Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mitek Systems Inc (MITK, Financial) reported a 4% year-over-year increase in total revenue for fiscal Q3 2024, reaching $45 million.
- The company's mobile check deposit revenue grew by 18% year-over-year, driven by strong transaction volumes and earlier than expected renewals.
- Check Fraud Defender (CFD) continues to expand its customer base, with over 40 banks under contract, including a top five US bank.
- Mitek Systems Inc (MITK) has a nearly 100% customer renewal rate for its identity solutions, indicating strong customer satisfaction and demand.
- The company is launching a new deep fake detection product, leveraging ID R&D technology, to address the growing issue of digital fraud.
Negative Points
- Identity product revenue declined by 14% year-over-year, primarily due to softness in ID R&D biometrics revenue and pricing pressure on Mobile Verify.
- The company experienced execution challenges in scaling its ID R&D product portfolio, leading to missed revenue targets.
- Two large banking clients delayed promotional campaigns, impacting expected revenue from Mitek Systems Inc (MITK)'s identity products.
- The fiscal 2024 revenue guidance was lowered to $169 million to $173 million, down from the previous range of $180 million to $185 million.
- The identity product portfolio is not expected to be profitable in fiscal Q4 2024, prompting a reassessment of profitability targets.
Q & A Highlights
Q: Can you help allocate the revenue shortfall between ID R&D and Mobile ID promotions?
A: The ID R&D miss was more material than the timing issue with promotional campaigns. We had promising opportunities that were expected to close in Q3 and Q4, but they proved more complex, leading to delays. These deals remain viable, and we expect them to close in the future. - Scott Carter, Executive Chairman & Interim CEO
Q: Given the disappointing performance of Mobile ID, have you considered selling it or splitting the company?
A: Despite the challenges, we see validation of the synergy between Mobile ID and our other businesses. The MiVIP platform, for example, integrates capabilities from both Mobile ID and Check Fraud Defender, showing potential for improved margins and growth. We believe in the combined value proposition of these businesses. - Scott Carter, Executive Chairman & Interim CEO
Q: Is there any chance Mobile ID will be breakeven by late 2025?
A: We need to see how our nascent products progress into accelerated growth stages. We will reassess and provide more specific guidance in our next earnings call after completing our annual operating plan. - David Lyle, CFO
Q: Can you provide more details on the renewal dynamics and pricing issues?
A: As customers move to the MiVIP platform, which offers a stronger value proposition, we see improved price elasticity. The platform allows for better margin profiles by integrating multiple data sources, reducing the need for agent transactions, which are typically dilutive. - Scott Carter, Executive Chairman & Interim CEO
Q: How is the sales process for Check Fraud Defender progressing, especially with the recent signing of a top-5 bank?
A: The consortium-based approach of Check Fraud Defender provides significant value by offering real-time visibility across the ecosystem, which individual banks can't achieve alone. While sales cycles are long, the ROI is compelling, and we are seeing strong validation from customers. - Scott Carter, Executive Chairman & Interim CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
