our personal finances from one or two accounts with a single institution. But today, we may have as many as a dozen accounts across multiple institutions. This means that just because somebody opens a trading or crypto account elsewhere, a financial institution does not necessarily lose that customer. And in fact, our forward-thinking clients see digital product proliferation as a growth opportunity. The objective of our platform investments is to help our clients expand their relationships and serve as an aggregator for financial innovation. Another theme is that while watching the digital front door and keeping customers satisfied, financial institutions also need to streamline their capabilities, ensuring they're using technology to optimize their operations and reduce expenses. Finally, a theme that I consistently hear is that financial institutions are increasingly realizing the value of the data they have and its ability to provide their customers with a better experience and drive revenue opportunities. Our own research confirms this; nearly two-thirds of millennials say that relevant product recommendations are critical in their digital banking experience. These themes are why, in a challenging macro environment, we continue to see strong demand. We have one of the largest qualified pipelines in our history and a packed implementation schedule. There are a few digital banking companies that can provide a modern, cloud-based end-to-end solution and have the capacity and track record to manage 1.5 million or more user implementations at a time. Alkami is proud to be a leader and one of the fastest-growing companies in the market. I'd like to give you some product updates. With our sustained platform and product investments, we continue to bring new products and capabilities to the market. Let me give you some examples. First, we are increasing the pace in business banking. Over the past few years, we made significant investments in our business banking capabilities. Today, we can serve our target bank market with our retail and business offerings, just as we currently serve business customers at our credit union clients. Over the last year alone, we allocated tens of thousands of development hours to add capability to our product so that we can expand our target market to larger institutions that have more sophisticated commercial customers. That investment has been focused on areas where business customers need functionality, including more sophisticated money movement, customer service, and advanced user roles and rights administration. At the same time, we built out a sales and marketing effort focused on the needs of banks, and this is making an impact. We're getting invited into more opportunities, winning against well-known incumbents, and our bank pipeline is now approximately 30% of our total qualified pipeline. One of our bank wins in June came to Alkami specifically for our business functionality and our commitment to keep them best-in-class digitally. I met them at our user conference, and they commented on the power of hearing candid experiences from other Alkami clients and on the value of a single code-based SaaS application that allows innovation to get to our clients faster, with more reliability and security. Second, our update on data products and our Segmint acquisition. Most financial institutions know that generic emails and texts are becoming ineffective. They know that personalized and relevant communications are a requirement if you are going to reduce churn and expand relationships. Last quarter, I mentioned a study we did in which 64% of Gen Z wish that their financial provider offered a more personal, digital banking experience and will choose a financial institution based on that capability. This is where Segmint helps the market. Most financial institutions already have some idea of certain customer attributes such as their income, spending patterns, credit ratings, and propensity to use other services at the financial institution. What they have not been able to do until now is automate making that knowledge actionable. For example, for a financial institution to offer, approve, and open a personal or small business loan or credit card, they do not want to force their customers to go through a time-consuming application process. With an integrated Segmint solution offered by Alkami, a financial institution can not only identify the right targets for products, but can also automate the offer of the right product to the right customer at the right time using actionable data with our key lifestyle indicators. That capability, combined with our digital account opening solution Ignite, enables a financial institution to execute from identification to offer to account opening and ongoing service all through a mobile device. This not only helps Alkami expand and win new client relationships, but it improves our clients' top line and deepens their customer loyalty. With over 1.7 billion personalized messages delivered, Segmint is the leader in this space, and we are excited to bring this capability to all of our clients. Third, let me give you an update on our mobile platform transition. Last quarter, I told you we were launching a new mobile platform that includes an enhanced user experience, which enables our customers to customize and expand their mobile solutions while basically doubling our mobile development velocity. That launch went live in Q2, and client feedback is excellent. All recent client launches have been on the new modernized mobile platform, and we are currently in the process of publishing the new apps for all existing clients. Over 2 million of our users are already on the new apps, and the remaining 11-plus million users will have the new apps deployed over the next few months. This further demonstrates our ability to deploy new technology. Finally, let me give you a strategy update. At the beginning of the year, I shared with you five key priorities. To recap, first, we are committed to becoming the digital banking provider of choice for banks while maintaining our market leadership position with credit unions. When we started the year, we talked about five to ten bank wins for the year, and we are ahead of schedule. Second, we will continue to focus on growing add-on sales. We're seeing good progress on this priority, with add-on sales representing over 40% of sales so far this year. And we are taking actions to drive continued growth in existing client sales. Third, we continue to allocate investments to make our platform the foundation of our clients' digital banking infrastructure. All of our clients have an analog back office, and they need to offer innovative digital products and experiences to their customers. Alkami will be the operating platform that connects their past with their future. Our focus is to become the most scalable and extensible platform in the market, and that's why we've gone from six third-party integrations in 2014 to 27 in 2018 to 42 today. Fourth, we're strengthening our focus on talent, ensuring that Alkami remains an attractive employer in the market. By embracing a remote work strategy, we've reduced our time to hire, and we've been able to fill some very hard-to-find key skills. And then fifth, and finally, we remain agile on the M&A front. For the remainder of 2022, I expect we'll be focused on the integration of Segmint, our bank strategy, and our platform scalability. But if we see opportunities that fit our portfolio and drive value for our customers, we will pursue them within our capital return requirements. In closing, thank you again for joining the call to hear about Alkami's Q2 results. We are proud of the quarter, and we are energized by the opportunity in front of us. And with that, let me turn the call over to Bryan.

