Q4 2024 Mitek Systems Inc Earnings Call

December 16, 2024

Irritation, there will be an opportunity to ask questions to ask a question you May Press Star then one on the Touchtone phone to withdraw your question. Please press Star and then two.

Please note this event is being recorded.

Todd: I would now like to turn the conference over to Todd currently of MK or Investor Relations. Please go ahead Sir.

Todd: Thank you operator, good afternoon, and welcome to my tax fiscal 2020 for fourth quarter and full year earnings Conference call.

Todd: With me on today's call are Mitek, CEO, Ed West and CFO, Dave Lyle.

Todd: Before I turn the call over to Ed I'd like to cover a few quick items today Mitek issued a press release announcing its fiscal its financial results for its fiscal 2020 for fourth quarter and full year ended September 32024 that release is available on the company's website at Mitek systems Dot Com. This call is being broadcast live.

Todd: Over the Internet for all interested parties and the webcast will be archived on the Investor Relations page of the company's website.

Todd: I want to remind everyone that on today's call management will discuss certain factors likely to influence the business going forward any factors discussed today that are not historical facts, particularly comments regarding our long term prospects and market opportunities should be considered forward looking statements.

Todd: These forward looking statements may include comments about the company's plans and expectations of future performance.

Todd: Forward looking statements are subject to a number of risks and uncertainties, which could cause actual results to differ materially. We encourage all of our listeners to review our SEC filings, including our most recent 10-K and 10-Q for a complete description of these risks.

Todd: Our statements on this call are made as of today December 16, 2024, and the company undertakes no obligation to revise or update publicly any of the forward looking statements contained herein, whether as a result of new information future events changes in expectations or otherwise.

Todd: Additionally throughout this call we'll be discussing certain non-GAAP financial measures today's earnings release and the related current report on form 8-K describe the differences between the GAAP and non-GAAP reporting and present the reconciliation between the two for the periods reported in the release.

Todd: With that said I'll now turn the call over to Mitek CEO Addwest. Thanks.

Addwest: Thanks, Todd and good afternoon, it's an honor to address you for the first time as CEO of Mitek.

Addwest: I would like to share my thoughts coming into the business My learnings over the last 60, plus days as well as the opportunities and actions that we're taking.

Addwest: Dave will cover the Q4 and fiscal 'twenty four results and provide some insight regarding the outlook for the year.

Addwest: And then open up the call for Q&A.

Speaker Change: Four key takeaways I would like for you to hear from today's call first the company now has an experienced leadership in place supported by a team with deep domain expertise, who are executing against a clear plan to get back to durable growth.

Speaker Change: We are nearing the fulcrum point for profitability on the identity side of our business.

Speaker Change: Third Mitek is becoming a comprehensive solution for fighting fraud, and mitigating identity related cyber security risks, including deep faith in gin AI fraud is significant and growing problem for all businesses everywhere.

Speaker Change: And fourth organic growth is our near term focus and operational discipline for long term value creation is our north star.

Speaker Change: So onto the first point.

Speaker Change: I recently joined Mitek in October inspired by its legacy as a trusted partner to thousands of financial institutions or <unk>.

Speaker Change: While the company has faced challenges we are actively addressing them and strengthening our foundation in fiscal 'twenty five.

Profitable organic growth.

Speaker Change: With a clear plan in place, we are well positioned to create significant value for customers shareholders and employees my confidence in my text potential is rooted in my experience as CEO at Cardtronics, where we delivered shareholder value by fostering innovation driving organic growth, while enhancing margins and building a scalable net.

Speaker Change: <unk>, serving over 1000, <unk> syntax and the nation's largest retailers. These experiences along with my alignment with shareholder interest drive my commitment to executing our growth and operating strategy here at Mitek and unlocking the transformative opportunities ahead.

Speaker Change: Since mitek founding almost 40 years ago, we had been at the forefront of innovation.

Levering mission critical software solutions to some of the world's largest financial institutions from enabling mobile banking to ensuring secure digital transactions, we've consistently solve the pressing challenges that our customers face today.

Speaker Change: Today, we find ourselves uniquely positioned to tackle new and rapidly evolving threats, particularly the rise of AI driven product.

Speaker Change: My comments today regarding the market are informed by meeting and speaking with numerous strategic customers and prospects over the last several weeks in Europe, the United Kingdom and the U S.

Speaker Change: Mostly very large <unk>.

Speaker Change: At the core of our success our mission critical solutions, serving over 7900 companies globally, including five telecoms fintech companies and marketplaces Mitek as a trusted leader in computer vision and identity related application of AI and fraud prevention.

Speaker Change: Revolutionized check processing with our mobile check deposit solution and we've continued to push boundaries with innovations and identity verification authentication and fraud management. This includes proprietary best in class multimodal biometrics frictionless liveliness injection and recently released deep.

Speaker Change: <unk> Detections at our core our heritage solutions in mobile deposits has been fairly steady over the last three years with total transactions exceeding $1 2 billion each year.

Speaker Change: Over the past five years Mitek has undergone a decent amount of growth in fiscal 19. The company had $85 million revenues, primarily driven by check related products fast forward to today.

Speaker Change: Most doubled in size to $170 million in revenues and expanded adjusted EBITDA margins to 27% now with over 40% of the business focused on fighting fraud and verification.

Speaker Change: While this growth is impressive it hasn't come without its challenges the COVID-19 pandemic accelerated digital transformation driving significant demand for our solutions and pushing the company to prioritize speed over scalability outpacing its operational infrastructure.

This challenge was amplified by executive turnover and major acquisitions, which placed considerable strain on our accounting finance and legal teams. This created issues that you are all too familiar with with the dust settling fiscal 'twenty five marks a pivotal year for mitek as we focus on strengthening our foundation unify.

Detections at our core our heritage solutions in mobile.

Speaker Change: New products and technologies and optimizing our go to market strategy to prepare for the next phase of growth.

Now turning to the second key takeaway, which has understandably been a major focus for the investment community. We are nearing the fulcrum point and identity.

Speaker Change: The company is committed to the goal of returning to double digit revenue growth during fiscal 'twenty six and beyond this will be achieved through streamlined technology optimized go to market strategies and cost efficiencies that will scale revenue, while leveraging prior investments in fiscal 'twenty five we have shifted our focus towards innovation and enhancing.

Speaker Change: Customer experience, while slightly reducing overall identity spending levels to position the portfolio for profitability. This.

Speaker Change: Storage really identity has been ash consuming and we have carefully considered feedback from our shareholders. Our valued partners in addressing this moving forward provide some context. This product portfolio was dilutive to our overall consolidated adjusted EBITDA margins by a high single digit percentage.

Speaker Change: In fiscal 'twenty four.

And with a disciplined execution against the following four point plan, we believe achieving 80% to $85 million and run rate identity product revenue is the fulcrum point at which this portfolio becomes margin accretive.

Please call please hold and operator will be with you shortly.

Speaker Change: Plan is as follows first cultural integration.

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Speaker Change: Over the past five years, our total head count has more than doubled to 630 in fiscal 'twenty four bringing an exceptional talent, but also creating silos entered collaboration and efficient execution. We're now focused on integrating past acquisitions aligning teams and driving product enhancements and cross selling we believe this initiative will boost revenue through better.

Welcome to chorus call, please hold and operator will be with two shortly.

Speaker Change: Selling and product expansions, while reducing costs by streamlining redundancies.

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Well, it's always a conference in Arizona.

Speaker Change: Technological integration of our acquisitions have significantly bolstered our technology stack with advanced biometrics liveliness platform capabilities that managing separate systems to preserve their unique innovation created fragmentation.

Hey, Mike.

Mike can I have your name please.

Speaker Change: For example, we have been operating multiple identity document verification systems, both home grown and acquired that address similar customer needs, but deferred and functionality.

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Although you're right I think you called me and recorded a logical integration our acquisitions have significantly bolstered our technology stack with advanced biometrics liveliness and platform capabilities that managing separate systems to preserve their unique innovation created fragmentation.

Speaker Change: We have been integrating these into a single streamline platform and we've already seen positive customer feedback highlighting enhanced performance and ease of use this consolidation is driving opportunities for revenue growth through cross selling and improved customer retention, while reducing operational costs by eliminating redundancies.

For example, we have been operating multiple identity document verification systems, both homegrown and acquired that addressed similar tests for knees are deferred and functionality.

Speaker Change: The third action to getting to the full complaint and identity is cost efficiency a key priority for us is reducing reliance on costly manual our agent reviewed transactions, which limit scalability through.

We have been integrating these into a single streamline platform, we've already seen positive customer feedback highlighting enhanced performance and ease of use this consolidation is driving opportunities for revenue growth through cross selling and improved customer retention, while reducing operational costs by eliminating redundancies.

Speaker Change: Through the integration of acquired technologies, and an enhanced AI models, we've significantly ramped up automation, reducing the direct cost per transaction per identity by over 25% and 24 with.

The third action to getting to the bulk of point and identity is cost efficiency. The key priority for us is reducing reliance on costly manual our agent reviewed transactions, which limit scalability through.

With automated transactions now the vast majority of our total transactions as we continue to increase the proportion of automated transactions. We expect continued improvements in our unit economics.

Through the integration of acquired technologies, and an enhanced AI models, we've significantly ramped up automation, reducing the direct cost per transaction per identity by over 25% and 24 with.

