Mitek Systems(US:MITK)2022-04-28 23:47Financial Data and Key Metrics Changes - Mitek reported a revenue growth of 21% year-over-year, reaching $34.7 million in Q2 2022 [9][30] - Non-GAAP net income increased by 49% year-over-year to $10.8 million, or $0.24 per diluted share [9][36] - Cash flow from operations was $7.4 million for the quarter [9][37] - Total GAAP operating expenses rose to $29.9 million from $26.4 million in Q2 of the previous year [33] Business Line Data and Key Metrics Changes - Software and hardware revenue increased by 48% year-over-year to $19.3 million, primarily due to contributions from ID R&D and mobile deposit reorders [30] - Services revenue, which includes transactional SaaS revenue, decreased by 2% year-over-year to $15.4 million, with transactional SaaS revenue down 4% to $10.5 million [31] - Deposit revenue grew by 24% year-over-year to $21.3 million, while identity revenue increased by 16% year-over-year to $13.4 million [32][78] Market Data and Key Metrics Changes - The identity verification market is experiencing increased demand due to rising fraud attacks and data breaches, which increased by 68% in 2021 [22] - The acquisition of HooYu is expected to expand Mitek's addressable market significantly, targeting more customers and accelerating growth in the identity business [10][25] Company Strategy and Development Direction - Mitek's acquisition of HooYu aims to enhance its capabilities in identity verification and authentication, providing a comprehensive orchestration platform [10][25] - The company is focusing on integrating its technology and harmonizing go-to-market efforts to capitalize on growing market opportunities [28][39] - Mitek plans to leverage its low code, no code capabilities to allow businesses of all sizes to quickly implement identity verification solutions [14][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged potential headwinds within the core identity business but emphasized the urgency for orchestration-enabled solutions in the market [28] - The integration of HooYu is expected to take 90 to 180 days, with a focus on demonstrating the combined platform to existing and new customers [66] - Management believes that profitability for the identity business may be pushed back to the second half of fiscal 2024 due to integration costs [39] Other Important Information - Mitek's total cash and investments stood at $93.4 million as of March 31, following the acquisition of HooYu for $127.1 million [37] - The company is making necessary investments to integrate HooYu and enhance its offerings in the identity verification market [39] Q&A Session Summary Question: How are initial customer and partner conversations changing with the new platform? - Management noted that customers are increasingly recognizing the ROI of combining technologies into one platform rather than seeking point solutions [45][46] Question: Can you provide updates on new products like Check Fraud Defender and IDLive Doc? - Management reported positive adoption and interest from large financial institutions for Check Fraud Defender, while IDLive Doc has seen increasing transaction volumes with initial customers [51][56] Question: What were HooYu's revenue and historical losses? - HooYu generated just under $10 million in revenue last year but was a loss-making startup, requiring additional investments for integration and growth [62][64] Question: What is the timeline for integrating HooYu and selling to larger customers? - Management aims to have a demonstrable product in the market within 90 days and to build pipeline sales cycles shortly thereafter [66] Question: Can you explain the decrease in services revenue and the headwinds in the identity segment? - The decrease was attributed to the completion of a large project for a customer, creating a difficult comparison for future quarters [70][71]