Mitek Systems ((MITK)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Mitek Systems’ recent earnings call painted a positive picture, highlighting a robust quarter marked by significant growth in SaaS revenue and strides towards profitability in their Identity product portfolio. The company has made notable improvements in operational efficiencies, and their Check Fraud Defender product continues to experience substantial growth. While there are challenges, such as a decline in deposits software revenue and delays in closing larger identity deals, the overall sentiment remains optimistic, with positive aspects significantly outweighing the negatives.
Identity Product Portfolio Approaching Profitability
Mitek’s Identity product portfolio is on the cusp of achieving durable profitability. The trailing 12-month Identity revenue has reached $75 million, marking a 13% increase year-over-year. This growth trajectory indicates a promising future for the company’s Identity solutions, positioning them well in the market.
Strong SaaS Revenue Growth
The company reported a 23% year-over-year growth in SaaS revenue for its Fraud and Identity solutions, which now comprise over 41% of total revenue for the past 12 months. This substantial growth underscores the increasing demand for Mitek’s solutions and their successful penetration in the market.
Free Cash Flow and Operational Efficiency
Mitek demonstrated strong financial health with $56 million in free cash flow over the last 12 months, reflecting a 99% conversion rate. Additionally, the company improved its non-GAAP operating expense intensity from 64% to 55% of last 12 months’ revenue, showcasing enhanced operational efficiency.
Check Fraud Defender Growth
The Check Fraud Defender product continues to thrive, with its annual contract value reaching $13.1 million, a 56% increase year-over-year. Nearly 40 new financial institutions joined in Q3, indicating widespread adoption and trust in the product.
Improved EBITDA Margin
Mitek’s adjusted EBITDA was $13.1 million, representing a solid 28.6% margin, which is 170 basis points better than the previous year. This improvement highlights the company’s effective cost management and revenue generation strategies.
Decline in Deposits Software Revenue
Despite the overall positive performance, Mitek faced a 20% year-over-year decline in deposits software revenue. This was attributed to deal timing and fluctuations in term license revenue, presenting a challenge that the company is addressing.
Challenges with Large Identity Deals
Mitek is experiencing delays in closing some larger deals in the stand-alone biometrics revenue category. These deals, originating from the previous year, are taking longer than expected to finalize, posing a challenge to the company’s growth in this segment.
Forward-Looking Guidance
Looking ahead, Mitek provided guidance indicating continued growth and operational improvements. The company anticipates a 23% year-over-year growth in SaaS revenue for their Fraud and Identity solutions, which now account for over 41% of total revenue. Mitek is nearing profitability for its Identity product portfolio, with trailing 12-month Identity revenue reaching $75 million. The company maintains a strong financial position with $175 million in cash and investments, focusing on sustained growth and operational excellence.
In conclusion, Mitek Systems’ earnings call reflects a strong quarter with significant achievements in SaaS revenue growth and operational efficiency. While challenges remain, particularly in deposits software revenue and large identity deals, the overall sentiment is positive, with the company well-positioned for future growth and profitability.