Mitek Systems ((MITK)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Mitek Systems revealed a generally positive outlook, underscored by robust growth in identity and SaaS revenues, alongside the promising expansion of the Check Fraud Defender. Despite these successes, the company faces challenges in its deposit products segment, largely due to the variability in renewal timings. Nevertheless, Mitek’s strategic initiatives are beginning to bear fruit, with expectations of continued growth and improved profitability moving forward.
Strong Identity Revenue Growth
Mitek Systems reported a substantial 13% year-over-year increase in identity products revenue, bolstered by a 26% rise in identity SaaS revenue. This growth reflects heightened transaction volumes across their MiVIP and Mobile Verify platforms, indicating solid performance in the company’s identity verification solutions.
Check Fraud Defender Expansion
The Check Fraud Defender product has shown significant growth, with its annual contract value nearing $12 million. This increase is partly attributed to securing a new top 10 financial institution as a client, highlighting the product’s untapped growth potential and strategic importance in Mitek’s portfolio.
Improved Profitability and Cash Flow
Mitek’s financial health is on an upswing, with adjusted EBITDA soaring 32% year-over-year, achieving a 21% margin. Additionally, their free cash flow conversion improved significantly to 83%, demonstrating effective cost management and positive changes in net working capital.
SaaS Revenue Growth
The company’s SaaS revenue increased by 29% year-over-year, with notable contributions from deposit and identity SaaS revenues, which grew 64% and 26% respectively. This surge underscores Mitek’s successful shift towards a subscription-based revenue model.
Deposit Products Revenue Decline
Despite the positive trends in other areas, Mitek experienced a 9% year-over-year decline in deposit products revenue, dropping to $19.3 million. This decline was driven by a 21% decrease in deposit software license revenue, linked to timing issues in mobile deposit renewals.
Mobile Deposit Revenue Variability
Mitek continues to face revenue variability challenges due to the timing of mobile deposit renewals and transaction inventory purchases. These factors create unpredictability in short-term revenue, posing a challenge for financial forecasting.
Forward-Looking Guidance
During the earnings call, Mitek provided substantial guidance for future performance, reporting a total revenue of $37.3 million for the first quarter. The company’s strategic focus includes strengthening its growth foundation, scaling the identity platform, expanding fraud solutions, and maintaining operational excellence. With aims to have SaaS revenue account for nearly half of total revenue by fiscal 2026, Mitek is also targeting a doubling of the Check Fraud Defender’s contract value in fiscal 2025. Revenue guidance is set between $170 million to $180 million, with adjusted EBITDA margins projected at 25% to 28%.
In conclusion, Mitek Systems’ recent earnings call highlights a positive trajectory for the company, driven by strong identity and SaaS revenue growth, as well as strategic expansions like the Check Fraud Defender. While challenges remain in the deposit products segment, Mitek’s forward-looking guidance reflects a clear commitment to innovation and growth, promising a bright future for the company and its investors.