And finally go to market optimization to accelerate growth. We're focused on three key initiatives first increasing the maturation of recently acquired customers.

Second expanding within our existing customer base, such as new use cases, new products, new geographies and expanding to other business units and third acquiring new customers.

And finally go to market optimization to accelerate growth, we're focused on three key initiatives.

Speaker Change: Our my VIP platform has driven considerable growth with transaction volumes more than doubling and several tier one accounts following the first year of adoption.

First increasing the maturation of recently acquired customers.

Second expanding within our existing customer base, such as new use cases, new products, new geographies and expanding to other business units and third acquiring new customers.

Speaker Change: User friendly interface and flexible architecture allows customers to rapidly deploy new use cases, and activate additional signals driving further customer value and revenue per transaction for mitek.

Our my VIP platform has driven considerable growth with transaction volumes more than doubling and several tier one accounts. Following the first year of adoption, it's user friendly interface and flexible architecture allows customers to rapidly deploy new use cases and activate additional signals driving further tests.

Speaker Change: In FY 'twenty for revenue per transaction on my VIP was a multiple of that on the mobile verify I'd document verification engine underscoring its stronger value proposition as well as exhibiting pricing resiliency when compared with the pricing pressures experienced by Standalone document verification.

<unk> value and revenue per transaction for Mitek.

Speaker Change: Simply stated we want to leverage our proprietary differentiated capabilities and lessen the exposure to standalone commoditized offerings as customers increasingly levers to pull suite in my VIP products, we expect an uplift in revenue per transaction.

In FY 'twenty for revenue per transaction on my VIP was a multiple of that on the mobile verify I'd document verification engine underscoring its stronger value proposition as well as exhibiting pricing resiliency when compared with the pricing pressures experienced by Standalone document verification.

Speaker Change: With trust enabled cost thousands of advising our growing partner ecosystem the opportunity for new customer acquisition remains significant by deepening customer relationships and driving new customer acquisition, we're positioning my VIP as a market leader in identity verification authentication and fraud management.

Simply stated we want to leverage our proprietary differentiated capabilities and lessen the exposure to standalone commoditized offerings as customers increasingly leverage the poll suite My VIP products, we expect an uplift in revenue per transaction.

Speaker Change: That said, we want to assure investors that we will closely monitor the execution of this strategy in fiscal 'twenty five and if any significant deviations from our targets arise. We are committed to taking decisive data driven actions to maximize shareholder value to support. This we will continue to provide transparency.

With trust enabled across thousands of <unk> and our growing partner ecosystem the opportunity for new customer acquisition remains significant by deepening customer relationships and driving new customer acquisition, we're positioning my VIP as a market leader in identity verification authentication and fraud management.

Speaker Change: Offering our investors insights into our progress against these key milestones.

That said, we want to assure investors that we will closely monitor the execution of this strategy in fiscal 'twenty five and if any significant deviations from our targets arise. We are committed to taking decisive data driven actions to maximize shareholder value to support. This we will continue to provide transparency.

Speaker Change: Now, let's unpack the third key takeaway Mitek is becoming a comprehensive solution for fighting fraud, and mitigating identity related cyber security risks a growing problem for all businesses.

Speaker Change: Customers are increasingly seeking integrated platforms, not just point solutions to combat rising AI driven threats and defects are proud platform stands out with proprietary capabilities with an established track record of leading and trusted third party and U S government led benchmarks. This.

Our investors insights into our progress against these key milestones.

Now, let's unpack the third key takeaway Mitek is becoming a comprehensive solution for fighting fraud, and mitigating identity related to cyber security risks a growing problem for all businesses.

Speaker Change: Only verified technological leadership combined with our exceptional talent and domain expertise positions mitek to lead in this evolving market.

Customers are increasingly seeking integrated platforms, not just point solutions to combat rising AI driven threats and defects are proud platform stands out with proprietary capabilities with an established track record of leading and trusted third party and U S government led benchmarks. This.

Speaker Change: The rapid proliferation of AI leads to new growing period of gin AI driven fraud, we are uniquely positioned to address this growing problem as a result of our proprietary technologies and proven track record and highest <unk> market segments Mitek platform protects customers through Onboarding transaction.

Lee verified technological leadership combined with our exceptional talent and domain expertise positions mitek to lead in this evolving market.

Speaker Change: Enablement identity verification and integrated authentication all enhanced by advanced four factor biometrics and digital fraud detection capabilities, which include defenses against defects presentation and injection attacks.

The rapid proliferation of AI leads to new growing period of gin AI driven fraud, we are uniquely positioned to address this growing problem as a result of our proprietary technologies and proven track record and highest <unk> market segments <unk> platform protects customers through Onboarding transaction.

Our passive liveliness detection and biometric solutions have earned strong recognition from NIST and more recently the department of Homeland security highlighting our commitment to excellence in the field technical capabilities and innovation in a rapidly changing fraud environment.

<unk> identity verification and integrated authentication all enhanced by advanced four factor biometrics and digital fraud detection capabilities, which include defenses against defects presentation and injection attacks.

Similarly, our checkbook defender or Cfd product, though it's early stages is already showing strong uptake.

Speaker Change: Annualized contract value or <unk> ACD grew by nearly 60% year over year exceeding 10 million at fiscal 'twenty. Four is close and we are currently seeing strong interest in cfd and are targeting to more than double cft's ACD in fiscal 'twenty five.

Similarly, our checked all defender or Cfd product, though it's early stages is already showing strong uptake.

Speaker Change: The consortium model behind Cfd, where more participants and enhance the data asset is proving effective we.

Annualized contract value or ACD grew by nearly 60% year over year exceeding 10 million at fiscal 'twenty. Four is close and we are currently seeing strong interest in CFT and are targeting to more than double cft's ACD in fiscal 'twenty five.

Speaker Change: We have already seen checks from nearly all of the 8700 plus <unk> in the United States and we have accumulated datasets on approximately 17% of all checking accounts in the country.

Speaker Change: All while having less than 1% of these five eight members of our consortium.

The consortium model behind Cfd, where more participants and enhance the data asset is proving effective we have already seen checks from nearly all of the 8700 plus F. EIS in the United States and we have accumulated datasets on approximately 17% of all checking accounts in the country.

Speaker Change: With our strong mobile deposit foundation and relationships with major <unk>, we are poised to deepen these partnerships and drive continued growth through cross selling cfd.

Speaker Change: Now last but not least let's discuss the four key takeaways organic growth is our near term focus and operational discipline for long term value creation is our north star.

All while having less than 1% of these F. EIS is aimed members of our consortium.

With our strong mobile deposit foundation and relationships with major F. EIS, we are poised to deepen these partnerships and drive continued growth through cross selling and CFT.

Our focus is on organic revenue growth increasing share of more predictable SaaS revenue expanding margins and generating free cash flow all underscored by a disciplined capital allocation strategy to maximize shareholder value.

Now last but not least let's discuss the four key takeaways organic growth is our near term focus and operational discipline for long term value creation is our north star.

Speaker Change: Every initiative we've outlined today is designed to sharpen this focus ensuring we strengthened the foundation in fiscal 'twenty, five and deliver accelerating and profitable growth in fiscal 'twenty six here's how this approach will drive measurable improvements in five key areas of our financials.

Our focus is on organic revenue growth, increasing the share of more predictable SaaS revenue expanding margins and generating free cash flow all underscored by a disciplined capital allocation strategy to maximize shareholder value.

Speaker Change: First organic revenue growth by expanding transactions with existing customers.

Every initiative we've outlined today is designed to sharpen this focus ensuring we strengthen the foundation in fiscal 'twenty, five and deliver accelerating and profitable growth in fiscal 'twenty six yourself. This approach will drive measurable improvements in five key areas of our financials.

Speaker Change: Introducing new use cases like check fraud defender and digital fraud defender cross selling within the my VIP platform and acquiring new customers. We aim for steady organic revenue growth.

Speaker Change: Second a higher percentage of SaaS revenue, we aim to transition towards a higher proportion of SaaS revenue, which offers greater predictability and reduces volatility.

First organic revenue growth by expanding transactions with existing customers.

Introducing new use cases like check broad defender and digital fraud defender cross selling within that my VIP platform and acquiring new customers. We aim for steady organic revenue growth.

Speaker Change: In fiscal 'twenty for approximately 37% of our revenue came from SaaS.

Speaker Change: This becomes a larger portion of our sales we expect to dampen the impacts of the volatile term license revenue, which still dominates our revenue today looking out to fiscal 'twenty. Six we are pursuing a goal for SaaS revenue to approach half of our total revenue.

Second a higher percentage of SaaS revenue, we aim to transition towards a higher proportion of SaaS revenue, which offers greater predictability and reduces volatility and.

In fiscal 'twenty for approximately 37% of our revenue came from SaaS, but as this becomes a larger portion of our sales we expect to dampen the impacts of the volatile term license revenue, which still dominates our revenue today looking out to fiscal 'twenty. Six we are pursuing a goal for SaaS revenue to approach.

Speaker Change: Third margin expansion.

Speaker Change: Driving cost efficiencies integrating operations and scaling revenue to achieve operating leverage we anticipate a considerable improvement in adjusted EBITDA margins as we look out to fiscal 'twenty six and <unk>.

Speaker Change: Fiscal 'twenty five we expect to lower expenses associated with the identity product portfolio, while we invest and accelerating demand for cfd, while this CFT investment temporarily reduces margins by mid single digit percentage points, we believe the strong ROI justifies it.

