MITK - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Mitek Systems Third Quarter Fiscal 2020 Financial Results Conference Call. Today's conference is being recorded. And At this time, I would like to turn the conference over to Todd Kehrli, MKR Group. Please go ahead.

Todd Kehrli

Thank you, operator. welcome third and earnings fiscal everyone call. conference afternoon to quarter Mitek's XXXX Good today's Mitek's call and on me With are Davison. CFO, CEO, Jeff Carnecchia; Max

Before I page Company's fiscal afternoon and Mitek and a press to factors statements to cover the call its few should results. issued These I influence third announcing expectations like quarter are a on forward-looking This Any I'd of statements. financial to include considered may Max that likely items. of quick today release turn market the XXXX opportunities Company's Jeff, particularly today's over not and are be management the website. future website is the certain being long-term call historical want facts, on plans forward-looking discuss discussed release That Internet remind all Relations forward. miteksystems.com. for at is going factors will be available will on This the everyone business interested Investor about the comments parties live comments archived the over webcast the Company's regarding to call, and performance. that prospects that our broadcast

subject are which cause We number of risks. recent most results for complete of to risks XX-Q a could review materially. our and description encourage these filings to uncertainties differ listeners of our including a actual all to statements SEC Forward-looking our XX-K and

new XXXX July statements information, or of statements in the are update Our today forward-looking as of as undertakes XX, any or the otherwise. changes whether events, contained a and today no on this expectations to publicly call Company future of herein, obligation result revise made

to and Form in Mitek's that discussing release over report the and the related two reported financial now Today's reporting differences said, non-GAAP present throughout measures. on call call, the the non-GAAP the reconciliation Additionally, release. the certain for periods I'll describe our between turn GAAP we the between be CEO, and current Max. this will X-K earnings With

Max Carnecchia

Good everyone for thank us and afternoon Todd. you joining today. Thanks

let the well-being Mitek me cover I performance, the our strong community restate QX challenging the first Before during these times. commitment highlights to of our of

the operate full for trust Customer home and global demand financial and our accelerated is all remained in the billion its from remains deposit. than to Mitek enabled just we strive ensure more stage to the thanking, deposits. electronic highly digital Know health the all X,XXX clear a that companies applaud by which empower verification digital reference onboarding of and to services, are and gaming adoption businesses strength solution, the center to is at safely used also has some with services. digital while identity article, To secure trust all of banking simple are convenience of electronic aspects service education, effective sectors not leader continue has in it’s and check through who check deposit online and members remote witnessing solution. organizations remote and has COVID-XX online economy dating four it delivering in steadfast operations pandemic over the market just We operate safely our able Mitek team benefits, government and are Your use, levels. court’s our in on our commitment recent working to put identity, with

$XX.X revenue secure transactions. that strong We digital growth third shift to provide a enables With online, to XX% environment record is representing rapid of remote that, delivered year-over-year. quarter our let’s turn this million Mitek results. During proud

there to of verification cash up from $X XX% the and in experience momentum deposits from We identity also and we revenue our year-over-year operations net of XX% transaction diluted flow generated SaaS share, consumers validating year-over-year with or continue is non-GAAP businesses product adoption highly the and million. a increase. million mobile grew of positive from continuing per this resources the growth line income continue $X.XX $X.X profitable the increased market to which and meet was deposit Therefore, users stimulus check ever of digital active If consumer for growth business time checks, to invest mobile is levels was when the banks expected significant usage utilization quarter. and channels. deposit now. rising as to anticipated, essential, Outside volume in it mobile

advance, impact than growth revenue as will planned. in flow usage revenue, sell their transaction this immediately volumes as didn’t expand transactions in faster blocks of banks eventually our through in we this to While transactions growth licensed

offering while also deposit our assist defense time mobile layers against of both people to We in proud this are providing and its ability need of of fraud.