Thanks, Alex, and good afternoon, everyone. Second quarter results were strong across all our key metrics. For the second quarter of 2022, we achieved revenue of $50.5 million, which outperformed the high end of our financial guidance by approximately $2 million and represents a growth of 38% compared to the prior year. This was driven by continued strong performance across all our primary revenue drivers, combined with Segmint's revenue contribution of just over $2 million, which was in line with our expectations. We implemented eight new logos in the quarter, bringing our digital platform client count to 182 compared to 161 in the prior year. We now have 39 new logos in implementation, representing 1.4 million digital users. During the remainder of 2022, we expect to implement 24 financial institutions from our backlog, which represents approximately 900,000 digital users, an expected acceleration from the front half of 2022. We exited the quarter with 13.3 million registered users live on our digital banking platform, up 2.6 million or 24% compared to last year and up 520,000 digital users sequentially. Over the last 12 months, digital user growth continues to be driven by two areas. First, we implemented 28 financial institutions supporting 1.2 million digital users. Second, our existing clients have increased their digital user adoption by 1.4 million users or 11% growth. Offsetting our user growth was churn of 61,000 digital users. We continue to maintain a very high gross retention rate at 99%, measured in terms of ARR and digital users retained over the last 12 months. We ended the quarter with an RPU of $15.33, which is 14% higher than last year. This compares to our blended market opportunity of approximately $57 per user per year, which includes the Segmint revenue opportunity. The Segmint acquisition contributed $0.88 of RPU expansion, and organic RPU expansion of $0.97, or 7%, resulted from add-on sales success and the addition of new clients who tend to onboard with a higher average RPU. Subscription revenue grew 38% compared to the prior year quarter and represents approximately 95% of total revenue. We increased ARR by 41% in total or 33% organically and exited the second quarter at $204 million. It's important to note that we currently have over $38 million of ARR in backlog for implementation over the next 12 months. In addition, we expect to exit 2022 with ARR of $225 million to $228 million, representing total growth of 33% to 35% and organic growth of approximately 27%. At the halfway point of the year, we are continuing to see strong demand across our product portfolio, well ahead of 2021. Our total new sales performance outpaces the halfway point of 2021 by over 80%. Just as exciting, our client sales team continues to build on their add-on sales success, representing over 40% of new sales in the first half of 2022, compared to 23% for all of 2021 and 17% for all of 2020. Remember that many of our early clients were onboarded when we offered less than half the products we offer today. We are very excited with the continued success from this team and expect this to be an area of continued growth and investment. Now turning to gross margin and profitability. Our target operating model continues to be 60% to 65% non-GAAP gross margin as we scale our revenue. We expect to achieve this at a pace of 200 to 300 basis points of gross margin expansion on average per year. For the second quarter of 2022, non-GAAP gross margin was 58% compared to 57.5% in the prior year quarter. Expansion was driven primarily by revenue scale and was somewhat offset by higher costs associated with our third-party revenue relationships, investments in post-sale activities necessary to support our significant implementation backlog, and gross margin dilution from our MK Decision acquisition. On our recent calls, we noted that past M&A activity and investments in post-sale activities, such as our client implementation team, would constrain margin expansion for the next few quarters. Moving to operating expenses. For the second quarter of 2022, non-GAAP R&D expense was $14 million or 28% of revenue. A year ago, R&D represented 31% of revenue. The margin expansion is primarily attributable to revenue scale, but we continue to grow R&D on an absolute dollar basis when compared to the prior year quarter. Non-GAAP sales and marketing expenses were $9 million or 18% of revenue. In the prior year quarter, sales and marketing represented 14% of revenue. The primary drivers for the uptick are returning to pre-pandemic sales activities, such as our in-person client conference Co:lab and higher travel costs, combined with headcount investments in our sales and marketing teams and higher new sales commissions in line with our recent sales performance. Non-GAAP general and administrative expense was $12 million or 24% of revenue. In the prior year quarter, G&A was approximately 29% of revenue. The margin expansion is primarily attributable to revenue scale. During 2021, we experienced growth in G&A expense throughout the year as we absorbed incremental public company costs. We now reached a sustainable level and expect to leverage G&A expense as a percentage of revenue as we demonstrated in the first half of 2022. Our adjusted EBITDA loss for the second quarter was $5.3 million, better than our expectations and essentially flat with the prior year quarter. As a reminder, our goal is to balance investment opportunities with revenue growth and to maintain a good line of sight towards adjusted EBITDA positive, which we still expect to occur as we exit 2023. Now moving on to the balance sheet. We ended the quarter with just over $213 million of cash and marketable securities. We funded the Segmint acquisition with approximately $61 million of incremental term debt and $71 million of cash from our balance sheet, representing the primary use of cash during the quarter. Now turning to guidance. For the third quarter of 2022, we are providing guidance for revenue in the range of $51.5 million to $52.5 million and an adjusted EBITDA loss of $6 million to $5 million. Our Q3 revenue guidance includes approximately $3 million from the Segmint acquisition. Our third quarter adjusted EBITDA guidance includes an immaterial loss from the Segmint acquisition as we continue integration and investments in post-sale activities to support our significant implementation backlog and digital user growth. For the full year 2022, we are raising our guidance and now expect revenue in the range of $201 million to $203.5 million and a net adjusted EBITDA loss of $20 million to $18 million. Our full year guidance includes approximately $9 million of revenue and an immaterial adjusted EBITDA loss from Segmint. To summarize, we continue to execute across all areas of the business and continue our progress in sales, implementations, and technology infrastructure. In addition, we are improving our already attractive position in the marketplace with increasing momentum among banks, along with additional client exposure through Segmint.

