Mitek Systems (MITK) Q3 2025 Earnings Call August 07, 2025 05:00 PM ET Speaker0Good afternoon, ladies and gentlemen, and welcome to the Mitek Reports Fiscal twenty twenty five Third Quarter Financial Results. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 08/07/2025. I would now like to turn the conference over to Ryan Flanagan, ICR.Please go ahead.Speaker1Thank you, operator. Good afternoon ...

Financial Data and Key Metrics Changes - Total revenue reached a record $51.9 million, up 11% year over year in Q2 [27] - Non-GAAP gross profit for the quarter was $45.6 million, representing an 88% non-GAAP gross margin [28] - Adjusted EBITDA came in at $20.2 million, representing a 39% margin, reflecting a 52% increase year over year [35] Business Line Data and Key Metrics Changes - Deposit products revenue increased by 14% year over year to $33.7 million, driven by strong mobile deposit renewal activity [28][29] - Identity products revenue grew by 4% year over year to $18.2 million, highlighted by a 9% increase in Identity SaaS revenue [30] - Check Fraud Defender's SaaS revenue rose 64% year over year, indicating growing traction [30] Market Data and Key Metrics Changes - The company now has data sets covering approximately 23% of U.S. checking accounts, up from 18% [18] - SaaS revenue grew 15% year over year and now accounts for 40% of total last twelve months revenue, up from 39% [21][32] Company Strategy and Development Direction - The company aims to drive organic growth, increase the percentage of SaaS revenue, expand margins, and improve free cash flow conversion [9] - The focus is on enhancing automation, product development, and data analytics to support durable profitable growth [13] - The strategy includes a shift towards a layered signal-rich approach for identity verification, combining biometrics and behavioral data [23][24] Management's Comments on Operating Environment and Future Outlook - Management noted resilience in the business despite macroeconomic uncertainties, with no cancellations observed [37] - The full-year revenue guidance remains at $170 million to $180 million, with an expectation for Q3 revenue to modestly exceed Q4 [38] - Adjusted EBITDA margin guidance has been raised to 26% to 29%, reflecting strong first-half performance [38] Other Important Information - The company generated $47 million in free cash flow over the last twelve months, with an 86% conversion rate [22] - A $100 million senior credit facility was closed to support capital allocation strategies [36] Q&A Session Summary Question: What has gone well and what has been difficult for the company? - Management highlighted strong execution and traction in the past quarter, with positive feedback from customers regarding the focus on fraud and identity [42][46] Question: Can you discuss the guidance and any pull-forwards that helped drive the strength in the quarter? - A large mobile deposit customer order came in earlier than expected, contributing to the overachievement in Q2 [47][48] Question: How is the company progressing towards its target of reaching $20 million ACV? - The company is seeing substantial ramp-up in volumes and partnerships, indicating positive leading indicators for future growth [49][51] Question: Can you quantify the improvements from the modernized document onboarding system? - While specific data was not provided, management indicated meaningful acceleration in cycle times and improved customer experience [56][58] Question: What is the expected trend for SaaS revenue mix in the coming years? - The goal is for SaaS revenue to represent more than half of total revenue by 2026, driven by growth in fraud and identity verification products [60][62] Question: How does the company plan to achieve organic growth? - The focus is on adding new customers while expanding existing relationships through new products and solutions [71]

Financial Data and Key Metrics Changes - Total revenue reached a record $51.9 million, up 11% year over year in Q2 2025 [25] - Non-GAAP gross profit for the quarter was $45.6 million, representing an 88% non-GAAP gross margin [26] - Adjusted EBITDA came in at $20.2 million, reflecting a 39% margin, which slightly exceeded expectations [26][34] Business Line Data and Key Metrics Changes - Deposit products revenue increased by 14% year over year to $33.7 million, driven by strong mobile deposit renewal activity [26][28] - Identity products revenue grew by 4% year over year to $18.2 million, highlighted by a 9% increase in Identity SaaS revenue [29] - Check Fraud Defender's SaaS revenue rose 64% year over year, indicating growing traction [28] Market Data and Key Metrics Changes - The company now has data set coverage on approximately 23% of all U.S. checking accounts, up from 18% [16] - SaaS revenue grew 15% year over year and now accounts for 40% of total last twelve months revenue, up from 39% [19][31] Company Strategy and Development Direction - The company aims to drive organic growth, increase the percentage of SaaS revenue, expand margins, and improve free cash flow conversion [8] - Mitek is focusing on a layered signal-rich approach to identity verification, combining biometrics and behavioral data to enhance security [21][22] - The leadership team has been strengthened with the appointment of a new COO to focus on scaling automation and product development [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment remains uncertain, but the business has shown resilience and has not seen cancellations related to macroeconomic factors [36] - The company is maintaining its full-year revenue guidance range of $170 million to $180 million, reflecting a cautious approach to the current environment [37] - Adjusted EBITDA margin guidance has been raised to 26% to 29%, up from the previous range of 25% to 28% [37] Other Important Information - The company generated $47 million in free cash flow over the last twelve months, with an 86% conversion rate [20] - A $100 million senior credit facility was closed to support capital allocation strategies [35] Q&A Session Summary Question: What has gone well and what has been difficult for the company? - Management highlighted strong execution and traction in the past quarter, with no cancellations observed from the macro environment [44][45] Question: Can you discuss the guidance and any pull-forwards that helped drive the strength in the quarter? - A large mobile deposit customer order was received earlier than expected, contributing to the overachievement in Q2 [46] Question: How is the company progressing towards its target of reaching $20 million ACV? - The company is seeing substantial ramp-up in volumes and partnerships, indicating positive leading indicators for future growth [48][49] Question: Can you quantify the improvements from the modernized document onboarding system? - While specific data was not provided, management indicated that the automation significantly accelerates cycle times and improves customer experience [54][56] Question: What is the expected trend for SaaS revenue in the coming years? - The company aims for SaaS revenue to represent more than half of total revenue by 2026, driven by growth in fraud and identity verification products [58][59] Question: How does the company plan to balance new business growth with expansion in existing clients? - The focus is on both acquiring new clients and expanding relationships with existing ones through new product offerings [67][69]