as an it. we The identity. marketplaces live way embrace it, and to accurately verify and formally our customers primarily to landscapes work able this higher which has digital-first use and not partners accelerate in them normal therefore forced and our and turn services of quickly are experiencing adoption increased online helps that business customers and in legitimate quarter pandemic consumers stay to onto is in services fraud approach. in and than Financial The COVID compliant. of several and volumes. service are shifting that of regardless the transaction they where the verification face verification companies It essential changed a is with a journey, transformation case their and person, in transacted fraud now businesses identity customers have were surprising fast Digital been forever. mitigate digital online, Using is magnified secure new identity need Now, looking for remote economy.

requirements digital affected. access hotel some global see provide our for Mitek’s is returning swaps the being offering bigger where gig For was customer in the guests our Mitek’s customers the desk be in economy still Verify of resilience will new critical Xth Express innovative millions of These advantage is first quarter. normal increased the applications to this development. they impact momentum for client our customers go are Venetian solution proofing home from secure is Mobile as impacted guests expansion Agilisys these our short-term and hotels, some demand are solution product. a to unknown also distancing process, enables into meet hotel a extend in COVID-XX as leading to check-in critical of able able the large traditional digital our environment. continued COVID-XX the a June have hospitality these instance, potential we’ve ability Resort long identities Having convenient due Venetian provider live We partnered highlight of positive to resorts longer-term we been using to for This a with orders. volumes, business proven as to customers’ to Mobile Mitek help look platform successful need with channel execute to navigating the our enabling the of the Europe benefits and times. new packages. of of Mitek is lines. well COVID-XX. world. segments our The convenience automated and our their to to on while our to by software in Mobile through provided adjacent new partners product on growth during we is with Similarly, their This thousands restaurants commerce. digital the partnership the Verify, Channel European customers check-in bypass continue to front incorporated customers. check-in lifeline and customers customers other to customers predict are safeguard from leading they around a received the reopened provider economy Near-term, stature rise very product on preliminary still people into milestone them identity who following for pipeline meet that scale, results examples and two Agilisys plan to positive. current as social remotely by this of supports serving allowing rGuest relief launch and proud to applicants while government were a being have a as who current Casino some and skip at our It and stay to and One demand procedures. increased to challenging example as impossible onboard from customers citizens is went of quickly Through

issued with and same partnership other a are intrinsic adoption since new determine government states time, submit development regulations. have notarized license a are product Standardizations verified every ID sensitive online to With At along quickly shared, identity. few questions signed opportunity ensure can and remote Verify, received differentiator of global remote been Liveness in is The the very digital signal U.S. space. driver’s an Mitek. companies assurance wake authorize their of high has the Congress users competitive in for In simply Detection allowing plan in e-notary growth face well documents the address signed of Notarization with Innovation past notarization. also only in technology the Mitek This parts notarizations their perform and user the or biometric social its e-notary markets the of pushing in our the launch services the will and Act, COVID-XX, to to measures notaries Mobile to We New authenticity is significant parties. of notary This to issued and February. answering many would document to distancing turn with important that as response a perform Secure online the picture which emergency compare

and the is success for clear Another differentiator of Mitek organizations. services, support our professional customer caliber

with live reputation. exception banking-grade of our go kind no implementations was contributing quarter one This a to record in collectively

crisis We and customers emerge attempt they faster are partners stronger. and to recover committed our adapt, from helping as this to

results, services improved who times. record talent hires globe rallied to lead invest value deliver the significantly products across are pleased during extraordinary profitability. In include onboarded technology, the am and successfully new has effective and We continue the closing, to with processes. proud customers these in workforce which remote innovation that our our and need through to and we revenue and Mitek I

of a the uniquely need We have Mitek to significant to positioned technology the for market opportunity our a together and divisions, that deliver teams, is shareholders. amounts solution employees a this all and

over in results Now discuss detail. turn to will the Jeff financial call to more the I

Following open Jeff’s please call the remarks, Jeff, up go we questions. ahead. for will