And our first question will come from Bob Napoli of William Blair.

Nice solid and stable results. I appreciate that. Just on, I guess, the new modern platform, if you would, what material differences are there in the new platform versus the prior platform?

Are you speaking to the mobile platform question?

Yes.

So historically, we built our mobile application both to an iOS operating system and an Android operating system. And that was great. But as customers became more and more sophisticated with their needs for the mobile application, it became difficult to keep those two platforms in sync and continue to roll out features at the pace that the market wanted. So we took a decision to rebuild the platform on a technology called Flutter, which comes from Google. That platform allows us to have one code that runs across both Android and iOS. So now basically, we're able to make one mobile application across both of those platforms. The other thing that it allows is it creates more capability for the customers to customize the user interface, the user experience, if you will, for their own customers. It allows them to tailor it more for their branding. It also allows us to create a more friendly software development kit that gives our customers more flexibility. So in summary, we now basically write once to one platform. It allows us to deploy technology more quickly and is giving our customers both a bigger feature set and more ability to tailor the platforms to the experience that they want to deliver for their members.

Bryan, I'd like to follow up on your target of 200 to 300 basis points year-over-year for gross margin. Given the reasons you've mentioned, it seems you're flat on gross margin year-over-year. Do you still believe you can stay within that target range for gross margin expansion as we approach the end of the year? Also, how confident are you in your long-term total operating model?

