MITEK SYSTEMS INC Q2 FY2025 earnings call

• Made progress strengthening the foundation for scalable, profitable organic growth by improving sales execution, technology platform, and operational efficiency. Restructured compensation plans to focus on recurring revenue. - R&D efforts led to a fully modernized document onboarding system reducing cycle times. - Identity portfolio showed momentum with $71.4 million in last 12 months' revenue, MiVIP outpacing the portfolio, and increased traction with MyPass. - Check Fraud Defender Solution saw growth with ACV at nearly 13 million and data set coverage on 23% of U.S. checking accounts. - Continued progress towards a more durable business model with SaaS revenue growth and improved financial discipline.

Deposit products revenue reached $33.7 million, up 14% year-over-year. Identity products revenue was $18.2 million, up 4% year-over-year. SaaS revenue grew 15% year-over-year and now accounts for 40% of total revenue, up from 39% in the previous quarter. Deposit software license revenue for the last 12 months ending fiscal Q2 '25 was $73 million, consistent with the longer-term average. Identity SaaS revenue grew 9% year-over-year, driven by strong transaction volumes across MiVIP and Mobile Verify.

• Maintained full-year revenue guidance range of $170 to $180 million. - Raised full-year adjusted EBITDA margin guidance range to 26% to 29% from prior 25% to 28%. - Expect Q3 revenue to modestly exceed Q4 based on typical customer buying behavior and term-based license renewals. - Anticipated non-GAAP operating expenses for Q3 to be in the range of $26 million to $27 million with depreciation around 70 basis points of revenue.

• Forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially. - Macro environment and evolving macroeconomic headwinds pose potential challenges. - Risks associated with the pace of adoption and monetization of new solutions like Check Fraud Defender.

Q: Can you talk about things that have gone well and difficult, and customer feedback?

A: Ed West mentioned employees did a great job, priorities aligned with market feedback, and company's heritage and tech capabilities set them apart.

Q: On guidance, any pull forwards in Q2?

A: Dave Lyle said a very large mobile deposit customer order was earlier than expected in Q2.

Q: Thoughts on software as a service mix trending?

A: Ed West stated goal is to have majority of revenue from SaaS by '26, driven by fraud platform and identity verification SaaS.

Q: Submission to DHS opportunity?

A: Ed West said DHS assessment had Mitek leading in liveness applications and biometric responsiveness.

Q: Organic growth from new business vs cross-sell?

A: Ed West said focus is on organic growth, adding new logos and expanding with existing clients, rolling out new products timely with market needs.