Mitek Systems(US:MITK)2023-10-27 00:31Financial Data and Key Metrics Changes - For Q3 2023, Mitek generated revenue of $43.1 million, a 10% increase year-over-year [25][45] - Non-GAAP net income for Q3 was $9.5 million, or $0.20 per diluted share, compared to $10.9 million, or $0.24 per share for the same period last year [30] - Total revenue for the first nine months of fiscal 2023 was $134.9 million, a 28% increase year-over-year [31] Business Line Data and Key Metrics Changes - Deposits revenue increased 13% year-over-year in Q3 to $24.8 million, driven by mobile deposit reorders [57] - Identity revenue grew 6% year-over-year in Q3 to $18.3 million, supported by increases in Identity SaaS revenue and biometric offerings [57] - For the full fiscal year 2023, Deposits revenue is expected to grow over 20% year-over-year, while Identity revenue is projected to grow at least 18% year-over-year [15][22] Market Data and Key Metrics Changes - Mitek's net revenue retention (NRR) rate was over 120% over the trailing 12 months ended June 30, 2023, indicating strong customer retention and value delivery [15] - The Check Fraud Defender product is gaining traction as bank losses from check fraud increase, with one customer reporting a 220% rise in check fraud losses in 2022 [16] Company Strategy and Development Direction - Mitek is focused on enhancing its product offerings in both the Deposits and Identity lines of business, leveraging technologies like MiPass for continuous identity authentication [18][21] - The company aims to drive shareholder value through cash flow management and is not currently pursuing acquisitions [52][93] - Mitek is positioned to capitalize on market opportunities in identity verification and fraud prevention, with a focus on improving operational efficiency [77] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting full fiscal year revenue guidance of 18% growth year-over-year and non-GAAP operating margins of 30% to 31% [15][32] - The company anticipates fluctuations in Identity revenue due to varying transaction volumes but expects mid-teens organic revenue growth in Q4 [22] - Management acknowledged the challenges posed by the macroeconomic environment but remains optimistic about long-term growth prospects [71] Other Important Information - Mitek has successfully updated its internal processes and is now current with SEC filings, which is expected to enhance operational rigor [6][14] - Scott Carter will step down from his executive role effective December 1, 2023, but will remain as Chairman of the Board [24] Q&A Session Summary Question: What is the expected revenue for Q4? - Management indicated that Q4 revenue is expected to be lower due to the timing of mobile deposit reorders, but the full-year growth remains strong [70] Question: How long does it take to implement Check Fraud Defender for large customers? - Implementation can take six to nine months depending on the size of the bank and compliance requirements [106] Question: What are the assumptions for achieving break-even in the Identity business by 2024? - Achieving break-even will depend on scaling revenue and leveraging new products, with expectations for mid to high-teens organic growth [94] Question: Are there any promotional revenues to highlight in the quarter? - There were significant promotions in the first half of the fiscal year that impacted transaction volumes for Identity verifications [91] Question: What is the outlook for mobile deposits versus Check Fraud Defender? - Management believes mobile deposits will continue to be a significant growth driver, but Check Fraud Defender is also gaining traction [88]