Bob, on the gross margin front, as it relates to achieving 60% to 65% gross margin on our target operating model, we're very confident in that. Most of that is going to come through revenue scale. As we've talked about in the past, when we renew clients, we have a gross margin expansion occurring at a unit economic level. So that's another area for gross margin improvement. We're also investing in the platform that provides efficiency as it relates to hosting expenses and our ability to implement clients more efficiently. Those are other areas of gross margin expansion in the future. As it relates to 2022, the guide of 200 to 300 basis points a year is an average over a longer period of time for the reasons that I described in the call, and I've spoken to in the past as it relates to implementation investments to support our large backlog as well as the MK Decision acquisition being a headwind to gross margin in 2022. We're not going to achieve the 200 to 300 basis points expansion this year. We expect to return back to that level of expansion in 2023. But in 2022, that will be compressed somewhat.

I'd like to ask one final question. You seem to have a lot of momentum with the add-on products. Which products are the most attractive or driving the growth of add-ons?

Bob, we're seeing great adoption across almost each of our product family categories. We have eight product family categories, and we're seeing significant adoption in six of those. The other two product family categories typically include products on the initial MSA. For example, our SDK kits and extensibility, that's typically an MSA product, the original MSA. Our card management solutions are original MSA products. So where we're seeing a lot of traction in our top three from a cross-sell perspective is our money movement product family category, which includes our crypto product, instant account verification, and bill pay products. We're also seeing a lot of traction in our client service product family group, which includes chat and conversational AI products. Fraud security rounds out the top three, which includes account takeover and, of course, ACH Alert. Those are the areas where we're seeing the greatest adoption so far in 2022.

The next question comes from Mayank Tandon of Needham.

I wanted to just ask you about these new wins. Maybe Alex, could you give us a sense of the size and scope of the banks that you're winning? Just want to get a better feel for the opportunity set there versus the credit unions that you're winning as well?

Yes, at the highest level of the bank market, there are some very large institutions that provide complex commercial banking services for major multinational companies. However, that is not our focus. When considering our target market, we are successful with banks that cater to small and medium-sized businesses as well as mid-market customers. This accounts for nearly 99% of the institutions across the United States that we can aim to serve.

And then maybe, Alex or Bryan, just want to get a sense of with rates moving up and clearly banks seeing better profitability, how much of that is playing into their ability to spend maybe more aggressively on digital transformation? Or is it just more of the same? I wanted to get a sense again of how much of that incremental impact are you benefiting from near term and then over the medium term potentially?

I recently spoke with the CEO of a regional community bank, and he shared that they have been discussing the importance of continuing to invest in digital solutions to enhance the experience for their commercial customers. He noted that during COVID, their customers shifted from casual interest to a necessity for digital solutions. This realization has prompted him and the board to prioritize upgrading their offerings. This situation reflects a broader trend we're observing, where digital transformation, once regarded as a buzzword, has become an essential need for these institutions. Board members are now focused on delivering the kind of retail experience that commercial customers expect from banking, entertainment, and shopping, and they recognize that failing to do so could lead to customer attrition.

Next question comes from Raquel Betesh of JPMorgan.

Congrats on a great quarter. I'm curious if you guys can speak a little bit to your end market and the demand environment? And specifically, if you have any insight into forward indicators like RFPs?

I just lost the last couple of words. I heard the question about insight into the end market. I think there is a question about RFPs maybe.

Yes, specifically if you have any insight into forward indicators like RFPs?

I still missed again, but regarding the demand environment, I've learned one thing in the last few years; I can't predict what the economy will do. However, we have not experienced any softness in demand over the last couple of quarters, despite the macro environment being highly volatile. I don't know if you want to add anything to that, Bryan.

No. I mean, Alex mentioned this in the last question, but really to maintain competitiveness in an up or down market, this is mandatory innovation. That's how our clients view it, that's how we view it. Expanding the platform and offering an even greater digital banking experience is a must. As a result of that, what we're seeing is a sales pipeline that's really as strong as it's been in the company's history. That's coming off of a couple of quarters of pretty good new sales activity, which generally means you have to rebuild your pipeline, but we maintain a very strong pipeline. Our new sales in the first half of 2022 are significantly higher than the same six months of 2021. So that gives us a lot of encouragement. We're seeing a lot of adoption in add-on sales, which is increasing the average number of products that our clients subscribe from us today. All of these are indicators to us that the end market is still strong, and we expect that even moving into a tougher economic environment creates a greater need for our solutions.