Half of our total revenue.

Third margin expansion by driving cost efficiencies integrating operations and scaling revenue to achieve operating leverage we anticipate a considerable improvement in adjusted EBITDA margins as we look out to fiscal 'twenty six in fiscal 'twenty five we expect to lower expenses associated with the identity.

Speaker Change: Fourth free cash flow generation.

Speaker Change: As we reduced non recurring and extraordinary costs tied to acquisitions executive transitions and audit fees, we expect a stronger free cash flow conversion of adjusted EBITDA with a more significant impact starting in fiscal 'twenty six.

Product portfolio, while we invest and accelerating demand for cfd, while this CFT investment temporarily reduces margins by mid single digit percentage points, we believe the strong ROI justifies it.

Speaker Change: And finally capital allocation, we remain committed to balancing growth investments.

Fourth free cash flow generation.

Speaker Change: Returning capital to shareholders and maintaining a strong flexible balance sheet.

As we reduce nonrecurring and extraordinary costs tied to acquisitions executive transitions and audit fees, we expect a stronger free cash flow conversion of adjusted EBITDA with a more significant impact starting in fiscal 'twenty six and.

Speaker Change: In conclusion operational discipline is not just about fiscal 'twenty five is the foundation for creating durable long term value for all of our stakeholders as we look forward to fiscal 'twenty six and beyond I'd now like to turn it over to Dave.

And finally capital allocation, we remain committed to balancing growth investments with returning capital to shareholders and maintaining a strong flexible balance sheet and.

Dave Lyle: Thanks, Ed and.

Dave Lyle: And I'd like to take a moment to say welcome to my Cat, it's been great getting to know you and I'm excited about the strong start we've already had working together on.

In conclusion operational discipline is not just about fiscal 'twenty five is the foundation for creating durable long term value for all of our stakeholders as we look forward to fiscal 'twenty six and beyond I'd now like to turn it over to Dave.

Dave Lyle: I'll begin today by taking you through financial results and then I'll provide our fiscal 2025 outlets and finish by addressing some housekeeping items.

Dave Lyle: Please note that I'll be referring to non-GAAP results going forward.

Thanks, Ed.

And I'd like to take a moment to say welcome to Mitek is being great getting to know you and I'm excited about the strong start we've already had working together on.

Dave Lyle: First our fiscal Q4 2024 results.

Dave Lyle: Fiscal Q4 came in $1 $1 million higher than the midpoint of the revenue guidance range at $43 2 million or 15% year over year revenue growth.

I'll begin today by taking you through financial results and then I'll provide our fiscal 2025 outlets and finish by addressing some housekeeping items.

Dave Lyle: <unk> products revenue grew 13% year over year, while deposits products revenue grew 17%.

Please note that I'll be referring to non-GAAP results going forward.

First our fiscal Q4 2024 results.

Dave Lyle: non-GAAP operating income for Q4 was $15 million, a 34, 8% margin, which surpassed the midpoint of the guidance range by just under $4 million. This was driven by a one time reduction of $1 $9 million related to bonus accruals adjustment based on our full year results.

So Q4 came in $1 $1 million higher than the midpoint of the revenue guidance range at $43 2 million or 15% year over year revenue growth.

Identity products revenue grew 13% year over year, while deposits products revenue grew 17%.

Dave Lyle: A onetime $600000 reversal of the allowance for doubtful accounts.

non-GAAP operating income for Q4 was $15 million, a 34, 8% margin, which surpassed the midpoint of the guidance range by just under $4 million. This was driven by a one time reduction of $1 $9 million related to bonus accruals adjustment based on our full year results.

Dave Lyle: The $1 1 million higher revenue, just mentioned and the remainder from operating expense efficiencies.

Dave Lyle: Looking a little closer to our non-GAAP operating expenses, we reduced expenses by $5 million sequentially from $27 1 million in fiscal Q3 to $22 1 million. In Q4. This was primarily due to a $2 $2 million sequential reduction to bonus and vacation accruals and <unk>.

A onetime $600000 reversal of the allowance for doubtful accounts.

The $1 1 million higher revenue, just mentioned and the remainder from operating expense efficiencies.

Dave Lyle: One $4 million reduction in outside accounting related support to.

Looking a little closer to our non-GAAP operating expenses, we reduced expenses by $5 million sequentially from $27 1 million in fiscal Q3 to $22 1 million. In Q4. This was primarily due to a $2 $2 million sequential reduction to bonus and vacation accruals and one.

Dave Lyle: The $600000 accounting reversal as mentioned before.

Dave Lyle: $500000 reduction in marketing and travel expenses.

Dave Lyle: Now, let's move on to the full year 2024 results in summary fiscal 'twenty four with roughly flat year over year at $172 1 million and our non-GAAP operating margins remained strong at 26%.

$4 million reduction in outside accounting related support.

The $600000 accounting reversal as mentioned before and $500000 reduction in marketing and travel expenses.

If we adjust for the large customer four year mobile deposit Reorders contract recorded in fiscal Q1, 2023 that we discussed in prior calls were $7 million and accelerated revenue recognition created a two plus million dollars gap in fiscal 2024.

Now, let's move on to the full year 2024 results in summary fiscal 'twenty four with roughly flat year over year at $172 1 million and our non-GAAP operating margins remained strong at 26%.

Year 'twenty four would have seen about 6% revenue growth and a 27% non-GAAP operating margin.

Dave Lyle: It is important to note that we believe that three year CAGR is more reflective of the underlying potential trajectory of the business over the long term.

Dave Lyle: That revenue CAGR since fiscal 2021 was 13% as COVID-19 pulled forward the penetration of our mobile deposit product and boosted revenue growth in fiscal 'twenty two in fiscal 'twenty three 'twenty four remains flat.

<unk> 24 would have seen about 6% revenue growth and a 27% non-GAAP operating margin.

It is important to note that we believe that three year CAGR is more reflective of the underlying potential trajectory of the business over the long term.

Dave Lyle: Turning now to more specifics on our full year revenue results, starting with deposit products deposit products revenue declined slightly by less than 1% to $103 6 million.

That revenue CAGR since fiscal 2021 was 13% as COVID-19 pulled forward the penetration of our mobile deposit product and boosted revenue growth in fiscal 'twenty two in fiscal 'twenty three 'twenty four remained flat.

Dave Lyle: Strong growth in Cfd was offset by declines in mobile deposit and check rate of product revenue.

Primarily driven by renewal timing.

Dave Lyle: We believe that these declines are primarily due to timing rather than market weakness.

Turning now to more specifics on our full year revenue results, starting with deposit products deposit products revenue declined slightly by less than 1% to $103 6 million strong growth in cfd was offset by declines in mobile deposit and check rate of product revenue.

Our transaction volumes have remained relatively stable despite a broader decline in check volumes.

Dave Lyle: This resilience reflects the increasing adoption of mobile deposit solutions.

Dave Lyle: To provide context, we believe the U S check market now process is about eight to 9 billion checks with an estimated one third being retailed shacks suitable for mobile capture.

Primarily driven by renewal timing.

We believe that these declines are primarily due to timing rather than market weakness.

Our transaction volumes have remained relatively stable despite a broader decline in check volumes.

Dave Lyle: With over $1 2 billion annual transactions on our platform. This translates to about a 40% digital adoption rate.

This resilience reflects the increasing adoption of mobile deposit solutions.

While we estimate the total check volumes have declined at a single digit rate in recent years, a growing adoption of mobile banking has helped sustain transaction levels in a relatively narrow range.

To provide context, we believe the U S check market now processes about eight to 9 billion checks with an estimated one third being retailed Jack suitable for mobile capture.

Dave Lyle: Moving onto identity products revenue revenue increased by less than 1% year over year to $68 5 million for fiscal 2024 strong transaction driven revenue growth on our <unk> platform was offset by the sunsetting of our legacy car hardware products.

With over $1 2 billion annual transactions on our platform. This translates to about a 40% digital adoption rate.

Dave Lyle: <unk> pricing pressure and our mobile verify products and small declines in our biometric point solutions.

Moving onto identity products revenue revenue increased by less than 1% year over year to $68 5 million for fiscal 2024 strong transaction driven revenue growth on our <unk> platform was offset by the sunsetting of our legacy E car hardware products continued.

Dave Lyle: <unk> hardware sunsetting had a $1 2 million or negative impact for a two percentage point headwind to identity.

Dave Lyle: Moving down the P&L, we maintained strong unit economics, with an 86, 2% non-GAAP gross margin for fiscal 2024.

Pricing pressure and our mobile verify products.

Dave Lyle: non-GAAP operating expense rose to $103 6 million from $96 8 million in fiscal 'twenty, three with approximately 80% of that growth coming from my from R&D.

And small declines in our biometric point solutions.

E car hardware sunsetting had a $1 $2 million negative impact for a two percentage point headwind to identity.

Dave Lyle: The bridge between at $103 3 million non-GAAP operating expenses.

Moving down the P&L, we maintained strong unit economics, with an 86, 2% non-GAAP gross margin for fiscal 2024.

Dave Lyle: $145 4 million GAAP operating expenses reflects $14 8 million in cash adjustments and $27 3 million in noncash accounting adjustments as detailed in our earnings release.

non-GAAP operating expense rose to $103 6 million from $96 8 million in fiscal 'twenty, three with approximately 80% of that growth coming from from R&D.

