Mitek Systems(US:MITK)2022-07-29 01:41Financial Data and Key Metrics Changes - Mitek reported record revenue of $39.3 million for Q3 2022, representing a 24% year-over-year growth [9][33] - Software and hardware revenue increased by 17% year-over-year to $19.8 million, driven by contributions from ID R&D and Check Fraud Defender [33][34] - Services and other revenue, including transactional SaaS revenue, rose by 32% year-over-year to $19.5 million, with transactional SaaS revenue increasing by 45% to $14.7 million [35][36] - Total GAAP operating expenses were $38.1 million, up from $26.3 million in Q3 of the previous year, attributed to investments in the identity business and acquisition-related costs [38][39] - Non-GAAP net income for Q3 was $10.2 million or $0.23 per diluted share, a decrease of 4% year-over-year [41] Business Line Data and Key Metrics Changes - Deposit revenue increased by 5% year-over-year to $21.9 million, supported by global deposit reorders and Check Fraud Defender [37] - Identity revenue surged by 58% year-over-year to $17.4 million, driven by expanded use cases and the addition of HooYu SaaS revenue [37] Market Data and Key Metrics Changes - The identity verification market is experiencing significant growth due to increased online transactions and rising identity fraud incidents, which affected 42 million consumers in 2021 [10][11] - Regulatory requirements in the UK, such as right-to-work and right-to-rent laws, are creating new opportunities for identity verification solutions [12][14] Company Strategy and Development Direction - Mitek launched the Mitek Verified Identity Platform (MiVIP), aimed at enhancing digital access and security, which is expected to expand the addressable market and accelerate growth [20][26] - The company is focusing on regulated industries, including fintech and financial services, to target faster-moving businesses that require efficient identity verification solutions [78][80] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the ability to replicate Q3 revenue in Q4, noting that identity revenue is transactional and may vary based on consumer activity [42][43] - The company anticipates that the identity business will reach profitability in the second half of fiscal 2024, emphasizing the complexity of the identity verification market [45][89] Other Important Information - Mitek's gross margin for the quarter was 88%, slightly down from 89% in the previous year [38] - The company integrated orchestration technology from the HooYu acquisition and is building a sales pipeline for the new platform in the U.S. [30] Q&A Session Summary Question: Impact of macro environment on customer buying behaviors - Management noted that, so far, there has been no significant impact on individual customers or use cases due to the macro environment, although they anticipate potential headwinds in certain areas like mortgage origination as interest rates rise [52][53] Question: Changes in relationships with orchestration partners due to MiVIP - Some smaller partners view MiVIP as competitive, but larger partners see it as an opportunity, enhancing Mitek's attractiveness as a partner [55] Question: Initial customer reception for MiVIP - Early engagement has been positive, with several serious prospects and demonstrations conducted, indicating a good initial reception [57][58] Question: Revenue performance attribution - Revenue growth was attributed to both HooYu and strong performance from Mobile Verify, particularly in new use cases [63] Question: Go-to-market strategy for MiVIP - MiVIP will be sold by all Mitek salespeople, targeting regulated industries and faster-moving businesses that require efficient identity solutions [78][80] Question: Timeline for identity segment profitability - Management expects the identity segment to reach profitability in the second half of fiscal 2024, citing the complexity of the identity verification market as a challenge [89]