Jeff Davison

us joining and this thank for Thanks, everyone you, afternoon. Max,

with start the revenue operating results. Let's and QX

third the fiscal million, record quarter increase a year-over-year. For $XX.X XX% revenue Mitek XXXX, of of generated

hardware in and to XX% consulting transactional year-over-year transactional million, increase revenue, last SaaS the and due other was includes quarter, of increase XX% $XX.X Services increase an XX% an for revenue of which This and X% Software year-over-year. increased $XX.X $X.X million. growth sequentially year. which million SaaS maintenance was revenue, and was revenue, over QX services to

swings customer on in for of impact April $X.X quarter, June. to During We then and volumes our May were net a in experience transaction quarter transactional sequentially was million. and the pandemic, as we taper an volume the varied began others large the in The of biggest traffic, and customers decreases. large The increases certain revenue increase and off impact in result to but March revenue. X% saw had with

enter QX, have we swollen increases volume these As off.

for and costs. recorded QX million, in operations XXXX, compared in partially in for These and was million. revenue our other operations QX Sales $X.X XX%, marketing to were million, XX% share. the compared expenses G&A strong margin a decrease $X.X margin million business to including year Total diluted GAAP $X.X increased acquisition-related million a QX charge Identity the with were Total gross hardware grow revenue revenue million primarily million ago. $XX.X offset to compared and last quarter our million by continued million and were expenses for GAAP litigation year-over-year decline expenses Paris was cost $XX operating For was to investments verification R&D and restructuring to year. to XX% quarter and $X.X quarter. $X.X Gross million. expenses last $X.XX margins per services for net and the was $X.X our consistent software million, or year-over-year We $X.X a decreases $X.X This is of the cost were due year year. to the ago. last year revenue quarter our of deposits year related quarter. income million, to QX last expenses. compared $X.X $XX.X XX% delivered gross which were for the in XX% on increased to increased

shares, million XX.X a was count share shares ago. diluted million Our to XX.X compared year

expenses, results our Company's As release expense, costs stock operating We net a earnings a comp GAAP litigation by $X.XX believe expenses and ago. or reconciliation million and the of a share diluted these increased million $X.X of or includes reminder, net compared non-GAAP useful per share, measure income $X.XX acquisition-related diluted Non-GAAP income. between and excluding provides items. non-GAAP per to for tax impacts the to related $X.X year income net a QX

adjustments difference, and tax stock by $X.X quarter. expense, of of non-GAAP expenses of million acquisition-related tax all $X.X $X in of income the $X.X effect million costs This million. Our litigation adjustments was cash expenses, the for $X.X and comp pre-tax include of offset million million

balance the cash in to during bringing $XX.X we from Turning sheet, $X million our XXth. investments million total quarter, generated operations and the at cash flow June to

continuing our Mitek deliver questions. receivable that Operator represents and our DSO with Please the record to improved results remarks. for and are pleased for provides. a to valued days. quarter, of revenue open concludes significantly accounts of look prepared In million balance that services closing, include $XX.X the line Our profitability, the which forward third we XX we

Operator

Thank you. our Instructions] from ahead. Bhavan we will from hear And Please is question Blair. William first [Operator go Suri

Bhavan Suri

verification on with you’ve some guys. of nice set in touch the Congratulations maybe of a tough, the Maybe, great, especially identity seem companies. on e-signature side, first Hey results. with such a want the like job to partnerships great demand I tough uptick the environments. Nice given

to like is that. You or obviously just partners bit larger how because acquire on they plan, those around And are a go update a how that But progressing? notary, these to DocuSign you on market you such saw the touched you remote service market provide critical go DocuSign with little that the partnerships on significantly with someone maybe that. Liveoak,

some on got follow-up. then I and color would So that great be a quick

Max Carnecchia

And way just direct for the channel sales Bhavan. been months. a with XX thanks that intentional that our the thoughtful for XX over selling their Well, and Sure. progression hand. of the us where to Yes, really partner thoughts big for channel has are big a improvement raises augmenting we a us last done course signing any of in very not kind we’ve up and

