Sacra estimates Alloy hit $55M in annual recurring revenue (ARR) at the end of 2023, growing approximately 31% from $42M ARR in 2022. The company had previously doubled revenue from $21M ARR in 2021, when they raised funding at a $1.35B valuation.

Growth has moderated significantly in 2024, with revenue remaining roughly flat according to industry sources. The company maintains healthy gross margins between 50-60% and has 2-3 years of runway remaining.

Alloy generates revenue primarily through its B2B fintech infrastructure products, serving both emerging fintechs and established financial institutions. The company started as a verticalized iPaaS for ecommerce before pivoting to become a more horizontal universal API platform, expanding their total addressable market.

Key enterprise customers include Amazon, Gorgias, Postscript, and Kibo, who use Alloy's embedded toolkit to power integrations with platforms like Netsuite, Magento, Quickbooks and others. The company has over 270 pre-built integrations available through their platform.

While Alloy has never publicly disclosed revenue figures, their $1.35B valuation in 2021 represented a 64x forward multiple - typical for high-growth fintech infrastructure companies during that period's favorable market conditions.

Alloy was founded in 2019 by Sara Du and Gregg Mojica, initially launching as a verticalized integration platform (iPaaS) focused on ecommerce automation.

Alloy found product-market fit as an embedded integrations platform for engineering and product teams who needed to build and maintain user-facing integrations within their applications. The company's initial success came from serving ecommerce companies that needed to connect various tools in their tech stack, but they later expanded to serve broader markets.

The product enables companies to embed integration capabilities directly into their applications through an SDK. Engineers can quickly implement pre-built connectors to hundreds of applications while maintaining full control over the user experience. When a customer wants to integrate with a third-party app, Alloy handles the complex backend work - OAuth flows, credential management, field mapping, rate limiting, and polling infrastructure.

Alloy's platform includes both low-code integration building tools for rapid deployment and programmatic APIs for custom integration development. The system manages the ongoing maintenance of integrations, providing execution logs and error handling to help teams monitor and troubleshoot connection issues. This allows engineering teams to focus on their core product while offering robust integration capabilities to their users.

Alloy is a fintech infrastructure company that provides identity verification and fraud prevention services through APIs, helping financial institutions and fintechs make better decisions about new and existing customers. The company monetizes through a combination of per-transaction fees and platform subscriptions, with annual contracts typically ranging from $120,000 to $500,000.

The company's core product enables real-time decisioning by orchestrating multiple data sources and verification services through a single API integration. This allows customers to customize their risk tolerance and verification workflows while maintaining compliance with regulatory requirements. Alloy has expanded beyond its initial identity verification focus to offer ongoing monitoring and fraud prevention capabilities, creating opportunities for increased revenue per customer.

Alloy employs a land-and-expand strategy, starting with core identity verification services before cross-selling additional fraud prevention and monitoring capabilities. The company's developer-first approach enables quick adoption, while its enterprise-grade capabilities and compliance features support expansion into larger financial institutions. This dual-track approach has helped Alloy build strong relationships with both emerging fintechs and established banks, creating a diverse customer base that includes both high-growth startups and regulated financial institutions.

Alloy operates in the identity verification and fraud prevention infrastructure market, where companies provide APIs and orchestration layers to help financial institutions and fintechs manage risk and compliance.

Traditional identity verification providers like Jumio and Onfido focus primarily on document verification and biometric matching. These companies typically offer point solutions for specific verification needs rather than comprehensive orchestration. Newer entrants like Persona and Prove have expanded beyond basic verification to include more sophisticated fraud prevention capabilities.

Feedzai and DataVisor focus on transaction monitoring and fraud detection using machine learning, primarily serving large financial institutions. These platforms emphasize real-time decisioning but generally lack the breadth of identity verification capabilities that characterize newer market entrants.

Companies like Merge, Finch, and Rutter offer unified APIs that standardize data access across various business systems. While they sometimes overlap with identity verification use cases, their primary focus is on data integration rather than risk decisioning. Plaid, though primarily known for financial data aggregation, has expanded into identity verification through its Identity API product.

The market is seeing convergence between these categories as providers expand their capabilities. Several companies now position themselves as end-to-end platforms that combine verification, fraud prevention, and data orchestration. This shift reflects growing demand from financial institutions for solutions that can manage complex risk decisions while maintaining regulatory compliance across multiple jurisdictions.

Alloy has tailwinds from the rapid growth in embedded finance and increasing fraud prevention needs, with opportunities to expand into adjacent markets like risk decisioning and identity orchestration across industries beyond fintech.

Alloy's initial success in fraud prevention and KYC for fintechs positions them well to become the central identity decisioning layer for any company that needs to make risk decisions about customers or transactions. Their platform already integrates hundreds of data sources and vendors, allowing them to expand horizontally into new verticals like healthcare, insurance, and gaming that face similar challenges around identity verification and fraud.

The company's pivot from commerce-specific integrations to becoming a horizontal universal API player opens up a massive opportunity in embedded finance, estimated at over $7 trillion by 2030. As more non-financial companies look to embed financial services, Alloy can leverage its existing relationships with banks and data providers to become the critical infrastructure layer powering these offerings.

With real-time payments adoption accelerating and new forms of fraud emerging through AI, Alloy's risk decisioning capabilities become increasingly valuable. The company can expand beyond basic identity verification into more sophisticated fraud prevention, transaction monitoring, and credit decisioning - serving as the "brain" that helps companies make complex risk decisions across their entire customer lifecycle. This represents a significant expansion of their serviceable market from basic KYC into the broader $23B+ fraud detection and prevention market.

Pivot execution risk: Alloy's recent expansion from commerce-focused identity verification to being industry-agnostic represents a significant strategic shift. While opening up a larger TAM, this pivot requires rebuilding brand perception and sales motions for new verticals. The company's deep commerce expertise and relationships may not translate cleanly to other industries, potentially leading to longer sales cycles and higher customer acquisition costs.

Revenue concentration in interchange: With ~60% of revenue coming from interchange fees, Alloy is heavily exposed to regulatory risk around the Durbin Amendment exemption for small banks. If regulators close this "regulatory arbitrage" loophole, it could severely impact Alloy's unit economics and force a business model restructuring.

Take rate compression at scale: As customers grow larger, they gain leverage to negotiate better economics, compressing Alloy's take rates. While offset somewhat by volume growth, this dynamic combined with high customer concentration could squeeze margins over time. The company may need to continuously acquire new customers to maintain growth rates.