Mitek Systems(MITK) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for fiscal Q1 was $37.3 million, slightly ahead of last year's results, with a 9% year-over-year decline in deposit products revenue and a 13% increase in identity products revenue [33][34] - Non-GAAP gross profit was$ 31.5 million, representing an 84% non-GAAP gross margin, with adjusted EBITDA reaching $7.8 million, a 21% margin, both exceeding expectations due to cost efficiencies [34][41] - Total SaaS revenue grew 29% year-over-year, with deposit SaaS revenue up 64% and identity SaaS revenue up 26% [29][34] Business Line Data and Key Metrics Changes - Deposit products revenue declined 9% year-over-year to$ 19.3 million, primarily due to a 21% decline in deposit software license revenue [35] - Identity products revenue increased by 13% year-over-year to $18 million, driven by a 26% year-over-year increase in identity SaaS revenue [40] - Services revenue streams grew by 21% year-over-year, offsetting a 25% decline in software and hardware sales [40] Market Data and Key Metrics Changes - The company processed approximately 1.2 billion transactions annually, maintaining stable transactional volumes [39] - The Check Fraud Defender's annual contract value (ACV) approached$ 12 million, with data sets on approximately 18% of all checking accounts in the country [25][26] Company Strategy and Development Direction - The company aims to enhance solutions, achieve operational excellence, and strengthen its foundation for durable, profitable revenue growth in fiscal '26 and beyond [11][30] - A four-pronged framework guides the company's transformation, focusing on strengthening the foundation, scaling the identity platform, expanding fraud solutions, and maintaining operational excellence [12] - The company is focused on integrating its identity verification engines into a unified platform, MiVIP, to enhance customer experience and competitive position [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to double-digit growth CAGR, driven by ongoing improvements and customer engagement [52][55] - The company anticipates continued growth in identity and fraud solutions, with a focus on addressing increasing threats from fraud and cyberattacks [8][11] - Management highlighted the importance of customer relationships and the strategic value provided to high-assurance businesses [22][24] Other Important Information - The company generated $40.2 million in free cash flow over the last 12 months and repurchased$ 27.2 million worth of shares [45] - Fiscal 2025 revenue guidance remains at $170 million to$ 180 million, with adjusted EBITDA margin guidance raised to 25% to 28% [48] Q&A Session Summary Question: Near-term opportunities and growth confidence - Management remains confident in the business's ability to return to double-digit growth, citing encouraging customer interactions and market conditions [52][55] Question: Check Fraud Defender partner channel trends - Partnerships are growing, and the value of the solution is compelling for financial institutions facing increasing fraud [58][60] Question: Update on ID R&D deals and sales cycle - Sales cycles for larger deals are long, but management expects benefits to materialize in the second half of fiscal '25 and into '26 [64][65] Question: Competitive environment and pricing pressures - The focus is on growing MiVIP, which is expected to reduce pricing pressures over time as more business shifts to the platform [90][92] Question: Revenue opportunity comparison between Check Fraud Defender and mobile deposits - Management refrained from providing specific revenue comparisons but emphasized the growth potential of Check Fraud Defender in addressing fraud challenges [112][113]