Financial Data and Key Metrics Changes - Mitek reported record revenue of $21.9 million for Q3 2019, representing a 36% year-over-year growth [9][26] - Software and hardware revenue increased by 14% year-over-year to $11.9 million, driven by the addition of A2iA and growth in Mobile Deposit revenue [26] - Services and other revenue, including transactional SaaS revenue, rose by 77% to $10 million, with SaaS revenue growing 71% year-over-year to $5.3 million [27][28] - GAAP net loss for the quarter was $100,000, or $0.00 per diluted share, while non-GAAP net income was $4.8 million, or $0.12 per diluted share [30][32] Business Line Data and Key Metrics Changes - Mobile Deposit remains the market leader with over 6,400 financial institutions using the product, with significant growth potential as mobile check deposits capture less than 20% of all retail checks [19] - Identity verification solutions saw a 71% year-over-year growth in transactional SaaS revenue, with SaaS transactions growing 76% year-over-year [21] - The company is rationalizing its platforms, focusing on Mobile Verify as the flagship identity product while discontinuing non-core products from A2iA [14][34] Market Data and Key Metrics Changes - The identity verification market is described as large and fast-growing, with significant opportunities for Mitek as businesses increasingly require secure customer onboarding [20] - The company is expanding its customer base, signing new clients across various sectors, including banking and e-commerce [21][22] Company Strategy and Development Direction - Mitek is focusing on consolidating its platforms to eliminate outdated technologies and improve operational efficiency [15] - The company aims to enhance its identity verification offerings and capitalize on the growing demand for digital identity solutions [13][20] - Mitek is also targeting new verticals, such as charities and digital banks, to expand its market reach [19][63] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in both the deposits and identity verification markets, despite some short-term revenue dissynergies from platform rationalization [11][38] - The company anticipates total revenue for fiscal 2019 to be between $84 million and $85 million, representing a growth of approximately 32% to 34% year-over-year [38] Other Important Information - A restructuring charge was taken in Q3 related to the separation of employees from A2iA, with plans to streamline operations and focus on core business areas [17][34] - The company expects to see annualized cost savings from the restructuring, although some costs will carry over into Q4 [53][56] Q&A Session Summary Question: Can you provide more details on the platform consolidation and which parts of the business are being rationalized? - Management indicated that the focus is on consolidating legacy systems acquired through previous acquisitions, particularly in the identity verification space, to streamline operations and enhance focus on Mobile Verify [44][45] Question: What is the company's strategy regarding the unbanked and under-banked markets? - Management sees significant opportunities in both the U.S. and developing economies, where government-issued identity documents are crucial for verifying identity [47] Question: What is driving the growth in the Mobile Verify business? - Growth is attributed to both new customer acquisitions and increased usage among existing customers, with improvements in the time-to-live for new implementations [48][49] Question: Can you elaborate on the competitive landscape for identity verification? - Management noted that competition varies by geography and that the market is still developing, with new entrants emerging [74][76] Question: When is the identity revenue expected to surpass the deposits revenue? - Management anticipates that identity revenue will equal deposits revenue within 18 to 24 months [78]
Mitek Systems(MITK) - 2019 Q3 - Earnings Call Transcript