Alkami Technology is drawing attention for a combination that is uncommon among small-cap software names: recurring banking revenue growing at a double-digit clip while the stock trades at a modest forward earnings multiple. The provider of cloud-based digital banking software to community banks, regional banks and credit unions ranked seventh on a list of small-cap value candidates screened for forward P/E below 15 and trailing 12-month revenue growth above 20%.
The screen that surfaced Alkami
Alkami cleared both thresholds. Its forward P/E stood at 12.32, and trailing revenue growth was 24.04%. Twenty-two hedge funds held the stock, placing it sixth among qualifying companies ranked by hedge fund ownership in the second quarter of 2026.
The broader backdrop helps explain why smaller value names are getting a closer look. Reuters reported on November 2 that more than 70% of S&P 500 constituents rose in October even as AI-related companies fell sharply, and small- and mid-cap indexes also moved higher. Edward Jones senior global investment strategist Angelo Kourkafas described investors as wanting to keep equity exposure while reducing concentration in AI, adding to areas with differentiated return sources.
Plante Moran Financial Advisors chief investment officer Jim Baird told Reuters that skepticism about the AI trade and companies’ ability to monetize their investments has prompted rotation into other parts of the market. Royce Investment Partners co-chief investment officer Francis Gannon, in a third-quarter review, noted that the Russell 2000 Value Index fell 4.9% versus a 9.4% decline for the Russell 2000 Growth Index. In an October 30 commentary, he pointed to accelerating earnings, attractive relative valuations and low expectations as a potentially powerful combination, while stressing higher-quality companies with strong balance sheets, sustained profitability and disciplined capital allocation.
The rotation has limits. Miller Tabak’s Matt Maley wrote in a note that a more compelling drop in the major averages would likely push investors out of sector rotation and into cash.
What the third quarter showed
Alkami’s third-quarter revenue rose 19% to $134.9 million, topping the high end of its own projection. Subscription revenue, which made up 96% of the total, grew 20%. Annual recurring revenue reached $533 million, up 19%, and adjusted EBITDA was $26.3 million, a 19.5% margin and more than 530 basis points above the prior-year period.
The platform served 323 operational clients and 24.4 million registered users, a 13% increase in users. Management revised full-year revenue guidance to $530.5 million to $532.0 million and adjusted EBITDA to $98 million to $99 million. The company also reported a $56 million ARR backlog tied to 31 new clients.
Where the story gets less comfortable
Not every metric moved in the same direction. Revenue per registered user rose just 5% to $21.88. Gross margin slipped to 63.1%, which the company attributed to a heavier mix of third-party products. Management also said the quarter benefited from an easier prior-year comparison.
Fourth-quarter guidance implies growth slowing to roughly 16% to 17%. That deceleration puts more weight on execution as Alkami works to expand its niche among community and regional financial institutions.
Why the value label fits, for now
The case for Alkami rests on the durability of its subscription model rather than on enthusiasm for AI spending. Nearly all revenue is recurring, and the client base consists of banks and credit unions that typically sign multi-year agreements. Against that, the low forward multiple reflects slower expected growth and margin pressure from third-party products.
For investors sorting through small-cap value candidates, Alkami offers a clear test: whether recurring banking revenue can keep compounding fast enough to justify a value multiple that already assumes some moderation.
