MITK - Earnings call transcript Q2 2021

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Operator

Good day and welcome to the Mitek Systems Second Quarter Fiscal 2021 Financial Results Conference Call. Today's conference is being recorded. At this time I would like to turn the conference over to Todd Kehrli, MKR Group. Please go ahead, sir.

Todd Kehrli

Thank you, Operator. to Quarter welcome Conference XXXX and Call. afternoon Mitek's Fiscal Second Earnings Good today's CEO, are CFO, me call With on Mitek's Jeff Max Davison. and Carnecchia;

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

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

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

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

Max Carnecchia

today. Good staying safe. I afternoon, Todd. us are and for you joining and hope Thanks, your everyone. families Thank you healthy

I revenue lines First, work, continued quarter performance commend dedication because delivered with across second Mitek their for team business. and want exceptional hard determination, record both of to of Mitek your the

our For more revenue the our second consecutive highlighting high verification XX% in year-over-year, growth grew quarter, this identity than leadership market.

deposits business consumer by growth adoption. revenue to continued solid deliver increasing Our also driven

delivered and All of in this of per non-GAAP income % operations $XX.X resulted $X.X or diluted remain more of appropriate and verification established technology increased on-boarding novel added scale identity breaches. of existing helped in And frequency fraud we verification been use quarter, More doing of momentum cash by up new initial beyond intelligence we We from an customers year-over-year. year-over-year financial and million, this energized XX% up artificial telecommunications, and our revenue and enabling identity Identity are XX nexus verification $X.XX million Also the customers net to the trust are business rising the Rapid numerous million. the in never digital building identity relevant. and more solutions advances has forms online. $X.X well data emerging of of as outside market rapidly we with organizations marketplaces, solution. as share, in of identity verification expanding case. services,

customer's adding of organizations protect to is data on All access. and which pressure heightened

opportunity customers has Business $XX authenticate scans companies combined Forbes that more $X,XXX. with Javelin's alarming identity business an they channels the I fraud can identity fraud fraud digital and across to As To loss account point multiple data are usage identity verification prosper recently trusted than to XX who online fraud. billion incident a million United to consumers a being the that the American accounts. rapidly to must channels Council and fraud lifecycle. that Most in need to continuously commerce to fraud fraud have in was in demonstrate secure and verify become total no user's fight significant for growing for staggering simply made commerce, and These to protect per to validate of the lost identity across the their half customer was victimized to the throughout commit study, online. their they takeover luxury of the loss, numbers States of The are According longer now XXXX. instead of experienced the exactly new at consumers presents imperative. investment as wrote able know access function on-boarding, were annual online. customers data perfect by being criminals impacted be in integral for Organizations long-term transitioned identity

identity end our So solve transactions. becoming across authenticate Mitek continuously stronger the I come and identity digital to integral unchallenged. only the verification active service access the help in biometric recommends of enterprise problem. approach we to need of primed next using as the management and and together an most prevention decade by to to standards class rapidly quote beginning is Identity and of ecosystem an platforms believe remain Well and from and fraud is category to both element behavior will of be is an this organization's Javelin deliver provider authentication we analytics should verification stack used capabilities. organization's of identity lifecycle forms passive authenticated defined be biometrics technology continuous and

is provide and to advanced with fraud identity identity Our on-boarding and and detection. initial re-verification, biometrics linked approach devices, continuous to signals layered from authentication, documents,

track world's an this customers to as our our geographies expand for we markets hundreds and and of we is and and banks brands record the fast-growing momentum success reach we fighting are continues the target identity the represent proven ambition Mitek's in evident. into of grow indispensable is to best-known fraud partner Our experiencing market. globally be

is customers strong. potential new pipeline of Looking forward, our

multiple of traction. are are customers channel their expanding use across partnerships existing and Our gaining mobile our verify use cases

verification, for solution to committed and identity growing this product industry-leading we our are expanding into superiority reach maintaining market. the large and As

and are to protecting threat and simple We from products are while committed growing intuitive to fraud. the of innovation that use delivering organizations

business. to every usage deposits continues banking quarter. Turning to our Mobile increase

important Chase feature their banking This devices active XX% deposit mobile app to valuable XX% Cornerstone consumers X% quarter Wells Fargo a checks increased increase Advisors a mobile reported X% XXXX check surveyed recent to intend most banking increase users customers banking mobile and was most according to XX.X mobile banking Similarly, million. in the XXXX. features with customers check to using said Forbes banking in mobile adoption, reported in million mobile survey. JPMorgan this and the was in rated XX.X in depositing of one mobile continue of by depositing XXXX Along