that e-notary, that the with think we lot verification reverification here that I or e-signature are Agilisys, is So, you what value we is can use a that top higher to where of do a the on e-signature and all to level with but the is right. including of segment e-notary. use of. add the example great up a process the they up authentication, e-signature a step time, a guys, We identity example, there and a And mentioned sitting bigger e-signature now all the requires to of

and business. I become So, bigger part of that think you’ll our a see bigger

broader able enablement a not We thoughtfully what we I when like And Adobe, question that once are we are the enablement, are investing deliver do an they restaurants channel get partner continuing water there. is Agilisys, there, hotels whether in they can the or like on we of and – just your e-notary for the found we That same that being but what we helps? to case partner your application basically integrated, repeatedly access act when DocuSign a wildly lift, much a basically are life to are investing e-signature, because think the about Agilisys or very and them the of it’s and casinos. easier that to hotels, it’s

Bhavan Suri

and the at one-time Yes. we I No, not and about past point there, COVID think Yes. will Jeff hopefully items, and some of I guess, helpful. we really and find right. Yes, move e-signature as look and - but assume let’s you at no, which if I the know that’s we workloads, actually

check benefits a of of and in a been because are sort The look like do if e-signature would in wrong think of hotel, the idea the makes about the might no churn it one-time we of return self one then has is think bank, paper. lot want be a Other when get the environment? a ask maybe seeing, what parts was rates the people that item check-in App, traction that’s and look no identity an more you of about of a that. doesn’t into for if themselves is available that sense. normalized you you and mobile fashion going go to go growth seeing back anything growth at you market you totally sort But normalized check-in word. we Thank to for to we are check-in to which while, but guys me adoption, should e-notary how that? go like stretches feel about idea think going maybe about of but someone and deposits, you. not so, That The think And doesn’t back how

Max Carnecchia

Yes.

busting, hard to examples. I it check-in, more Agilisys good on and some check So, around think into hours the it’s the even element, spend I to be we but two waiting line this when one Cesar’s with you the to desk check-in. self with relationship of When use But check-in on avoid get to – is mean, there you right. the right, here is really sitting Agilisys, your you and predict, embarked XXX front front and people self contact you able to in the Palace walk phone with to was

a we UK. services example the financial saw original of in the have, ton through particularly we with and that point, applications your PPP it’s government contactless. an in the four the But We So, customers the regard. months, for with case think partners use just to of that our business our this in of saw go customers some accelerated the the I loans, things Europe, more we and last was in kind

from year April as fingers cross front I spiked May. UK. have door business volumes the And would and really And would their in government a is Our my I cross March, and partner there – much unemployment my it’s to as benefits the love now. the unfortunately, hard I the basically from of – the the getting fingers

Bhavan Suri

That’s right.

Max Carnecchia

don’t I Jeff, miss did in Yes. I know, anything Right. there?

Jeff Davison

No.

those I think this of – I The applications it there people people the like and that see will Bhavan, that of just be see you hopefully for right norm way that, it will more that there contribute I to we we or government uses, to you becoming where you were some spikes services the hit some on. think, it, quarter referred But a a cases think in the a put definitely thing are in did Max needing see. repeatable don’t and continually.

and will those things So ask definitely retreat down. back come

Bhavan Suri

And, I quantify, yes. hard transparency Yes, the Congrats. into it’s nice guys to well, the present said, things. us like and really you appreciate giving job. I guys Thanks

Max Carnecchia

Thanks Bhavan.