Dave Lyle: This resulted in a 26, 9% non-GAAP operating margin for the year non-GAAP net income per diluted share improved to 96 on 47 5 million diluted shares <unk> increase year over year.

The bridge between at $103 3 million non-GAAP operating expenses.

$145 4 million GAAP operating expenses reflects $14 8 million in cash adjustments and $27 3 million in noncash accounting adjustments as detailed in our earnings release.

Dave Lyle: Now, let's move on to our balance sheet and capital allocation framework.

Dave Lyle: We generated $30 3 million and free cash flow during fiscal 2020 for repurchased two 2 million shares for $24 $2 million under our share repurchase program.

This resulted in a 26, 1% non-GAAP operating margin for the year non-GAAP net income per diluted share improved to 96 on 47 5 million diluted shares and <unk> increased year over year.

Dave Lyle: And ended the year with $141 8 million in cash and investments of $6 $8 million increase year over year.

Now, let's move on to our balance sheet and capital allocation framework.

Dave Lyle: Our capital allocation priorities remain first and foremost funding high return growth opportunities, including my VIP Cfd, my past and biometrics, which are poised for strong demand as we make headway with strengthening our foundations in fiscal 2025.

We generated $30 3 million and free cash flow during fiscal 2020 for repurchased two 2 million shares for $24 $2 million under our share repurchase program and ended the year with $141 8 million in cash and investments of $6 $8 million increase year over year.

Dave Lyle: Then we must balance returns of capital with balance sheet strength.

Our capital allocation priorities remain first and foremost.

Dave Lyle: Share repurchases continued in fiscal Q1, 'twenty five but the pace has slowed to maintain flexibility ahead of the $155 million convertible bond maturity in February 2026.

In high return growth opportunities, including my VIP Cfd, my past and biometrics, which are poised for strong demand as we make headway with strengthening our foundations in fiscal 2025.

Dave Lyle: Combining our continued cash flow generation with our strong balance sheet, we are well positioned to repay and or refinance the bond by its maturity at our discretion.

Then we must balance returns of capital with balance sheet strength.

Share repurchases continued in fiscal Q1, 'twenty five but the pace has slowed to maintain flexibility ahead of the $155 million convertible bond maturity in February 2026.

Dave Lyle: We are currently purchasing activity does not reflect any change in our views of the stock value and given the current price, we're focusing on at least dilutive financing strategies to protect shareholder interests.

Combining our continued cash flow generation with our strong balance sheet, we are well positioned to repay and or refinance the bond by its maturity at our discretion.

Dave Lyle: Now turning to our fiscal 2025 guidance, we are guiding to a revenue range of $170 million to $180 million with growth coming from our SaaS products. We are also introducing adjusted EBITDA margin guidance, replacing our emphasis on non-GAAP operating income as we feel it offers.

Current repurchasing activity does not reflect any change in our views of the stock value and given the current price we are focusing on at least dilutive financing strategies to protect shareholder interests.

Dave Lyle: Greater comparability and simplicity.

Now turning to our fiscal 2025 guidance, we are guiding to a revenue range of $170 million to $180 million with growth coming from our SaaS products. We are also introducing adjusted EBITDA margin guidance, replacing our emphasis on non-GAAP operating income as we feel it offers.

Dave Lyle: Note that the bridge between these two is depreciation and amortization, which has historically run at approximately 1% of revenue.

Dave Lyle: With that said, we are guiding to an adjusted EBITDA margin range of 24% to 28% in fiscal 2025.

Dave Lyle: More specifically on the deposit side, we expect total revenue for the year to be relatively steady with last year, we expect growth from our check front defender products to be somewhat offset by declines in mobile deposit product revenue, mostly due to deal timing.

Greater comparability and simplicity.

Note that the bridge between these two is depreciation and amortization, which has historically run at approximately 1% of revenue.

With that said, we are guiding to an adjusted EBITDA margin range of 24% to 28% in fiscal 2025.

Dave Lyle: A few of our larger customers bought a second tranche of inventory in the second half of 2024, and where we expect those customers to likely return to a more typical single by in 2025.

More specifically on the deposit side, we expect total revenue for the year to be relatively steady with last year.

We expect growth from our tech front defender products to be somewhat offset by declines in mobile deposit product revenue, mostly due to deal timing, where a few of our larger customers bought a second tranche of inventory in the second half of 2024, and where we expect those customers to likely return to a more typical.

This revenue decline all reflects the nature of the accounting for term license deals, especially with our larger bank customers, where the timing and size of deals impact quarterly and yearly revenue recognition.

Dave Lyle: But the key takeaway is that revenue accounting doesn't affect billing terms or contract values looking more specifically at CMT. During 2025, we plan to transition some on premise CSP customers into the consortia while.

Single by in 2025.

Dave Lyle: This transition strengthens our consortium and has no impact on ACD.

Dave Lyle: Can create a small gap a small GAAP revenue headwind as we shift from term license to SaaS ratable revenue.

But the key takeaway is that revenue accounting doesn't affect billing terms or contract values looking more specifically at <unk>. During 2025, we plan to transition from on premise CSP customers into the consortium.

Dave Lyle: Turning to identity products, we expect nearly all of our identity products revenue growth in fiscal 2025 to be driven by our SaaS identity solutions.

While this transition strengthens our consortium and has no impact on ACD that can create a small gap a small GAAP revenue headwind as we shift from term license to SaaS ratable revenue.

Dave Lyle: With products like my VIP expected to see meaningful growth.

Dave Lyle: While our biometrics solutions, primarily in identity software and maintenance lines.

Dave Lyle: I expect it to grow we learned from fiscal 2024 is forecasting challenges for these products and are taking a more cautious approach to forecasting those larger more complex deals it can significantly impact in year revenue recognition.

Turning to identity products, we expect nearly all of our identity products revenue growth in fiscal 2025 to be driven by our SaaS identity solutions.

With products like my VIP expected to see meaningful growth.

Dave Lyle: To provide more clarity on how we see top line revenue phasing through the year, we anticipate the first half to be similar to fiscal 2024 with a heavier concentration of revenue occurring in the second fiscal quarter we.

While our biometrics point solutions, primarily in our identity software and maintenance lines.

<unk> to grow we've learned from fiscal 2024 is forecasting challenges for these products and are taking a more cautious approach to forecasting those larger more complex deals that can significantly impact in year revenue recognition.

Dave Lyle: We anticipate that the second half of fiscal 2025 and will follow a similar seasonality to the second half of 2024.

To provide more clarity on how we see top line revenue phasing through the year, we anticipate the first half to be similar to fiscal 2024 with a heavier concentration of revenue occurring in the second fiscal quarter.

Now for some color on non-GAAP operating expenses, we expect our operating expenses to revert to about $26 million level in the first fiscal quarter of 2025.

Dave Lyle: With sequential increase is primarily coming from the annual bonus accrual reset as well as vacation accrual reset for the new year.

We anticipate that the second half of fiscal 2025 will follow similar seasonality to the second half of 2024.

Dave Lyle: We expect some incremental operating expenses sequentially from there beginning in fiscal Q2, mostly in R&D and sales as we invest in our new products.

Now for some color on non-GAAP operating expenses, we expect our operating expenses to revert to about $26 million level in the first fiscal quarter of 2025.

Dave Lyle: Now, let's move on to some housekeeping items, we refined our revenue disaggregation to show revenue type as well as new GAAP to non-GAAP reconciliation tables in our earnings release. In addition, we have introduced free cash flow, which echoes and emphasis on improving our free cash flow conversion.

With sequential increase is primarily coming from the annual bonus accrual reset as well as vacation accrual reset for the new year.

We expect some incremental operating expenses sequentially from there beginning in fiscal Q2, mostly in R&D and sales as we invest in our new products.

Dave Lyle: Finally, we've uploaded an excel based supplemental financial package to our Investor Relations website contain some trended historical financials.

Now, let's move on to some housekeeping items, we refined our revenue disaggregation to show revenue tight as well as new GAAP to non-GAAP reconciliation tables in our earnings release. In addition, we have introduced free cash flow, which echoes emphasis on improving our free cash flow conversion.

Dave Lyle: All in all we hope these updates coupled with more transparency and our remarks reflect our positive commitment to consistent transparent disclosures, enabling shareholders to better assess our performance and our plans moving ahead.

Finally, we've uploaded an excel based supplemental financial package to our Investor relations website containing some trended historical financials.

Speaker Change: Operator that concludes our prepared remarks, please open the line for questions.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.

All in all we hope these updates coupled with more transparency and our remarks reflect our positive commitment to consistent transparent disclosures, enabling shareholders to better assess our performance and our plans moving ahead.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star and then two.

Speaker Change: Operator that concludes our prepared remarks, please open the line for questions.

Speaker Change: And our first question today will come from Jake Roberts with William Blair. Please go ahead.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.

Jake Roberts: Yes, thanks for taking the questions and welcome aboard Ed.

Jake Roberts: Daddy commentary and disclosures were really helpful. So thanks, thanks to both you and Dave.

Jake Roberts: And you made some comments about refining the strategy to better prioritize organic growth can you help us parse out the lower hanging fruit that you were looking to address this year versus maybe some of the longer term initiatives, you're exploring and then you talked about the three year CAGR of 13% and as you look at the business moving forward do you still see that as kind of a.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star and then two.

