• Total Revenue: $37.3 million for fiscal Q1, slightly ahead of last year.
• Deposit Products Revenue: $19.3 million, a 9% decline year over year.
• Identity Products Revenue: $18 million, a 13% increase year over year.
• Non-GAAP Gross Profit: $31.5 million, representing an 84% non-GAAP gross margin.
• Adjusted EBITDA: $7.8 million, representing a 21% margin.
• Identity Revenue (Last 12 Months): $70.7 million, up from $68.5 million at the end of fiscal 2024.
• Identity SaaS Revenue Growth: 26% year over year.
• Free Cash Flow (Last 12 Months): $40.2 million.
• Cash and Investments Balance: $137.9 million at the end of Q1.
• Fiscal 2025 Revenue Guidance: $170 million to $180 million.
• Adjusted EBITDA Margin Guidance: 25% to 28% for fiscal 2025.

• Warning! GuruFocus has detected 4 Warning Sign with MITK.

Release Date: February 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Mitek Systems Inc (NASDAQ:MITK) reported a 13% year-over-year increase in identity products revenue, driven by accelerating transaction volumes.
• The company achieved a 21% adjusted EBITDA margin, reflecting strong cost efficiencies and operational discipline.
• Mitek Systems Inc (NASDAQ:MITK) saw a 29% year-over-year growth in SaaS revenue, highlighting the strength of its services revenue streams.
• The Check Fraud Defender (CFD) solution experienced considerable growth, with annual contract value approaching $12 million.
• Mitek Systems Inc (NASDAQ:MITK) maintained an 84% non-GAAP gross margin, driven by high margins on software license revenue and improved services gross margin.

Negative Points

• Deposit products revenue declined by 9% year-over-year due to the timing of mobile deposit renewals.
• The company faces challenges with the timing and lumpiness of mobile deposit software license renewals, impacting revenue phasing.
• There is a long sales cycle for the Check Fraud Defender solution, particularly with large financial institutions.
• Mitek Systems Inc (NASDAQ:MITK) experienced a 25% decline in software and hardware sales, reflecting fluctuations in biometrics point solutions and mobile deposit renewals.
• The company is still working through restructuring and integration efforts, which may impact short-term stability and execution.

Q & A Highlights

Q: Can you discuss the near-term opportunities for MyTech and your confidence in returning to double-digit growth following recent transitions? A: Ed West, CEO: Yes, I am confident in our ability to return to double-digit growth. The actions we've taken and the progress we've made, particularly in fraud solutions and identity verification, are encouraging. Our focus is on enhancing our go-to-market strategy and leveraging our capabilities in financial services and identity solutions to address growing threats. We will provide more updates on our progress and outlook for fiscal '26 later this year.

Q: How is the partner channel for Check Fraud Defender (CFD) trending, and is there potential for larger mobile deposit partners to start selling this solution? A: Ed West, CEO: Our partnerships are growing, and the opportunity list is expanding as partners gain experience with the solution. Conversations with larger channel partners are progressing, and as financial institutions face increasing fraud, they are likely to push for solutions like CFD. The value of our solution is compelling, with a quick return on investment due to the level of fraud we can detect.

Q: Can you provide an update on the larger IDR&D deals and banking campaigns for ID verification that were previously delayed? A: David Lyle, CFO: These deals are expected to close eventually, with benefits anticipated in the second half of fiscal '25 and into fiscal '26. Our capabilities, particularly in passive liveness, are recognized as second to none, and we continue to evolve our products and solutions to meet market needs.

Q: Regarding the restructuring efforts, where does the company stand in terms of salesforce and engineering department changes? A: Ed West, CEO: We have completed the necessary restructuring and are now focused on execution. The changes were made to align our R&D resources closer to customers and integrate our platforms. We are at a stable level and are now focused on driving the business forward.

Q: How does the simplification of your product lineup affect the sales process, and is there potential for clients to pause implementations? A: Ed West, CEO: The focus and execution on our MyVIP platform and additional signals are positive for all involved. Our sales team is becoming more familiar with the solutions, and the dialogue with customers is strong, especially as they face increased threat factors. We do not anticipate significant pauses in implementations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.