Mitek Systems, Inc. (MITK) Q1 2026 Earnings Call Transcript
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Overview
The earnings call reveals strong financial performance with a 19% increase in total revenue and a 69% rise in adjusted EBITDA. The company is effectively expanding its Fraud and Identity solutions, evidenced by a 30% revenue growth in this segment. Despite a slight decline in gross margin, the strategic expansion of Check Fraud Defender and strong shareholder return plans, including a new $50 million repurchase authorization, contribute positively. The Q&A session highlighted competitive positioning and growth in other verticals, reinforcing a positive outlook for the stock price over the next two weeks.
Key Financial Performance
Fraud and Identity revenue $25.5 million, up 30% year-over-year. Growth driven by $3.6 million of SaaS growth led by MiVIP and Check Fraud Defender, reflecting transaction volume momentum and broad-based adoption.
SaaS revenue 21% year-over-year growth, representing 43% of last 12 months revenue. Growth attributed to increased transaction volumes and adoption of solutions.
Check Verification revenue $18.8 million, up 6% year-over-year. Annual transaction volumes stable at approximately 1.2 billion, reflecting the durability of the franchise.
Check Fraud Defender annualized contract value $17 million, up 44% year-over-year. Growth due to expanded participation across the consortium and improved detection accuracy.
Total revenue $44.2 million, up 19% year-over-year. Driven by strength across the portfolio, including Fraud and Identity and SaaS growth.
Adjusted EBITDA $13.3 million, up 69% year-over-year, representing a margin of 30%. Growth driven by revenue scale, mix, and incremental capitalized R&D.
Non-GAAP gross margin 82%, a decline of approximately 280 basis points year-over-year. Decline due to early-stage Check Fraud Defender pilot costs and SaaS/services delivery economics.
Free cash flow $6.6 million for the quarter and $60.5 million on a last 12-month basis, representing 102% conversion of LTM adjusted EBITDA. Elevated conversion due to nonstructural tailwinds like interest arbitrage and improved working capital efficiency.
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Operating Highlights
Fraud and Identity revenue: Grew 30% year-over-year, driven by SaaS growth and broad-based adoption.
Check Fraud Defender: Annualized contract value now at $17 million, up 44% year-over-year, with data sets covering over 50% of U.S. checking accounts.
MiVIP: Enabled new digital channel use cases and supported expansion across industries beyond core banking.
Geographic expansion: Progress in EMEA, including migration of legacy customers in Spain and expansion into telecommunications, insurance, mobility, and payments.
North America performance: Driven by large enterprise renewals and targeted expansions, including a new platform entry point at a top 5 financial institution.
Revenue growth: Total revenue was $44.2 million, up 19% year-over-year.
Adjusted EBITDA: $13.3 million, up 69% year-over-year, representing a margin of 30%.
Free cash flow: $6.6 million for the quarter, with $60.5 million on a last 12-month basis, representing 102% conversion of LTM adjusted EBITDA.
Unify and Grow ethos: Focused on fortifying Check Verification, unifying Fraud and Identity portfolio, investing in innovation, and disciplined capital allocation.
Capital allocation: Retired $155 million convertible senior notes, drew $50 million on term loan, and announced a new $50 million share repurchase program.
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Risk or Challenges
Generative AI and Synthetic Fraud: Generative AI is accelerating synthetic fraud globally, increasing the need for fraud detection solutions. This poses a challenge as attackers become more sophisticated, requiring continuous investment in fraud prevention technologies.
Check Verification Market Decline: The broader check market is experiencing a gradual secular decline, which could impact the stability of Mitek's Check Verification business despite its current resilience.
Fraud Democratization: Fraud is becoming more democratized and easier to execute at scale, increasing the volume and complexity of fraudulent activities that Mitek's solutions must address.
Early-Stage Costs for Check Fraud Defender: Early-stage pilot deployments of Check Fraud Defender incurred costs ahead of associated revenue, which could pressure margins in the short term.
SaaS and Services Delivery Economics: Higher volumes, onboarding activity, and customer implementations are pressuring SaaS and services delivery economics, potentially impacting gross margins.
Regulatory and Compliance Risks: Operating in highly regulated industries across multiple geographies requires adherence to complex regulatory standards, posing compliance risks.
Resource Allocation and Talent Management: Reallocation of resources and upgrading skill sets across product, engineering, and go-to-market teams are necessary but could pose execution risks if not managed effectively.
Economic Uncertainty: Economic uncertainties could impact customer demand and the broader adoption of Mitek's solutions, particularly in financial services and other industries.
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Guidance & Outlook
Revenue Guidance for Fiscal 2026: The company raised its fiscal 2026 revenue guidance range to $187 million to $197 million, up from the prior range of $185 million to $195 million. This reflects increased visibility into Check Verification and Fraud and Identity segments.
Second Quarter Revenue Guidance: Revenue for the second fiscal quarter is expected to be in the range of $50 million to $55 million, with variability due to the timing of Check Verification license renewals.
Fraud and Identity Revenue Growth: The annual revenue range for Fraud and Identity has been increased to $102 million to $107 million, reflecting strong execution and customer expansion.
Adjusted EBITDA Margin Guidance: The adjusted EBITDA margin guidance for fiscal 2026 has been updated to 29% to 32%, up from the prior range of 27% to 30%, driven by higher levels of capitalized software development.
Capital Expenditures and Depreciation: Capital expenditures are expected to be approximately 3% of revenue, and depreciation and amortization are expected to be approximately 1% of revenue.
Check Verification Business Outlook: Check Verification revenue is expected to remain stable, with annual transaction volumes at approximately 1.2 billion. Renewals and conversions from CheckReader to Check Intelligence are expected to drive performance.