Speaker Change: And our first question today will come from Jake Roberts with William Blair. Please go ahead.

Jake Roberts: Yeah, Thanks for taking the questions and welcome aboard Ed.

Speaker Change: Daddy commentary and disclosures were really helpful. So thanks, thanks to both you and Dave.

Jake Roberts: Medium term opportunity here once you work through those initiatives around the idea of verification and check fraud.

Speaker Change: And you made some comments about refining the strategy to better prioritize organic growth can you help us parse out the lower hanging fruit that you were looking to address this year versus maybe some of the longer term initiatives, you're exploring and then you talked about the the three year CAGR of 13% and as you look at the business moving forward do you still see that as kind of a.

Speaker Change: So first of all good to meet you. Thanks for the introduction.

I spoke to in my comments.

Speaker Change: There's a lot of focus.

Speaker Change: In order to focus on organic growth and frankly, that's just getting very focused in our products our solutions in terms of what the market.

Speaker Change: Medium term opportunity here once you work through those initiatives around the idea of verification and check fraud.

Speaker Change: Currently seen.

Speaker Change: Integrating some of the solutions that we have in particular on the identity side with the emphasis on my VIP improving the algorithms like has been done with showing the improvement in transaction in auto transaction. In addition to rolling out the new solutions, particularly like.

Speaker Change: So first of all good to meet you. Thanks for the introduction and as I spoke to in my comments, obviously, there is a lot of focus.

In order to focus on organic growth and frankly, that's just getting very focused on our products our solutions in terms of what the market does.

Speaker Change: Digital followed the defender with VIP, all kind of tee that up for some excellent conversations with our current base one of the things I outlined.

Currently seen.

Speaker Change: Integrating some of the solutions that we have in particular on the identity side, what the emphasis on my VIP improving the algorithms like has been done with showing the improvement in transaction in auto transaction. In addition to rolling out the new solutions, particularly like.

Speaker Change: As with recently on boarded customers would see after about a year a significant uptake in the use and volume as the <unk>.

Speaker Change: Solution has been tuned with them. So we see that evolving this year.

Speaker Change: Digital followed the defender with VIP, all kind of teed it up for some excellent conversations with our current base one of the things I outlined.

Speaker Change: So with some of our key customers in key areas of growth.

Speaker Change: And then I was just on the deposit side I would say with check Paul defender.

Speaker Change: With recently.

Speaker Change: Recently on boarded customers would see after about a year a significant uptake in the use of volume as the.

Speaker Change: With the growth there I mentioned that last year in the ACB, we saw about 60% and then more to more than double.

Speaker Change: The solution has been tuned with them. So we see that evolving this year more so with some of our key customers in key areas.

Speaker Change: Into this year, so those areas and it's one of the reasons why I joined Mitek frankly, when you look at our history and the reputation that we have the company has for a long time with over 7000 financial institutions.

Speaker Change: <unk>.

Speaker Change: And then I was just on the deposit side I would say with check Paul defender.

Speaker Change: With the growth there I mentioned that last year in the ACB, we saw about 60% and awarded more than double.

Speaker Change: In the U S and frankly around the world.

Speaker Change: Leveraging that cross selling opportunities leveraging those relationships and coming in there with with innovation and new thoughts and frankly.

Into this year, so those areas and it was one of the reasons why I joined Mitek frankly, when you look at our history and the reputation that we have the company has for a long time with over 7000 financial institutions.

Speaker Change: My conversations I have had over the last few weeks whether in Europe.

Speaker Change: 19 of them in the U S.

Speaker Change: D C and frankly these are some of these are customers in the U S who are on the deposit side, but in particular in Europe on the identity side, where they see the issues that are rising and the concern around AI and looking at the solutions, where we're recognized as being a leader on theirs.

Speaker Change: In the U S.

Speaker Change: Frankly around the world.

Speaker Change: Leveraging that cross selling opportunities leveraging those relationships and coming in there with a with innovation and new thoughts and frankly.

Speaker Change: Conversations I've had over the last few weeks whether in Europe.

Speaker Change: There is a significant level of interest in having those partnerships. So I think those areas for the company's history, the new product innovation, which is why the last point I would make it's really important that we continue to invest in the innovation and having these market leading technologies and capabilities. That's why these large highest terence.

Speaker Change: The United Kingdom in the U S.

Speaker Change: They see and frankly these are some of these are customers in the U S who are on the deposit side, but in particular in Europe on the identity side, where they see the issues that are rising and the concern around AI and looking at the solutions, where we're recognized as being a leader on.

Speaker Change: Companies like financial institutions will want to partner with someone like mitek because of being a partner entities.

There is a significant level of interest in having those partnerships. So I think those areas for the company's history, the new product innovation, which is why the last point I would make it's really important that we continue to invest in the innovation and having these market leading technologies and capabilities. That's why these large highest terence.

Speaker Change: Many of these areas with evolving threats.

Speaker Change: And then secondly could you.

Speaker Change: <unk> yeah.

Speaker Change: Yes.

Speaker Change: Part was really around talk you talked about the three year CAGR of 13% I guess as you look at the business moving forward do you see that as the medium term opportunity here.

Companies like financial institutions will want to partner with someone like biotech because of being a partner entities.

Speaker Change: You were talking about double digit IV verification growth.

Speaker Change: Many of these areas with evolving Brooks.

Speaker Change: Check fraud, doubling next year, just curious how you're how you're looking at the medium term growth opportunity.

Speaker Change: I think any of that exactly.

Speaker Change: So to your question yeah.

Speaker Change: I mean, I think that's fair.

Speaker Change: <unk> retained.

Speaker Change: It was really around talk and you talked about the three year CAGR of 13% I guess as you look at the business moving forward do you see that as the medium term opportunity here because you were talking about double digit IV verification growth check fraud, doubling next year, just curious how you're how you're looking at the medium term growth opportunity.

Speaker Change: First goal is to get to the back to the double digit growth and then taking it from there.

Speaker Change: But having a low teens.

Speaker Change: Do not have a concern with.

In terms of that and frankly, all of our goals and efforts can be how do we continue to drive that up from there, but we got our first turn turn the ship and making sure we're getting back to.

Speaker Change: I mean, I think that's fair.

Speaker Change: Our first goal is to get to the back to the double digit growth and then taking it from there.

Speaker Change: Durable durable growth on that front and this company has gone through a lot I think as you all well know over the last couple of years, it's been a lot of traction a lot of issues.

Speaker Change: But having a low teens.

Do not have a concern with in terms of that and frankly all of our goals and efforts can be how do we continue to drive that up from there, but we get a first turn the turn the ship and making sure we're getting back to.

Speaker Change: And the good news is we've made tremendous progress on these.

Speaker Change: And efforts now having the organization highly focused on a clear plan executing against those that momentum.

Speaker Change: We believe will build throughout this year.

Speaker Change: And then we will give you more color on it is as that falls, but I do feel okay about that at this stage.

Speaker Change: Okay very helpful. And then just a two parter on check fraud defender have you starting to see conversations with new customers change in any way now that you've had kind of those initial customers up and running and likely have a clearer ROI message and then on the partner front with Cfe CFT are there any other large partners.

Speaker Change: And the good news is we've made tremendous progress on these.

Speaker Change: And efforts now having the organization is highly focused on a clear plan executing against those that momentum.

Speaker Change: We believe will build throughout this year.

Speaker Change: And then we'll give you more color on it is as that falls, but I do feel okay about that at this stage.

Speaker Change: Now you may be able to activate on that solution. This year.

Dave Lyle: Now, let's turn it over to Dave from prior conversations and about how those have evolved I would just tell you from the conversations.

Speaker Change: That I've had and then also been aware of is the ROI is extremely compelling.

Speaker Change: Solution works.

Speaker Change: Or is that you may be able to activate on that solution. This year.

Speaker Change: And I think as you see the level of the datasets that we've been able to build already just with the Q.

Speaker Change: Now, let's turn it over to Dave from prior conversations and about how those have evolved I would just tell you from the conversations.

Speaker Change: <unk> that are into the network right now now already having 17% of the accounts with some dataset.

Speaker Change: That I've had and then also been aware of is the ROI is extremely compelling.

Speaker Change: Associated with 17% of those accounts is very meaningful so I think as more and more get familiar with it.

Speaker Change: The solution works.

Speaker Change: And I think as you see the level of the datasets that we've been able to build already just with the Q.

Speaker Change: It's a new concept.

Speaker Change: So it takes a little while to come along but as they do and they run the test and see the benefit.

Speaker Change: <unk> that are into the network right now now already having 17% of the accounts with some dataset.

Speaker Change: That it brings forward.

Speaker Change: I think they'll move in more more quickly with data don't know if you can comment on Pryor.

Speaker Change: Associated with 17% of those accounts is very meaningful so.

Speaker Change: Yeah, just looking where this is in its lifecycle as we said before.

Speaker Change: I think as more and more just familiar with it.

Speaker Change: In its nascent stage this past year.

Speaker Change: It's a new concept.

Speaker Change: So it takes a little while to come along but as they do and they run the test and see the benefit.

Speaker Change: Obviously continues to be.

Speaker Change: We're starting to get the traction that we thought we would which we're pretty excited about it don't forget a little over a year ago, we had a handful of banks that we're working on and we've come a pretty long way.