One thing I would add is that when you mentioned RFPs, we are fortunate to be a well-known entity in the retail side of the industry and among credit unions. We often get invited to these opportunities. What we have observed is that as we continue to achieve victories with banks and as the market becomes more aware of the investments we’ve made in software specifically for banks with commercial customers, we are now receiving more invitations for RFP opportunities from banks than we did a couple of years ago.

And our final question comes from Pat Walravens of JMP Securities.

This is Joe on behalf of Pat. Given that you have very long contracts in this end market, do you have any inflationary price escalators built into those contracts?

Our contracts are structured more for increasing the minimum commitment throughout the term of the contract. Our contracts on average are 70 months. So each year, there will be a step-up in the minimum commitment from our clients. That generally comes at a lower cost per user for each incremental user for a client. So how we're increasing the contract value over time or in any one year is a step-up in minimums.

So there is no component that's increasing ARPU along with your CPI or anything like that built in?

Not generally. We do have some contracts that possess that. But the normal contract is more of a step-up in the minimum contractual users across each product.

So the ARPU growth in the quarter is not a result of pushing through inflationary price increases.

And I was thinking more just over a longer period of time, more on the go forward. Just curious how they're structured, but thank you for that. And then I guess you called out 30%...

Just one more comment on this. What we are seeing is price increases at the time of renewal. So the five contracts that we've renewed in 2022, we've been able to increase the ARR on those contracts by 10%. They represent about $4 million of ARR. About two-thirds of that 10% comes from cross-sell of additional products, and the remaining one-third is a price increase that occurred at the point of renewal.

And then, I guess, my next question is just, of the eight product categories or families in your portfolio, where is the most kind of ARPU to go out and unlock on the road map?

We're not very penetrated in any of our product family categories. So there is an opportunity for significant cross-sell into our base. We're less than 30% penetrated into our base. The products that we're seeing higher ARPU additions really come through in some of the money movement products that I mentioned earlier. Like our crypto product, for example, has a fairly high revenue per user opportunity. Also, in client services area, our chat product and our conversational AI product have a very high ARPU opportunity that comes with it. Even our security and fraud products, as it relates to ACH Alert, has a very high ARPU opportunity associated with it. Those individual products within each product family group have significant opportunities. The six areas that I mentioned in the earlier question are driving the cross-sell in 2022. That's resulting in the success in the back half of 2021 and the success we had early in 2022, driving the 8% organic ARPU expansion so far in 2022.

Our next question comes from Andrew Schmidt of Citi.

Apologies if this is redundant, but just wondering if you could talk about your discussions with banks in the pipeline. Obviously, some competing factors with NIMs going up versus kind of some increased uncertainty. But just if you take your temperature on just the appetite for digital banking transformation, that would be great.

So far, we have not observed any decrease in interest for investing in digital banking transformation. The leaders of these banks are quite knowledgeable and recognize the significant shift towards digital channels becoming primary. They are assessing their investment strategies similarly to how they evaluate new physical locations, treating digital as a priority. While it's impossible to predict the future, we have not yet noted any decline in demand. In a recent conversation with a CEO and his senior team, they emphasized the necessity of providing a top-tier digital experience for their customers to remain competitive. There is a strong consensus on the need for investment in a quality digital experience, and demand remains robust.

Very clear. And then...

Where it's gone from, if you think about it a couple of years ago, you had early adopters; you had people that understood before others what needed to happen. We are in the bell curve of the market right now. The broad market understands what needs to happen. They really do know that this is not just a mobile application; this is the front door to their bank.

No, very clear. That's very constructive. I appreciate that. And then it's a little bit too early to talk about 2023. But given the long implementation pipelines and the ARR growth here, it seems pretty constructive setting up in next year. Obviously, some blocking and tackling into next year. But what's the right way to think about visibility growth into next year? I know it's a little bit early, but if you can give us a framework, what's locked in, what's left to go after, things like that, that would be helpful.

