Mitek Systems, Inc. Q3 FY2025 earnings call

• 3 Key Takeaways: Approaching fulcrum for durable profitability in Identity product portfolio; Fraud and Identity solutions grew 23% Y/Y SaaS revenue and represent over 41% of total revenue; 99% free cash flow conversion rate. - Strategic Pillars: Strengthening foundation (aligning teams, modernizing tech stack, expanding data science capabilities); Scaling Identity (nearing fulcrum point for positive contribution, Identity revenue up 13% Y/Y); Expanding Fraud solutions (Check Fraud Defender scaling, data asset expanding); Driving operational excellence (tightening cost controls, 99% free cash flow conversion, launching efficiency initiatives).

Deposits Products: Revenue in Q3 was $26.2 million. Trailing 12-month license revenue totaled $69.1 million, just below the long-term average of $70 million. Maintenance revenue in the deposits portfolio grew 4% year-over-year. Identity: Revenue was up 24% year-over-year to $19.5 million, driven by a 19% increase in SaaS and solid performance across MiVIP platform and Mobile Verify Point solutions. Trailing 12-month Identity revenue reached $75 million, up 13% year-over-year. SaaS Revenue: Represents over 41% of trailing 12-month revenue, a steady strategic mix shift that improves visibility and scalability.

• Full year fiscal 2025 revenue guidance tightened to $174 million to $177 million, with a midpoint of $175.5 million. - Adjusted EBITDA margin guidance raised to 28% to 29%, up from prior range. - Fourth quarter revenue expected to be between $39 million and $42 million.

Q: How are you thinking about return to double-digit growth in 2026?

A: Not guiding 2026 in this call, but next year will focus on unifying platform and strengthening foundation, with revenue growth from SaaS solutions.

Q: What about deposit software revenue?

A: Trailing 12-month revenue is well in line with historical levels, offset by ASP increases over time.

Q: Pipeline for Check Fraud Defender?

A: Excellent, with ongoing conversations, nearly 40 new institutions joined the consortium in Q3, and large institutions in pilot phases.

Q: Check Fraud Defender ACV target?

A: Optimistic, ROI is real but takes time due to procurement processes.

Q: ID R&D deals?

A: Some larger deals pushed out, but integrating ID R&D team into Fraud and ID verification suite.

Q: Balance sheet and cash allocation?

A: Plan to repay debt using credit facility, balance between investing in business and returning capital to shareholders, with $21 million left in share repurchase program.

Q: Margin improvement from automation?

A: Saw 200 basis points year-over-year improvement, with room to grow as moving to MiVIP platform.