Speaker Change: That it brings forward.

Speaker Change: I think they'll move in more quickly, but Dave I don't know if you can comment on fire.

Speaker Change: Yes, I just looking where this is in its lifecycle as we said before it was in its nascent stage this past year.

Speaker Change: Yes, yes, you have a default great opportunity ahead, and thanks for taking the questions.

Speaker Change: Alright, thank you.

Speaker Change: Obviously continues to be where we are.

Speaker Change: And your next question today will come from Mike Grondahl with Northland systems. Please go ahead.

Speaker Change: We're starting to get the traction that we thought we would which we're pretty excited about don't forget a little over a year ago, we had a handful of banks that we're working on so we've come a pretty long way.

Speaker Change: Okay.

Speaker Change: Hey, guys. Thanks, a lot and welcome Ed.

Speaker Change: My first question, it's really.

Speaker Change: Really for you.

Speaker Change: Yes, yes, you have.

Speaker Change: When you reviewed.

Speaker Change: Default great opportunity ahead, and thanks for taking the questions alright.

Speaker Change: And now that you've been there a while have you found a competitor on the mobile check deposit side.

Speaker Change: Alright, thank you.

And your next question today will come from Mike Grondahl with Northland systems. Please go ahead.

Mike Grondahl: Hey, guys. Thanks, a lot and welcome Ed.

Speaker Change: Well, yeah on so going back looking at the company historically.

Mike Grondahl: My first question, it's really.

Mike Grondahl: Really for you.

Speaker Change: <unk>.

Speaker Change: I see the reputation the presence we have.

Mike Grondahl: When you reviewed.

Speaker Change: My Tech and now that you've been there a while have you found a competitor on the mobile check deposit side.

Speaker Change: With a number of banks in the United States in financial institutions credit unions more broadly with over 7000.

What we are.

Speaker Change: Well, yeah on so going back looking at the company historically.

Speaker Change: The lion's share of the solution I think the market sees tremendous value.

Speaker Change: <unk>.

Speaker Change: And our product our suite, having a highly integrated.

Speaker Change: Obviously the reputation the presence we have.

To their own App and.

Speaker Change: With a number of our banks in the United States in financial institutions credit unions more broadly with over 7000.

Speaker Change: And using that there's just a tremendous amount of value associated with it.

Speaker Change: So yes, there are others out there but.

Speaker Change: What we are.

Speaker Change: We will continue to make sure we're delivering a very compelling competitive value proposition.

Speaker Change: The lion's share of the solution I think the market sees tremendous value.

In our product our suite, having a highly integrated.

Speaker Change: Excellently integrated <unk>.

Speaker Change: <unk> for our customers and their customers.

To their own App and.

And using that there's just a tremendous amount of value associated with it.

Speaker Change: And my question more specifically as you know.

Speaker Change: You have such a dominant position out there 7000 out of 8700 banks, what's your view on that.

Speaker Change: So there are others out there but.

Speaker Change: We will continue to make sure we're delivering a very compelling competitive value proposition.

Speaker Change: Pricing power that mitek has and in mobile check deposit.

Speaker Change: Excellently integrated <unk>.

Speaker Change: Potential future price increases.

Speaker Change: Application for our customers and their customers.

Speaker Change: Well I mean, obviously this call is not the place of going into what we're pricing would be.

Speaker Change: And my question more specifically as you know you have such a dominant position out there 7000 out of 8700 banks, what's your view on that.

Speaker Change: On a long term basis I would just say there's tremendous value in the solution there is tremendous value.

Speaker Change: Pricing power that mitek has and in mobile check deposit.

Speaker Change: The product and offering and we will continue to see and making sure our pricing is.

And potential future price increases.

Speaker Change: Well I mean, obviously this call is not the place of going into what are what pricing would be.

It's competitive and that the value is there, but there will continue to be opportunities and making sure that the.

Speaker Change: On a long term basis I would just say there's tremendous value in the solution there is tremendous value.

Speaker Change: Pricing is aligned to the value to the market.

Speaker Change: Okay Fair enough hopefully, it's something you guys take a take a hard look at.

In the product and offering and we will continue to see making sure our pricing is.

Speaker Change: Check fraud defender.

Speaker Change: Two questions. There when do you think you'll be able to disclose quarterly revenue.

Speaker Change: Competitive and that the value is there, but there will continue to be opportunities and making sure that the.

Speaker Change: And you talked about investing in check fraud defender. This next year roughly what is the dollar amount of that investment.

Speaker Change: Pricing is aligned to the value to the market.

Speaker Change: Okay Fair enough hopefully, it's something you guys take a take a hard look at.

Speaker Change: So I mentioned.

Speaker Change: Check fraud defender.

Speaker Change: My comments here, we ended the year with roughly a $10 million HCV.

Speaker Change: Two questions there.

Speaker Change: When do you think you'll be able to disclose quarterly revenue.

Speaker Change: And checks all defender so and it grew 60% throughout the year and we expect it to more than double this year. So we're seeing.

And you talked about investing in check fraud defender. This next year roughly what is the dollar amount of that investment.

<unk> interest and.

Speaker Change: And momentum.

Speaker Change: On the solution.

Speaker Change: So I mission.

But regarding the reporting.

Speaker Change: My comments here, we ended the year with roughly a 10 million HCV.

Dave Lyle: Dave I don't know if you want to comment further on that yes.

Dave Lyle: We're trying to stay on a start.

Speaker Change: And checks all defender so and it grew 60% throughout the year and we expect it to more than double this year. So we're seeing.

Dave Lyle: Heading towards more reporting on ACB, because we think that.

Dave Lyle: <unk> represents the better the economic value is given all of the.

Speaker Change: <unk> interest and.

Speaker Change: And momentum.

On the solution.

Dave Lyle: Accounting guidelines for revenue recognition, so youll see more ACB.

Speaker Change: But regarding the reporting.

Speaker Change: Dave I don't know if you want to comment further on that.

Dave Lyle: Not just with cfe expanding across other.

Speaker Change: We're trying to stay our start.

Speaker Change: Heading towards more reporting on ACB, because we think that.

Dave Lyle: Parts of our product portfolio and the cost side and the incremental I think I mentioned, it kind of a low to mid single digit.

<unk> represents the better the economic value is given all of the.

Dave Lyle: EBITDA margin impact from the incremental investment.

Speaker Change: Accounting guidelines for revenue recognition, so youll see more ACB.

Dave Lyle: On Cfd and the good news is the way that the company.

Speaker Change: Not just with CF expanding across other.

Dave Lyle: And that is getting it out into the market with our customers, but we are seeing such <unk>.

Speaker Change: Parts of our product portfolio and the cost side and the incremental I think I mentioned kind of the low to mid single digit.

Dave Lyle: Strong interest in it.

Dave Lyle: And request of additional functionality capability reporting.

Speaker Change: EBITDA margin impact from the incremental investment.

Dave Lyle: And interest levels, which is terrific.

Speaker Change: CFT and the good news is the way that the company invested.

Dave Lyle: And we want to deliver and execute on that swiftly.

Speaker Change: That's and that is getting it out into the market today with our customers, but we are seeing such.

Dave Lyle: To continue its growth and making sure that product continues to scale with the interest. So that's the investment this year.

Speaker Change: Strong interest in it.

Dave Lyle: The company has taken a prudent approach on that.

Speaker Change: And request of additional functionality capability reporting.

Dave Lyle: As a as the product and solution has grown.

Speaker Change: And interest levels, which is terrific.

Speaker Change: Okay, and then just last one for Dave.

Speaker Change: And we want to deliver and execute on that swiftly.

Speaker Change: Don't have the model in front of me, David but overall.

Speaker Change: To continue its growth and making sure that product continues to scale with the interest. So that's the investment this year.

Speaker Change: This fiscal 'twenty five.

Speaker Change: Opex be.

Speaker Change: About what 24 was do you expect a little bit of savings or or a little bit of elevated spending just opex relative to fiscal 'twenty four.

Speaker Change: The company has taken a prudent approach on that.

Speaker Change: As a as the product is a solution has grown.

Speaker Change: Okay, and then just last one for Dave.

Speaker Change: Yeah.

Speaker Change: Don't have the model in front of me, David but overall.

Speaker Change: If you did the math on the mid call it the midpoint of guidance at $170 million in revenue.

Speaker Change: This fiscal 'twenty five.

Opex be.

Speaker Change: And our adjusted EBITDA range is you end up kind of in an Opex range.

Speaker Change: About what 24 was do you expect a little bit of savings or or a little bit of elevated spending just opex relative to fiscal 'twenty four.

Speaker Change: An additional you know mid single digit millions of dollars over 24, and what we said earlier, where as you know the identity product portfolios, we will see some improvement in efficiencies on the operating.

Speaker Change: Yeah.

Speaker Change: If you do the math on the mid call it the midpoint of guidance at $170 million in revenue.

Speaker Change: On the spending side.

And our adjusted EBITDA range is you end up kind of in an Opex range.

Speaker Change: Most of the investment that Youll see it is really related to incremental investment.

Speaker Change: And additional mid single digit millions of dollars over 24, and what we said earlier, where as you know the identity product portfolios, we will see some improvement in efficiencies on the operating.

Speaker Change: I find it better.

Speaker Change: Got it Okay, hey, thank you.

Speaker Change: Thank you.

And your next question today will come from George Sutton with Craig Hallum. Please go ahead.

