MITK

Scaling of the Check Fraud Defender Data Consortium Network

• The consortium reached a key milestone: a top 5 U.S. bank completed its pilot and officially joined the CFD network, after the solution outperformed the bank's existing fraud tool.
• Fiserv, a leading financial services core platform, went live as a CFD reseller, extending network access to thousands of Fiserv client institutions. Dozens of new member institutions were added this quarter via channel partners including Abrego, CSI, and DataVisor.
• The consortium now covers approximately 70% of all U.S. checking accounts, with annualized transaction volumes in the billions.
• Adjacent product Positive Pay Plus, which detects fraud at the point of check presentment, gained early traction: the company expanded with an existing bank and added its first non-bank design partner, a leading business payments firm, marking entry into B2B payments and accounts payable use cases.

Deepening of the Fraud and Identity Portfolio

• The portfolio is structured into two core pillars: the CFD check fraud data network, and the core identity platform with MobileVerify and MyVIP engines, augmented by proprietary biometric capabilities. Customers can adopt full end-to-end onboarding/verification/authentication workflows or purchase individual capabilities.
• An unexpected surge in age verification transaction volumes driven by new regulatory requirements pushed total identity transactions to a record quarterly high, and the company successfully scaled to meet this unexpected demand.
• Existing customers are increasingly deepening relationships via multi-year committed contracts, and the company is winning new customers outside its traditional financial institution core, including a large enterprise software firm for employee screening and a top UK football club for season ticket holder verification.
• A growing share of sales are multi-signal, fully orchestrated KYC journeys rather than single verification checks, with stable transaction values per journey as customers adopt richer workflows.

Durability of the Check Verification Business

• Check verification remains a strategically valuable, cash-generative core business that provides embedded infrastructure for CFD and long-standing deep relationships with financial institutions and channel partners. Trailing 12-month revenue has stayed range-bound despite gradual long-term decline in paper check usage.
• The business has opened doors to the broader fraud and identity portfolio: long-time check verification partner Fiserv is now a CFD reseller, demonstrating the strategic value of the existing relationship base.

Organizational and Operational Execution

• The company delivered double-digit revenue growth paired with expanding margins and operating leverage, with profitable growth efficiently converting to free cash flow.
• The company ended the quarter with a net cash position of $46 million, up from $23 million year-over-year, and maintains a balanced, disciplined capital allocation strategy that prioritizes product investment while returning capital to shareholders via buybacks, with $48 million remaining under the current repurchase authorization.
• The company unified all go-to-market functions (direct sales, channel partner sales, customer success, sales engineering, professional services) under a single Chief Revenue Officer organization, and named Aaron Saylor as the new CRO effective August 17, 2026.

• Management raised full fiscal 2026 guidance: total revenue is now guided to $195 million to $200 million, representing approximately 10% growth at the midpoint, up from the prior guidance range.
• Full year 2026 fraud and identity revenue guidance was raised to $105 million to $109 million, representing approximately 19% growth at the midpoint.
• Adjusted EBITDA margin guidance for full year 2026 was raised to 32% to 34%.
• Fourth quarter 2026 revenue is expected to fall in the $42 million to $47 million range, with typical seasonal softness driven by check verification renewal timing. Fraud and identity SaaS revenue is expected to decline modestly sequentially from Q3 levels, after the unexpected one-time age verification surge in Q3.
• Fourth quarter non-GAAP operating expense is expected to be $26 million to $27 million, a modest increase driven by continued R&D investment. Full year 2026 Q4 gross margin is expected to land in the low 80s, with capital expenditures of approximately 3.5% of revenue and depreciation and amortization of approximately 1% of revenue.
• For fiscal 2027, management provided preliminary color: the fraud and identity growth engine is expected to continue mid-to-high teens revenue growth, with SaaS within that segment maintaining high-teens to low-20s growth. Check verification revenue is expected to remain near the $90 million range as a baseline, though modest pressure from renewal timing and continued secular check volume decline is possible.