Bhavan Suri

you. Thank

Operator

question Mike Northland Securities. next come with our will And Grondahl go from ahead. Please

Mike Grondahl

Congratulations guys. Hey on quarter. the

is little the kind to a bit what level mobile Just could question in check bit I deposit? just, did see? of just, you demand talk you it. revenue a magnitude increased the is of know First light but little about

Max Carnecchia

there, be into how actually revenue phone, latency going to am I us. then will serious to so pretty then, systems the seeing going member reseller of Yes, a as anecdotally core logs providers, everybody the electronically and then relationships on volume the works and there pictures because service to we seeing indicated for checks banks matriculate talk bit Jeff a the volumes direct providers, like the through little that those from and the remind that the on both increased actual between double-digits. those from banking model all get taking and the dramatically, based let

Jeff Davison

Yes, Mike, the models later. through the flow understand, revenue you for deposit, the will as mobile

use as to closer to there and was So, tranches this deposit usage teens, increased in of the closer the What above purchase see to is, would partners And usage, during mobile up then I XX% we describe low the lower back. to that big well come transactions. the they quarter. use definitely increased them They banks, XXs.

already. lots the next different growth they’ve usage as processors and So purchased that really will in quarter good expire then quarters through over the banks that in the and flow multiple

Max Carnecchia

last go bigger help the through back of if then kind just had and mobile the their increase a a Sure, like, calls mobile those of out software, apps. report users mobile sure. from active they of banks Mike, a XX% note their we their U.S. earnings And in mean, saw there, XX% bank transcripts banking where in I greater we week than me their deposit stats checks in some and X% - increase banking

there. So, that I mean, out inflow is

Mike Grondahl

got on Wells about you this think what I is week I what And Yes. have you’ve more Do mean, pricing don’t ago, saw. I said, curious banks, in Max, even was seems your where I In it it from you’ve a demand. a customer. kind you power view And update power? the product pricing with bank now what’s lost that so - or just wrote guys X,XXX Fargo current of that?

Max Carnecchia

access team and over reported Yes, we’ve we’ve with picked up I the pretty think and think on that and that Mike consistently, a I has it. now year run

to unfair eyes are with and in We of just that and contracts understand not our here. partners exactly are is customers or renegotiated. to partners, our value any a tremendous We’ve being value being got the way some the delivering are banks of on amount that. but we the what We

better that they are checks Basically, and those that. those relationships being whether are apps or those are with parties. horseshoes getting our are to more Well, software starting and in the they the the ATM So as processed. processed checks branches, checks to are checked in economics increased both And in processed the volume represent in as see mobile being for through mobile then well. results being you reasonable

we each of pricing one power are So, prosecuting that channels. in those

Mike Grondahl

And then record mobile think just maybe lastly, I were in elevated you implementations How ID. those? you Got said it. had

Max Carnecchia

it’s customer very revenue And really over side the the gain. top and many right. our are customers from a XX% Prados lives because quality away customers so hundreds the Yes, know statistics selling, what about to of how customers biggest so, we base install we is, the Law, providing it’s identity when volume it’s we of – had shy many from a gain, go on and of generate not

really up But up ramp they we’ve gone how where something back they the and tale. was in XX%, once implementations through has and quarter What somebody are your XX quarter it? how from question, best like their additional doesn’t the course is of XX% can which it’s coming the the to had in is, next that production? are tale The volumes probably end So, fast who production. actually

Mike Grondahl

Fair. Fair enough.

Okay. Thanks guys.

Operator

[Operator Instructions] we question Please And from our will take Aftahi Partners. next ahead. go Capital Roth from Darren

Darren Aftahi

Hey hope guys. Thanks are taking well. I for and my questions you

so, kind you you So, the trying the quarter to on those quantity of on characterize follow-up of just in terms made, in comment XX Max, additional versus would implementations quality. How so ID? or

Max Carnecchia

quantify, what you mean? When you say do

Darren Aftahi

got Well, generate sort of I mean, quality are large, stickiness… customer? a strong to terms the in transactions, the going mean, of of ton of I they super the

Max Carnecchia

Yes, I Yes. I get get. it.