Thank you and welcome nice to have you on board.

Speaker Change: Spending side.

Speaker Change: Most of the investment that Youll see it is really related to incremental investment there.

Speaker Change: Great. Thank you My first my first question is for Dave If we go back a quarter.

Speaker Change: Get better.

Speaker Change: Got it Okay, hey, thank you.

Speaker Change: The challenge in that quarter was.

Speaker Change: Thank you.

Speaker Change: The entity, we were moving from point solution sales to more of a platform sale.

Speaker Change: And your next question today will come from George Sutton with Craig Hallum. Please go ahead.

Speaker Change: Certainly the idea of R&D group more of the engineers selling the deals.

Thank you and welcome nice to have you on board.

Speaker Change: It looks like we saw some improvement there can you just give us a sense of.

Speaker Change: Great. Thank you My first my first question is for Dave If we go back a quarter.

Speaker Change: What happened in terms of some of those deals.

Speaker Change: The challenge in that quarter was.

Speaker Change: <unk> seen pushing how many of those happen in this.

Speaker Change: The entity, we were moving from point solution sales to more of a platform sale.

Speaker Change: Last quarter versus what we're looking for in the next fiscal year.

Speaker Change: Certainly the Tid R&D group more of the engineers selling the deals.

Speaker Change: Yes, Q4, you're right we got.

Speaker Change: Kind of what we expected on that front.

Speaker Change: Obviously with all the changes that we made to increase focus.

Speaker Change: It looks like we saw some improvement there can you just give us a sense of.

Speaker Change: What happened in terms of some of those deals.

Speaker Change: Especially on those <unk> biometric products.

Speaker Change: <unk> seen pushing how many of those happened in this.

Speaker Change: We saw some decent results relative to our expectations.

Speaker Change: This last quarter versus what we're looking for in the next fiscal year.

Speaker Change: Going into 2025, if you remember in the last call we said that.

Speaker Change: Yeah in Q4, you're right we got.

Speaker Change: Kind of what we expected on that front.

Speaker Change: A few of the.

Speaker Change: Obviously with all the changes that we made to increase focus.

Speaker Change: Revenue dollars that got pushed out or related to large multinational.

Speaker Change: Especially on those <unk> biometric products.

Speaker Change: Companies that were.

Speaker Change: More difficult to close the sandwich, so we'd take some more time in that revenue.

Speaker Change: We saw some some decent results relative to our expectations.

Speaker Change: Going into 2025, and if you remember in the last call we said that.

Speaker Change: Was that we had originally expected to get near the end of 'twenty. Four is now probably pushed out into 'twenty five starting more in the back half of 'twenty five 'twenty six probably somewhere in the 12 to 18 months range, but they but the other point that we wanted to make was we don't believe we necessarily lost revenue opportunities still.

Speaker Change: A few of the.

Speaker Change: Revenue dollars that got pushed out or related to large multinational.

Speaker Change: Companies that were just.

Speaker Change: More difficult to close the San Luis It would take some more time in that revenue.

Speaker Change: <unk> are out there and that we can we can land.

Speaker Change: Got you so Ed on checkpoint defender you gave an interesting statistic.

Speaker Change: Basically have down a system, 17% of the checks that are current tenant.

Speaker Change: Penetration is less than 1% can you just give us the delta between those two numbers.

Speaker Change: 17% in your mind represent in terms of opportunities.

Speaker Change: <unk> are out there and that we can we can lander.

Speaker Change: Okay.

Speaker Change: Well, what it really is the opportunity as the datasets that are being built on information and the number 17% of the number of the accounts we believe.

So Ed on checkpoint defender you gave an interesting statistic.

Speaker Change: Basically have data system, 17% of the checks, but our current tenant.

Speaker Change: Penetration is less than 1% can you just give us the delta between those two numbers.

Speaker Change: In the in the country.

Speaker Change: So it's more and more information against the network effect of building that out and having the consortium the network effect makes it just that much more valuable so the more data we get the more they are more rich the asset becomes and also having more and more institutions coming in and contributing to that everyone.

Speaker Change: 17% in your mind represent in terms of opportunity.

Speaker Change: Well, what it really is the opportunity as the datasets that are being built on information and the number 17% of the number of the accounts we believe.

Speaker Change: In the in the country.

Speaker Change: Benefits by that so.

Speaker Change: So it's more and more information again is the network effect of building that out.

Speaker Change: It's early on and the fact that I think the point that I was trying to make there is we have a lot.

Speaker Change: Less than 1% of EFI is in the country in here now.

Speaker Change: The network effect makes it just that much more valuable so the more data we get the more they're more rich the asset becomes and also having more and more institutions coming in and contributing to that everyone benefits by that so.

Speaker Change: Yes, we already have datasets and built on 17% of the accounts in the country. So that's yeah think about it those are accounts that are not necessarily or the ones who are in the consortium. It's also accounts on that are in institutions outside the consortium, but there were checks that were to pass.

It's early on the fact that I think the point that I was trying to make there is hey, we have a lot.

Speaker Change: Less than 1% of EFI is in the country in here now.

Speaker Change: Positive into it. So we were just buildup greater datasets more value everybody wins.

Speaker Change: Yes, we already have datasets and built on 17% of the accounts in the country. So that's you think about it those are accounts that are not necessarily or the ones who are in the consortium. It's also accounts on that are in.

Speaker Change: And that's why the network is very valuable.

Speaker Change: You mentioned one of them for you.

Speaker Change: Thanks.

Speaker Change: Wonderful turnaround and the outcome was great I'm curious as you look at this opportunity coming in how similar or how different do you view this to be versus that opportunity.

Institutions outside their consortium Buck there were checks that were deposited into it. So we were just buildup greater datasets more value everybody wins.

Speaker Change: And that's that's why the network is it's very valuable.

Speaker Change: Uh huh.

Speaker Change: It's a great question just one of the reasons I am sitting here right now I saw a lot of similarity obviously.

Speaker Change: Got you and one of them for you Cardtronics.

Speaker Change: From the international footprint the presence that capability.

Speaker Change: It was a wonderful turnaround and the outcome was great I'm curious as you look at this opportunity coming in house.

Speaker Change: <unk> had very strong positions with financial institutions, and a strong presence in particularly in the U S and where we saw the value there is what attracted.

Speaker Change: Similar how different do you view this to be versus that opportunity.

Speaker Change:

Speaker Change: It's a great question just one of the reasons I'm sitting here right now I saw a lot of similarity obviously.

Speaker Change: Needed here is because of those relationships, but also to build up the network effect, which we did there which is what drove all the values you may be familiar with and the growth and that's where it got the company moving to double digit organic growth.

Speaker Change: From the international footprint the presence that capability.

Speaker Change: <unk> had very strong positions with financial institutions and a strong presence in particular in the U S and where we saw the value there is what attracted.

Speaker Change: It's building out that network see similarity here, obviously a different solution.

Speaker Change: But this company is very well positioned because of the relationships and the history and the operating capability, but also the technical expertise.

Speaker Change: Made it here is because of those relationships, but also to build up the network effect, which we did there which is what drove all the values you may be familiar with and the growth and that's what got the company moving to double digit organic growth.

Speaker Change: And people who are at the forefront of an evolving market that these <unk> companies need a partner and want a partner for I just felt like Mitek was very well positioned for that and then getting inside just I couldnt be more enthusiastic with team.

Speaker Change: Building out that network see similarity here, obviously a different solution.

Speaker Change: But this company is very well positioned because of the relationships and the history and the operating capability, but also the technical expertise.

Speaker Change: Across the organization of our technical capabilities and the relationships, it's informed by meeting face to face with customers in multiple countries around the around the world. So.

Speaker Change: Got you finally, my complements to Dave when we look at operating expenses down $5 million quarter over quarter in service gross margins at an all time high 76, I know that was hard work and that's why we're seeing great results today. So congratulations.

Speaker Change: Yeah.

Speaker Change: Thanks, so much thank you.

Speaker Change: And your next question today will come from Allen Klee with Maxim Group LLC. Please go ahead.

Speaker Change: Yes, Hi, I wanted to touch on your guidance.

Speaker Change: Guidance.

Speaker Change: At the midpoint of your revenue guidance, it's implying around a 2% increase year over year.

Speaker Change: Yeah.

Speaker Change: Thanks, so much thank you.

Speaker Change: <unk>.

Speaker Change: Internet deposits, you are going to be relatively flat with check.

Speaker Change: And your next question today will come from Allen Klee with Maxim Group LLC. Please go ahead.

Speaker Change: Check defend or up in the rest of this stuff down I'm assuming.

Allen Klee: Yes, Hi, I wanted to touch on your.

Speaker Change: Couple of things, that's going to mean that there.

Allen Klee: Guidance.

Speaker Change: There is a negative margin impact there.

Allen Klee: At the midpoint of your revenue guidance, it's implying around it.

Speaker Change: And.

It seems like.

Allen Klee: 2% increase year over year.

Speaker Change: Why do we have I'm, a little confused on how we have confidence that.

Allen Klee: And you mentioned that deposits you are going to be relatively flat with <unk>.

Speaker Change: Deposits is going to grow in.

Speaker Change: Defend or up in the rest of this stuff down I'm assuming.

Speaker Change: In the future.

Speaker Change: But then second.

Speaker Change: The guidance kind of implies that you are not going to really see much growth.

