Mitek Systems, Inc. Q1 FY2026 earnings call

• Delivered a strong fiscal first quarter and raised outlook with early execution against Unify and Grow ethos.
• Fraud and identity revenue grew 30% y/y; SaaS revenue grew 21% y/y, representing 43% of LTM revenue.
• Check verification had 1.2 billion transactions annually and saw strong renewals/expansions.
• Simplified balance sheet by paying off convertible notes and announced a $50 million share repurchase program.
• Fortifying check verification with continued strong performance and opening doors for broader fraud/identity conversations.
• Unifying and scaling fraud and identity portfolio with growth in transaction volumes, more journeys and transactions per journey, and broad-based momentum across geographies and customer segments.
• Check Fraud Defender (CFD) consortium continued to scale with annualized contract value at ~$17 million, up 44% y/y, covering over 50% of US checking accounts.
• Investing in innovation, platform infrastructure, automation, model performance, and organization reallocation towards higher ROI initiatives.
• Disciplined capital allocation focusing on protecting financial flexibility, investing in high ROI opportunities, and returning excess capital to shareholders.

For the fiscal first quarter, fraud and identity revenue was $25.5 million, up 30% year over year, representing a significant portion of the business. Check verification revenue for the quarter was $18.8 million, up 6% year over year. On a last twelve months (LTM) basis, check verification revenue was approximately $91 million with annual transaction volumes remaining broadly stable at around 1.2 billion. Fraud and identity revenue growth was driven by SaaS growth (21% y/y, representing 43% of LTM revenue) and standalone biometrics licensing. Check verification's stability was noted despite the secular decline in the broader check market, with strong renewals and expansions.

• Raised fiscal 2026 revenue guidance range to $187 million to $197 million from prior $185 million to $195 million. Increased lower end of check verification range by $1 million and fraud/identity range by $1 million lower end and nearly $2 million upper end.
• Expect Q2 2026 revenue to be in range of $50 million to $55 million, driven by check verification license renewals timing.
• Updated fiscal 2026 adjusted EBITDA margin guidance to 29% to 32%, up from prior 27% to 30%, driven by higher capitalized software development.
• Expect gross margins to remain in low 80% range, with operating expenses stepping up sequentially as investing in growth initiatives.

• Factors could cause actual results to differ materially from forward-looking statements, including customer demand for products/services, CFD consortium expansion, check verification stability, growth and investment plans, gross profits, operating leverage, free cash flow conversion rates, and FY '26 financial outlook/guidance.
• Risks detailed in 10-Q filing and other SEC filings, including uncertainties around AI-driven fraud impact, consortium expansion progress, and market competition.

Q: For your broadened identity segment, can you discuss the competitive environment and why you think you're winning, and in what cases would you maybe be losing?

A: Edward H. West mentioned the growing environment driven by AI and synthetic fraud, Mitek's broad platform, heritage with high-assurance businesses, and network effect from adding data as reasons for winning. Losing cases not explicitly detailed but noted competitive landscape exists.

Q: Great to see the check verification business continuing to do well. How are you thinking about the pricing lever for growth over the longer term?

A: Edward H. West stated renewals and expansions were strong, pricing continues with strong relationships, and discussions around expanding fraud/identity solutions, with checks declining but check verification's convenience and mission-critical nature maintaining penetration.

Q: Can you talk a little bit about what you're doing from a go-to-market perspective to help drive that value for customers with linking fraud and identity?

A: Edward H. West mentioned unified go-to-market team selling full portfolio, training sales team to talk broadly, moving up the stack with core customers, and expanding into other verticals via partners and internal hunters.

Q: Has there been any expansion of the Salesforce, like, in terms of headcount? Or marketing budget?

A: Edward H. West and David B. Lyle discussed expanding headcount, investing in salesforce talent, and enhancing go-to-market programs, with leverage from unified salesforce and plans to accelerate with more talent.

Q: With Check Fraud Defender, any more color on larger pilots?

A: Edward H. West mentioned pilots underway, billions of annualized transactions, positive progress, deepening customer engagement, and more partners potentially joining the consortium.

Q: When we think about AI-driven fraud, are you seeing that creep into sales cycles at all on the fraud and identity side where FIs are pushing a bit more?

A: Edward H. West noted FIs with attacks may move more quickly, engagement broadening from onboarding to ongoing authentication, and more signals being brought in, with channel partners bringing in opportunities to other verticals.