Fraud and Identity Portfolio Expansion: The company expects continued growth in transaction volumes and customer adoption, driven by the shift towards unified workflows and increased fraud prevention needs.
Check Fraud Defender Growth: Annualized contract value for Check Fraud Defender has grown to approximately $17 million, up 44% year-over-year, with expanded participation and improved detection accuracy.
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Shareholder Return Plan
Share Repurchase Program: Mitek announced a new $50 million share repurchase program. This program is part of their disciplined capital allocation strategy, which includes returning excess capital to shareholders. During the first quarter, Mitek repurchased approximately $10 million of shares, with an additional $7 million repurchased after the quarter ended. A new 2-year $50 million repurchase authorization has been announced, effective upon completion of the current program.
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Key Q&A
Q:Can you discuss the competitive environment for the Fraud and Identity segment and why you think you're winning?
A:The environment is growing due to AI, generative AI, and synthetic fraud. Mitek is well-positioned because of its broad platform, biometrics capabilities, and ability to detect synthetic fraud and deep fakes. The company benefits from a network effect, where more customers and data enhance the system's effectiveness.
Q:How are you thinking about the pricing lever for growth in the Check Verification business over the longer term?
A:Pricing remains strong due to solid relationships with core partners. While checks are declining, Mitek's solution is mission-critical for financial institutions, leading to deeper penetration and stable activity with nominal prices.
Q:What are you doing from a go-to-market perspective to drive value for customers in Fraud and Identity?
A:Mitek is focusing on a unified platform approach, integrating fraud solutions, identity, authentication, and deep fake detection. The sales team is trained to present the full suite of solutions, targeting high-level decision-makers in financial institutions and expanding into other verticals like government, insurance, and telecom.
Q:Has there been any expansion of the sales force or marketing budget?
A:Yes, the sales force has expanded with additional hires and training. Marketing budgets fluctuate quarterly, and investments are being made in R&D and go-to-market strategies. The unified sales force is creating synergies, and additional talent is being added to accelerate growth.
Q:Can you provide more color on the pilots for Check Fraud Defender?
A:Pilots are progressing well, with billions of transactions being processed annually. The increasing data coverage enhances the value for participants, and the company is encouraged by the progress. There is no average life for a pilot, and updates will be provided as they progress.
Q:Are AI-driven fraud and synthetic fraud impacting sales cycles in Fraud and Identity?
A:Yes, institutions that have experienced attacks may accelerate their sales cycles. Engagement often starts with one area (e.g., digital checking accounts) and expands to other areas like auto loans, mortgages, and credit cards. Broader authentication and additional signals are also being incorporated.
Q:Are you seeing more activity from channel partners in Fraud and Identity?
A:Yes, channel partners outside financial services are bringing opportunities in other verticals like government and insurance. Core financial services partners are also focused on addressing synthetic fraud, which is a top concern for their customers.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the sales force expansion, such as the percentage increase in headcount, and did not specify the average life of pilots for Check Fraud Defender. Additionally, they used vague language about the progress and timelines for pilot conversions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Check Verification
Fraud Identity
Identity portfolio
MiVIP
Unify ethos
afternoon today
authentication life
consortium
context
coverage
decisioning
deployment
ethos hold
fraud
geography
infrastructure
institution
mission
network effect
note today
participant
participation
pillar
point solution
prevention outcome
scale
shareholder value
signal
today share
transaction journey
use case
verification
workflow
MITK Transcript
Mitek Systems, Inc. (MITK) Q1 2026 Earnings Call Transcript
Positive2-6
The earnings call reveals strong financial performance with a 19% increase in total revenue and a 69% rise in adjusted EBITDA. The company is effectively expanding its Fraud and Identity solutions, evidenced by a 30% revenue growth in this segment. Despite a slight decline in gross margin, the strategic expansion of Check Fraud Defender and strong shareholder return plans, including a new $50 million repurchase authorization, contribute positively. The Q&A session highlighted competitive positioning and growth in other verticals, reinforcing a positive outlook for the stock price over the next two weeks.
Mitek Systems, Inc. (MITK) Q4 2025 Earnings Call Transcript
Positive12-11
The earnings call highlights strong SaaS growth, improved EBITDA margins, and increased free cash flow. Despite a slight decline in check verification revenue, the company is optimistic about future growth, particularly in SaaS and fraud solutions. The Q&A reveals confidence in achieving double-digit growth and strategic initiatives like One Mitek. While some management responses were vague, the overall sentiment remains positive, driven by strong financial performance and strategic direction.
Maplebear Inc. (CART) Q2 2025 Earnings Call Transcript
Positive8-7
The earnings call summary highlights several positive aspects, including strong identity portfolio growth, expanded Check Fraud Defender coverage, and enhanced automation efforts. The company maintained its full-year revenue guidance and raised its adjusted EBITDA margin guidance. The Q&A section revealed management's optimism, with diversification and strategic partnerships contributing to ad revenue growth. Despite some unclear responses, the overall sentiment is positive, supported by positive guidance adjustments and strategic initiatives. However, the lack of market cap information limits the prediction to a 'Positive' sentiment, expecting a stock price increase of 2% to 8%.
Mitek Systems, Inc. (MITK) Q3 2025 Earnings Call Transcript
Positive8-7
The earnings call summary and Q&A reveal a generally positive outlook. The company reported strong growth in its identity portfolio and Check Fraud Defender, with optimistic guidance and expansion plans. The Q&A highlighted ongoing partnerships and pilot programs, indicating future revenue potential. Additionally, improvements in margins and operational efficiencies were noted. Although some guidance was vague, the overall sentiment was positive, with a focus on growth and profitability. The absence of negative financial surprises and the emphasis on shareholder returns further support a positive sentiment.
MITK Slides
MITK Report
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