Andrew, I mentioned a couple of key metrics in my prepared comments. The first one is the exit ARR of $225 million to $228 million. That's, at the midpoint, 34% total ARR growth and organic growth of 28%. So that should provide you some visibility into what we're thinking in the first half of 2023. We're not providing guidance on this call because it is early, but we did want to provide a perspective of where we expect to exit the year. Now we sit in a very good place. It's a very predictable revenue model with 95% of our revenue subscription, and with $38 million of ARR in backlog. Those two items are key in providing us the confidence and visibility to give an exit run rate or ARR number that can provide investors and analysts the ability to have pretty good precision as they're forecasting our first and second-quarter 2023.

And then just if I could sneak one more in just on the competition. Any changes when you're going up for new deals either on a smaller credit union side or anything like that across the spectrum to call out, or has it been relatively stable over the past six to 12 months? Just curious if there's any changes you're seeing in the market.

On the credit union side, I'll provide a general overview and then let Bryan respond. There hasn't been any significant change on the credit union side. Personally, I feel we have become a bit more competitive in the bank market, and our win rates have slightly improved there.

Yes, in terms of the marketplace, our pricing, and the type of financial institutions that we're seeing in our pipeline and what we're actually selling, the trend continues to be that we're selling more product on the initial order. We're selling at higher RPU on the initial order. The contractual term continues to benefit our revenue model with extremely long-term contracts. We're still averaging 70 months. When you introduce banks into the mix, they tend to have, because of the business banking component, a much higher RPU. If you look at our backlog today of new logos that represent 1.4 million digital users, the credit union average RPU is around $20, while the banks that are in our implementation backlog are closer to $27, just under $30 of RPU. That's a nice advantage we're seeing as we begin to have more success penetrating the banks out of the market. In terms of the size of the financial institutions, we cover a pretty broad spectrum of the market. The average bank in terms of assets that we're adding is around $4 billion to $5 billion. But we've added a bank that had $35 billion in assets. We've added banks that have had high teens and billions of assets under management. We're really seeing that opening up the banks out of the market is providing an even broader size financial institution that we serve.

Our last question comes from Josh Beck of KeyBanc.

Maybe just following along the line of banks. Obviously, that's been a success story in terms of them coming into the funnel, obviously, the ARPU elements of it. Just when we look at this year, it seems pretty even, at least in the first half, between banks and credit unions. Obviously, that's a step-up from prior years. So as we think about future years, is there more likely to be that balance between banks and credit unions could eventually tip the gross adds, the new customers are becoming more so banks? Just curious how we should frame that up.

Long term, this is not next quarter or next year, but if you look at the market, it's half credit unions and half banks. If we're competitive in banks and if we're known in the market, then our expectation long term would be that we have a balanced new client win portfolio between banks and credit unions. Obviously, we've got a pretty large installed base with credit unions. It would be quite a while before the entire installed base, if ever, was balanced between the two. So the fact that midyear, we're balanced between the two is fantastic. But that balance between the two in terms of winning new logos is something we expect in the longer term, not something we would expect to happen in the next couple of quarters.

Josh, we expect to continue to win 30 to 40 new logos that are credit unions a year. Last year, we had five banks already. Through the first six months of this year, we have six banks. We started the year off with a goal of somewhere between 10 to 15 banks. It looks like we will probably land somewhere in that range for 2022. As Alex mentioned, we expect to continue to create awareness in the marketplace and build momentum in banks. Banks still represent 30% of our sales pipeline today. We will reach a point four to five years out from today, where we'll each year originate an equal number of banks as we do credit unions. We think the market can absorb that and there are very good players in the space that will win their fair share of business as well. We think we're on a trajectory where we can achieve that over the next multi-year period of three to five years. So the Segmint ARR that you're speaking to, the 30% to 50% growth, that's contracted ARR. That includes the implementation backlog for Segmint. We've only owned the asset since April. What we don't fully have our arms around at this point is the speed at which we can go from executed order to implemented client. That's why we provided that guidance in terms of contracted ARR. We expect Segmint to be a significant contributor to RPU expansion, much like it was this quarter. We expect Segmint and other tuck-in acquisitions to provide the ability for us to continue to cross-sell and have organic revenue growth in the future and sustain our 25% plus organic revenue growth rate. We're seeing a lot of progress. Post quarter-end, we had our first cross-sell of an existing Alkami client where we cross-sold Segmint into that client, which is very encouraging this quickly after the acquisition.

This concludes our question-and-answer session. The conference has now also concluded. Thank you for attending today's presentation, and you may now disconnect.