we And that, marketplaces, was in Fin-Tech looking to we that accounts. Netherlands, approach financial in, of about are bringing we focus. sub-market segments clear after, focusing as really within were So, market to year, UK, of go for beginning then, an business big things making the one more think some around you’ll it adjustments what services, were we of of customers talked fiscal We were back was a was about were took thing. identity more this our where to on and for in target the the our we if the really our year. talked we go – part the November kind to Spain, I fiscal in countries activities that of we earnings we remember call, the our And

not have our fishing sales teams, we sellers have territories. our here. with where are direct are account lists don’t target fishing we They with spheres, geographic So, nets

Fin-Tech the value target find and for very So, lifetime say what been that amount a match a just three good we on a It’s accounts is, do. can get overarching to we’ve around do four the or for their trying that we largest to intentional going to to or from a smaller our quarters, answer thoughtful your a guys last are problem. value It we not tremendous know the are we relationship with that the with Identity some is I really the solve really Mitek they the up when really context on may happy really have years good financial quarters, We the and and really of they in and wake a a some that am couple that hit now won’t business the the volumes we winded two production, means intention using start-up. on way going dominate market. are They of company focused but be and question with. side services it going kind names likewise, long that’s to big will or as to three a of side from got some of names marketplace and names take some big are leaders

feel So, it. about good really

Darren Aftahi

for Thanks Great. that.

branches going we bank. kind with back just things of just ecommerce, how to in shift question struggle So, a to the pull instrumental seeing forward for were like the while COVID or like not

cetera? like just changes ID on maybe of maybe et days mortgaged, how deposit, shining has with curious kind you of up banks leaner PDAs and so, with they and are am your of side being multiple are kind working in transpired I And pipeline kind the position that XX products of on

Max Carnecchia

Yes.

so, guess, break two into pieces. I well, this So, we

to There moving came the move one this that out that digital to to year number using in and were check are in check there June was deposit, mobile good was the deposit of a thing around like that’s thing. as is the On just COVID branches mobile kind digital well. Europe, a we’ve point features javelin of both before now demographically. decline seen in study domestically that And and banks

the yell, instrument the short-term the still peer-to-peer checks ahead a electronic of In approaches, this so that’s or mobile to more as to these So, being are more is for and app threat of via of that’s that’s used, to And ATM whatever some the Fest phone your neighborhood no German it. peer-to-peer at threat us us, on being your branches doubt in as ahead opposed much a as reason. closed a deposited long-term. about financial the

There the part be are their of what invested is, three last going think my through Fin-Techs that assessment are are months the strong automation of question transformation through accelerate and and going with identity, activities. going what the to to digital financial to institutions, that second I is our survive function have banks, we four the though the a of So, or we able that the in really tough pretty within some some already deepwater. of – pretty them it’s control, other are side – and there some to of our some a of institutions that number but opportunity some of not are our And certainly ledger, financial of put, function gone that’s a customers.

going or it not for us. enough, that’s last just fast because move to isn’t opportunity you sound are one make you didn’t digital because business If the your

So balance that’s for you. a

Darren Aftahi

And update of the your on on Thanks. in that’s going just just business. then side lastly, Thanks. IP any legal

Jeff Davison

There any what’s material not to Hey, Darren. there. on update really going is

much are the beginning we pretty quarter the of and office. waiting courts were at for the the We where patent

the has So, then both review I mean, there. requests, office and patent several courts in Texas

So, we hear on when waiting will and to share those back we know.

Darren Aftahi

you. Thank Great.

Operator

Kehrli additional And to would remarks. or any no with turn further the questions, closing call back Todd like to I for

Todd Kehrli

updating you thank us and joining for quarter. to look everyone today. you again next We operator, you, Thank forward

Our call has concluded. Have a wonderful day.

Operator

disconnect. you participation Thank now conference. today's and concludes you your this for may And

Mitek Systems (MITK) 30 Jul 202020 Q3 Earnings call transcript