XXXX, solution sizable and acceptance a that our pushing used the it customer in to during time in a institutions continued mobile are check business for of significant use X,XXX the mobile As for increase XX% highly growth mainstream grow the opportunity profitable indicating consumer of quarter with deposit its the for consumers result deposit savings for Surprisingly, continue year-over-year. this deposits our very adoption. XX% surveyed revenue And adoption, them. increasing first financial as cost represents

and telling featuring deposits surprised product consumers So Magic deposit of more a mobile see Samuel to forward experience. Barkley more our record its show continuing is economy. products ease is you role It discover demonstrates we is. closing, play look don't adoption verification central And for and a market the that that Charles ad how in revenue our be ongoing. as digital Johnson magical L In and acceleration are TV convenience. solutions using our strong when demand results and And our you and Jackson, beyond. this strengthening XXXX we our in identity The position our

in detail, open call the the questions. and following financial over ahead. to up Jeff, results turn please I'll call more we'll Jeff's Jeff Now the go to discuss to remarks,

Jeff Davison

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

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

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

is of higher a Software QX quarter other in consulting in SaaS and usage. which due over increased SaaS $XX revenue, was year-over-year. transactional from hardware million. includes year-over-year maintenance, related The year. transactional was quarter, revenue, an few increase an XX% for revenue, XX% increase revenue transactional million increase and to million, last Services transaction $XX.X and customers with the This services the $XX which revenue to impacted positively increased to due revenues growth XX% was of

be with significant year-over-year, next our began. quarter. out QX happy quarter the point may since at this these look growth that pandemic very would are continue in will we the levels comparable on year-over-year basis first revenue forward, we I not Also While the increased a as

QX may to the the comparable saw As related transaction increases year, volumes rates. significant we you impact which will pandemic, in growth recall, in last

to cost to million increased business. R&D million identity expenses year associated and $X.X for revenue $XX.X hardware for quarter. of our ago. million We in G&A and the or compared the in compared margin expenses a revenues QX Total per increased revenue million. year million to quarter. net compared Identity higher year. to Sales quarter $XX.X revenue quarter $X.X to were XX% for were strong expenses verification $XX.X including XX% ago. for $X.X increased with investments increased compared year-over-year for deposits revenue to was software expenses QX, gross million $XX.X were $X.XX XX% and For income million services QX was million of revenue $X.X XX% year. $X.X our last is increase on delivered the compared to million year to year-over-year margins the and cost share. due GAAP $X.X grow expenses, to marketing other XX% GAAP a Total XX% Gross of diluted operating and $X million to last quarter This margin gross was were last the million. due

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

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

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

to and at Turning cash March sheet. to successful $X.X quarter flow sheet. XXst $XXX cash operations convertible from We the total million balance investments a adding cash in and during completed million. debt to approximately offering, Bringing generated our the balance in million our $XXX.X

reporting are we results, closing, $XX.X Our accounts of cash the open the as DSO for same second and record to net and revenue flow of their while million customers from include Operator, in XX our our we In at pleased remarks. as mitigating fraud. forward quarter balance our operations. Please coming with non-GAAP strong quarters a help digital very look our receivable progress prepared We concludes the as partners transformation, represents days. income that well continued accelerate line questions. which time

Operator

Bhavan you. from with [Operator question Thank Instructions] Blair. first William We'll our take Suri

Jake White

ID How Hi, sales given everyone. recent the recent verification? hear balancing growth inorganic given in curious Bhavan. just potential for investment I'm to you're seeing is versus This thinking marketing and on Jake about are you're the capital raise. how actually for allocation interested M&A just the you

