Mitek Systems(US:MITK)2025-12-11 23:02Financial Data and Key Metrics Changes - Total revenue for Q4 was $44.8 million, up 4% year over year, with SaaS revenue growth of 19% [23] - For the full year, total revenue was approximately $180 million, split evenly between fraud and identity and check verification, with a consolidated revenue growth of 4% [26] - Non-GAAP gross margin for Q4 was 84%, down approximately 200 basis points year over year, while full-year non-GAAP gross margin was about 85% [23][28] - Adjusted EBITDA for fiscal 2025 grew by 15% to $54 million, representing a margin of 30%, up from 27% a year ago [30] Business Line Data and Key Metrics Changes - Fraud and identity revenue for fiscal 2025 was $90 million, up 15% year over year, driven by SaaS offerings and volume expansion [25] - Check verification revenue for fiscal 2025 was $90 million, compared to $94 million in fiscal 2024, reflecting deal timing rather than a decline in demand [26] - SaaS revenue growth accelerated to 21% in fiscal 2025, contributing roughly eight points of growth to total revenue [27] Market Data and Key Metrics Changes - The fraud landscape is evolving rapidly, with AI-enabled fraud in the U.S. projected to reach $40 billion by 2027, making synthetic identity fraud a top concern for financial institutions [5] - In North America, large financial institutions are integrating identity verification with fraud checks earlier in the onboarding process [10] - In EMEA, banks are adopting new use cases and authentication products, driving higher verification and authentication volumes [10] Company Strategy and Development Direction - The company aims to unify its identity, authentication, and fraud capabilities into a cohesive platform, focusing on deeper, signal-rich identity journeys [14][16] - Fiscal 2026 is organized around four key pillars: fortifying check verification, unifying fraud and identity capabilities, investing in areas of advantage, and maximizing value through disciplined capital allocation [18] - The company is transitioning to a heavier SaaS and services mix, which is expected to compress margins slightly but increase gross profit dollars [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to capitalize on the growing demand for fraud and identity solutions, driven by the rise in synthetic fraud [41][49] - The company has fully remediated all previously reported material weaknesses in internal controls, marking a significant milestone [36] - Fiscal 2026 revenue is expected to be between $185 million and $195 million, reflecting stable check verification and accelerating fraud and identity demand [33] Other Important Information - The company ended fiscal 2025 with approximately $196 million in cash and investments and $157 million in total debt, resulting in a $40 million net cash position [32] - Free cash flow for the full year was $54 million, equating to 100% conversion of adjusted EBITDA [30] Q&A Session Summary Question: What are the key drivers behind the growth in the SaaS business? - Management highlighted underlying demand driven by the rise in synthetic fraud and the credibility of partnerships with large financial institutions [40][41] Question: Can you provide updates on Check Fraud Defender? - Management reported a 50% growth in overall ACV and noted that data sets now cover over 25% of all U.S. checking accounts, approaching 50% when including pilot institutions [42][43] Question: What is the current investment pace and future plans? - Management indicated a balanced approach to investment, focusing on R&D, particularly in AI decisioning and fraud intelligence, while maintaining margin discipline [58][63] Question: How is the pilot process for large banks progressing? - Management explained that large banks are seeing incremental value from being part of the consortium, which enhances their data access and insights [74][75] Question: What is the outlook for the Mobile Deposit business? - Management noted that while overall check volumes are declining, the transactional volume for Mobile Deposit has remained stable around 1.2 billion transactions annually [84][86]