Total company revenue for Q3 FY26 was $54 million, representing an 18% year-over-year increase.

1. Fraud and Identity: Revenue reached $29 million, up 14% year-over-year, accounting for 53.7% of total Q3 revenue. SaaS revenue within this segment grew 37% year-over-year, driven by core identity transaction volume growth, new Check Fraud Defender (CFD) customers, and an unexpected one-time surge in age verification demand from new EMEA regional regulations. On a normalized basis, adjusted SaaS growth for the segment was in the high teens to low 20s, consistent with recent quarters. Annualized contract value (ACV) for CFD grew 73% year-over-year to over $22 million.
2. Check Verification: Revenue hit $25 million, up 24% year-over-year, accounting for 46.3% of total Q3 revenue. The 24% growth was driven by timing of two large renewals that did not occur in the same quarter last year, not underlying market growth. Trailing 12-month revenue has held stable around the $90 million level, offsetting gradual long-term secular decline in paper check volumes via mobile deposit penetration and disciplined pricing. Trailing 12-month total SaaS revenue across the company now represents 46% of total revenue, up from 41% one year prior.

• Forward-looking performance, including growth, customer adoption of new products, and cash flow conversion, is subject to a variety of factors that could cause actual results to differ materially from current expectations, as detailed in the company's SEC filings.
• The business faces gradual long-term secular decline in paper check volumes, which is expected to lead to softening check verification revenue over time, even as current revenue remains stable.
• Free cash flow conversion declined year-over-year in the trailing twelve months, driven by working capital timing shifts, higher cash taxes, lower net interest income after convertible note retirement, and increased capitalization of development costs.

Q: What is the current industry adoption level of the MyVIP identity platform solutions (biometrics, document verification, liveness detection), and what share of new wins comes from displacing incumbents versus new customer adoption? / A: Management stated that the broader adoption of comprehensive identity verification and authentication is still in the early stages, with growth accelerating as AI-driven and synthetic fraud increases. The company's core go-to-market strategy is land-and-expand: most new customers start with one use case (typically new account opening) at a single business unit, then expand gradually to additional use cases, lines of business, and geographies, which often produces exponential growth over time. Growth now comes from both new logos (especially for CFD) and existing customer expansion, with customers increasingly moving beyond traditional password-based verification to biometric authentication tied to verified identities. / Q: Can you elaborate on the Positive Pay Plus product, its go-to-market strategy, and its market opportunity? / A: Positive Pay Plus leverages the existing CFD network infrastructure to stop check fraud at the point of presentment, before fraudulent payments enter the banking system. It was originally designed for commercial bank commercial accounts, but the product is still in early launch stages. The company recently added its first non-bank B2B business payments partner, demonstrating that the product has broader applications across the overall payments fraud market beyond retail financial institutions. / Q: What is driving the growth of the CFD reseller and partner channel, and how much of future CFD growth is expected to come through this channel versus the internal direct sales team? / A: Channel growth has accelerated over recent quarters as the CFD network has scaled to a critical mass of 70% U.S. checking account coverage, creating strong network value for new members. The direct sales team focuses on the top 100 largest U.S. financial institutions, while channel partners give the company access to thousands of smaller regional institutions that partners already serve. Partner clients can easily activate CFD via their existing core platform integrations, creating a low-friction value proposition. Management expects the channel to contribute an accelerating share of CFD growth going forward, while direct sales continues to progress with large top-tier bank opportunities. / Q: What is the size and outlook for growth from customers outside the company's traditional core financial institution market? / A: Financial services remains the company's core focus, leveraging its deep heritage, regulatory expertise, and existing customer relationships. Roughly 80% of current revenue still comes from financial services customers. Non-FI customers in verticals including healthcare, government, insurance, and sports/entertainment are acquired primarily through channel partners, and this segment will grow gradually over time. All non-FI customers prioritize the same offering: bank-grade high assurance verification and authentication delivered as scalable infrastructure, which is the company's core value proposition.