Max Carnecchia

the the Hey, beginning Jake. cash we calling. I question. Thanks tilt for just February. the Yeah, Thanks of at convert up for it think,

still that talked focused on primarily the focused about it's point, primarily use acquisition. at proceeds, and on we relatively So fresh of

two probably to the would I around think acquisition. the top number the on list. and get then down other priorities the things the Number two four business there list. Number three that's it's on within list. And one on with be number

Jake White

process And just update is follow-up, if curious, a then tracking? just search as on and Awesome. how the CFO any is there the

Max Carnecchia

set Jeff to help Process here continues the to of safe to roll have along. very fortunate we're question, in It's us. hands and a great

a that your but fit expectation. getting fully through from couple we're still would away resolved, probably tuned. this. going We're I of of So stay months kind

Jake White

Sounds great. for Thanks my taking questions.

Operator

from Next Grondahl we'll with Mike Securities. Northland hear

Michael Pochucha

just cases that? Maybe growth. like Thanks. about Michael there positioning generally expect thoughts year. about questions. see like we certain later as This just move Thanks lot any strong on use of the Salesforce or it's you of industries Is this that is for Mike. a where to taking for towards half Can first talk

Max Carnecchia

go-to target within targeted we're market, Mike our on and well think clear you're on approach our Thanks one focused accounts. marketplace change specific think don't to segments, that. into for internationally accounts, financial I we very don't we're we through as this of the for Mike. to accounts not going focused our Mike. to Yeah, with year a went FinTech, think, halfway And partners. was and but services, it question, just I we really domestically, going year. top fiscal have through those us named each I both then channel and direct targets -- think see where

we if to and may kind expand investigate predictions premature as to that. year. any little are aperture a We explore think start but I open ways about think on that making to there and the bit, of be next

Michael Pochucha

for push of the are Thanks. of deposit, it's month going And that structured just a it. Got way benefit or resellers that XX still the of it's for safe to mobile quarter say forward with where some or kind so, last contracts on those kind saw to roles we the two.

Max Carnecchia

Jeff how been and mean works, yeah that I that the on what but by kind know, there, that? necessarily model that's Jeff, to let revenue show actually seen everything I I'll comments up through some is we way you want government. yet. to work think service but add that's don't issued the Yeah, haven't in of out for revenue do core the us to its I providers resellers increased add [indiscernible] that

Jeff Davison

this on you add, the re-order usage would just to the though that I understand I increase deposit, depleted year think way the inventory. continued XX% in we over system work mobile see as I just checks the that's contracts in and plus add will last Yeah, through flush the and they being processed. quarter that

strong. still it's remains very So

Now next on quarter should the again be the first anniversary pandemic.

how usage one still this quarter see but increase over we'll XX%. impacts quarter, next was check that So year lapping that strong

Michael Pochucha

it. queue. in back Got Thanks. I'll the hop

Operator

with hear We'll from Hamzah Jefferies. now Mazari

Hamzah Mazari

Hey, you. good afternoon. Thank

that talk the how [indiscernible]. Kount, done did M&A size offering identity you your up about different of bureaus and have on that just from deals on some like Could is Just maybe pipeline. maybe the Mastercard

talk pipeline about for you? sort and space how is opportunity your of fragmentation Just this the differs offering in and

Max Carnecchia

and to we the Yeah, you in validated in extremely identity particularly and start digital it identity there. still fast countries we be early then Hamzah, It's stage localized, very category. way is find fragmented Identity for answer growing. meaning I think it's to is in authenticated different laws. is the It's that right do, early, with the the that things subject local

going and as signals it as with who I'm to looking be yeah, the of to there, talking we've acquisition. so advanced different most as how first those think taking companies world growing just banks targets out, telling going the light entered So, to market the out fast want staying for we're having I'm and want to we many it many our name got not work, the and potential as they name where should approaches. guiding what FinTechs space so to to use for the they're but they companies. approach in customers in some laid close how probably not some largest want of even this that and world, our far to how us going they orchestrated, categories, we

Hamzah Mazari

you. you already? COVID mentioned seeing where use of adoption And touch post-COVID Got follow-up clearly during greater I banks idea and question. my have adoption maybe the names and on mentioned deposit some over, increasingly there's Thank you an turn know you. I post-COVID on it smaller know mobile too, the today. side, some sort also I'll adoption you but sits of a do sits of just maybe the larger where you deposit. are of

Max Carnecchia

bank, deposit, financial back big tail used Yes, take represent regional and community let the the snake bank, industry. of union, head credit all financial X,XXX bank, Small bank digital the US long bank, bank, mobile big question, that's that first. the of of half me the the institutions

one do if a is with on. that you're everybody, to front-end want take So question up deposit, of you harder The mobile showing Mitek. to

sorry, we to on adopt be ATM or is retail we should folks do all our have to time adoption go machines, and over like that good able precise were retail on that being the that with but so checks. quickly, information, confidence. more validated information average, good were for touch check action deposited about banks adoption the how half so checks mobile a share average are take mobile deposit of lot on out across better forced I the strategic was that your we not high with a don't and longer pandemic for because there higher trend can pretty least customers were XX%, something as reason of reason talk want that is there 'XXs, but pretty, will so by something planning of us told adoption is What teens device, not XX% don't have kind we've at continues There's no it what no we think the then to we higher, you branches closed, institutions be when force for via the the adoption X,XXX the there's mid of Before and a give internally and adoption they handle mature. now is how XX%, about, happen those and lower, the retail being to I'm is happy it that a slightly adoption shown it to is we're just checks, get

Hamzah Mazari

much. so you Thank Great.

Operator

Benchmark. from We'll hear with Instructions] Mark Schappel [Operator

Mark Schappel

some repeat revenue won't why is clarify Thank on wonder starting that you could it why you you nice revenues XQ to not quarter. of if of this repeat, won't repeat? question likely just noted anyways likely you Hi. with the in remarks, next prepared some Jeff, quarter. your I and for taking job transactional my the

Jeff Davison

Sure.

we quarter, that transaction levels be higher a second maybe to are time more this not in quarter. that of handful had the in just customers repetitive likely So, reached one

may quarter. not next So repeat they

the my my transaction to specific was of customers. There's really that crux specific So point there.

Mark Schappel

great. mobile an may and deposit and that for had Okay, success you've there And Thanks. opportunities company any front? I wondering in be then, initiative some whether you've then if the the that in noted past on ongoing at price increases still was Max, that's

Max Carnecchia

taken to results many, ago We've the for of for come that, a it prosecute increases Yeah, just general that terms trend continue and right that's just we we that seven private work, and to as tremendous nicely. in not we the do within this -- that up decades the XX can up last some -- and we'll a because steady just it's that, value the our about renewal every reasonable us ruthless fair, six steady renegotiation. and or those price a slow, the getting amount firm reviews but and and not or it's review consistently were back on of ago, hockey contracts we've it's It's when in many they into that. see over a so nice up but of issue were stand continue quarters days these just quarterly not Mitek, and course stick, bringing we've cases business you years products to continue Mark, peers, improved to economics to not customers thanks these contracts stood because whether they are our are talked were from

Mark Schappel

wondering finally you if then geography? any here And weakness business. in I saw respect Helpful. strength to any ID with particular or was Great. your

Max Carnecchia

on strong it. when about of to about quarter there Jeff Last quarter. and stronger care some It year organization strength it how can of. This in of geography, banger now feel had just needs we QX. in across a quarter out every in an just we and take even to geography. seeing we're problem in across industry. a the one-time quarter is was FYXX. a good QX but these It's touched We you things, I The that figure take had we know really saw every

Mark Schappel

me. from Thanks. That's all

Operator

any that And now Todd to Instructions] turn closing I today's over would [Operator conclude Kehrli remarks. session. for additional question-and-answer conference or will the

Todd Kehrli

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

has concluded. call wonderful a Our day. Have

Operator

And Thank conference. that will today's for conclude you participation. your

may disconnect. You now

Mitek Systems (MITK) 30 Apr 212021 Q2 Earnings call transcript