Speaker Change: A couple of things that's going to mean.

Speaker Change: There is a negative margin impact there.

Speaker Change: In our identity.

Speaker Change: Yes.

Speaker Change: It seems like.

Speaker Change: And I'm not sure why that is.

Why do we have I'm, a little confused on how we have confidence that <unk>.

Speaker Change: You could give the reasons behind that thank you.

Speaker Change: Deposits is going to grow.

Speaker Change: Yeah. Thanks, Thanks, Alan we.

Speaker Change: In the future.

Speaker Change: But then second.

Speaker Change: Yes.

Speaker Change: Actually decided to lengthen our range a little bit as you can see.

Speaker Change: The guidance kind of implies that youre not going to really see much growth.

Speaker Change: Hum.

Speaker Change: In identity.

Speaker Change: The range that we had of.

Speaker Change: 170, 180, we did that because on the biometric side.

And I'm not sure why that is if you if you could give the reasons behind that thank you.

Speaker Change: We have some opportunity there, but we wanted to be pretty conservative in terms of our forecasting given the forecasting issues that we had last year.

Speaker Change: Yeah. Thanks, Thanks, Alan we.

Speaker Change: Actually decided to lengthen our range a little bit front as you can see.

Speaker Change: We saw confidence that that can create upside.

Speaker Change: The range that we have.

Speaker Change: You know that would move us.

Speaker Change: 170, 180, <unk>, we did that because on the biometric side.

Speaker Change: Into the higher end of the guidance. We also think we have opportunity on the my VIP platform, which we're pretty excited about but don't forget we have headwinds right. We have our E car legacy headwind, which is miles, but it's enough to make a difference.

We have some opportunity there, but we wanted to be pretty conservative in terms of our forecasting given the forecasting issues that we had last year.

Speaker Change: And mobile verify that document verification pricing pressure that we've talked about historically, we will continue says kind of outpacing on the identity side outpacing those headwinds.

Speaker Change: We still have confidence that that can create upside.

Speaker Change: That would move us.

Speaker Change: On the <unk>.

Speaker Change: On deposit side remember that with you.

Speaker Change: You know lower mobile deposit GAAP revenue.

And mobile verify.

Speaker Change: Pat and assuming kind of a flattish.

Speaker Change: And verification pricing pressure that we've talked about historically, we will continue so that's kind of outpacing on the identity side outpacing those headwinds.

Speaker Change: Year over year that means the Czech rock defender is growing to offset it.

Speaker Change: We think actually once we get to this 2025 year that when we get into 'twenty six will start to see both deposits and identity is starting to grow together and accelerate especially if we're able to do what Ed talked about in terms of our focus operating as planned in 2025.

Speaker Change: On the deposit side remember that with them.

Lower mobile deposit GAAP revenue.

Speaker Change: And assuming kind of a flattish.

Speaker Change: Year over year that means the checkout defender is growing to offset it.

Speaker Change: And I would just add there.

Speaker Change: We think actually once we get to this 2025 year that when we get into 'twenty six will start to see both deposits and identity starting to grow together and accelerate especially if we're able to do what Ed talked about in terms of our focus operating as planned in 2025.

Youre on the right point about the opportunity for growth.

Speaker Change: And then as we've talked about on the identity side, where the midpoint is the driver of that and honestly as I laid out the plan earlier. This says in this organization as an ardent focus on making sure. We can continue to accelerate that organic growth with the products the solutions, who we're selling to.

Speaker Change: So let me just add there.

Speaker Change: Youre on the right point about the opportunity for growth and then as we've talked about on the identity side, where the midpoint is the driver of that and honestly as I laid out the plan earlier. This says in this organization as an ardent focus on making sure.

Speaker Change: Our relationships, there and building that out and making sure we have the products and solutions to execute on so we aspire and we continue all of our objectives and goals are to continue to accelerate that growth.

Speaker Change: Honestly on new into it and we're going to take a prudent.

Sure we can continue to accelerate that organic growth with the <unk>.

Speaker Change: Approach to it and but we and we will keep you updated throughout the year and but how we exit the scene here today.

Speaker Change: <unk> the solutions, who we're selling to the relationships there and building that out and making sure we have the products and solutions to execute on so we aspire and we continue all of our objectives and goals are to continue to accelerate that growth.

Speaker Change: We're driving towards that double digit growth going into 'twenty six.

Speaker Change: Okay. One last question just following up on them.

Kennedy: Hi Kennedy.

Speaker Change: Obviously on new into it and we're going to take a prudent approach to it and but we and we will keep you updated throughout the year and but how we exit the sitting here today.

Speaker Change: Mobile identity was.

Kennedy: At $68 5 million of revenue in the <unk>.

Kennedy: Fiscal 'twenty four.

I thought I heard you say that when you get to 85 million Nixon.

Speaker Change: So we're driving towards that double digit growth going into 'twenty six.

Kennedy: Which over to profitability.

Speaker Change: Okay. One last question just following up on them.

Speaker Change: But based on what you are talking about it sounds like.

Speaker Change: <unk> mobile.

Speaker Change: Best case is that.

Speaker Change: Mobile identity was.

Speaker Change: Maybe we would see that in 2006.

Speaker Change: $68 $5 million of revenue in the.

Speaker Change: But so the category.

Speaker Change: Fiscal 'twenty four.

Or am I thinking about that wrong.

Speaker Change: And.

Speaker Change: I thought I heard you say that when you get to $85 million.

Speaker Change: So.

Speaker Change: Are the comments on that that Fulcrum point, we believe is 80 to 85, so let's just take the midpoint.

Speaker Change: Switch over to profitability.

Speaker Change: But based on what you are talking about it sounds like.

And yes pulling out from where we were this past year that says there's a delta of about $14 million.

Speaker Change: Best case is that.

Speaker Change: Maybe we would see that in 'twenty.

That we need to execute and deliver on in terms of growth of getting to that.

Speaker Change: But so with that one.

Or home.

Speaker Change: Thinking about that wrong.

Speaker Change: Level of contribution turning positive so that.

Speaker Change: So.

Speaker Change: The comments on that that Fulcrum point, we believe is 80 to 85, so let's just take the midpoint.

Speaker Change: That those products are accretive to the margin that we're focused on industrial we're executing against.

Speaker Change: And yes pulling out from where we were this past year that says there is a delta of about $14 million.

Speaker Change: That we would move into 2026, two to achieve that and we're going to keep you posted on if we see any.

Speaker Change: That we need to execute and deliver on in terms of growth of getting to that.

Speaker Change: Level of contribution turning positive so that.

Speaker Change: To the positive or negative changes on that trajectory, we will keep you posted but yeah, we see that going in two of the 26 period now I'll say that.

Speaker Change: Those products are accretive to the margin that we're focused on industrial we're executing against.

Speaker Change: That level of contribution also as a as a fully.

That we would move into 2026, two to achieve that and we're going to keep you posted on if we see any.

Speaker Change: Fully burdened contribution so that includes all of the company's overheads and general G&A. So that's a very.

Speaker Change: I'd say a fully burden approach at that objective.

Speaker Change: To the positive or negative changes on that trajectory, we will keep you posted but yeah, we see that going in two of the 26 period now I'll say that that level of contribution also as a as a fully.

Speaker Change: Okay. Thank you very much.

Speaker Change: Yeah.

Speaker Change: And your final question today will come from Surinder <unk> with Jefferies. Please go ahead.

Speaker Change: Fully burdened contribution so that includes all of the company's overheads and general G&A. So that's a you know a very.

Speaker Change: Thank you.

Speaker Change:

Speaker Change: I'd like to start a question with about the I'll call. It the integration of our transformation program that youre going through can.

Speaker Change: I would say a fully burden approach at that objective.

Can you walk us through that in a bit more detail in the sense of how big a lift studies at this point.

Speaker Change: Okay. Thank you very much.

Speaker Change: Yeah.

Speaker Change: And your final question today will come from Surinder <unk> with Jefferies. Please go ahead.

Speaker Change: And when you kind of expect to get to the end target is that a multiyear journey.

Speaker Change: Yeah.

Speaker Change: Year long journey, where you get most of the benefits.

Thank you.

Speaker Change:

Speaker Change: I'd like to start a question with about the I'll call. It the integration of transformation program that youre going through can.

Speaker Change: Sometimes as you get into these projects that can turn out to be a bit more complex than originally anticipated.

Speaker Change: Can you walk us through that in a bit more detail on defense of how big a lift that is at this point.

Speaker Change: Absolutely.

Speaker Change: They they can.

Speaker Change: I would tell you it sounds better to move swiftly.

Speaker Change: And when you kind of expect to get to the end target is that a multi year journey is it a year long journey, where you get most of the benefits.

Speaker Change: Again, the whole organization again.

Speaker Change: Commented on one of our previous questions. This company has gone through a lot over the last couple of years that people have gone through a lot having a clarity to focus on our plan what we're executing against having this organization geared to the results that drive value and what are the biggest value levers for the enterprise.

Speaker Change: Sometimes as you get into these projects that can turn out to be a bit more complex than originally anticipated.

Speaker Change: Absolutely.

Speaker Change: They they can.

Speaker Change: I would tell you or sounds better to you know move swiftly.

Speaker Change: The whole organization again.

Speaker Change: So we want the.

Speaker Change: The team aligned to so now having clarity to that.

Speaker Change: These programs and I mentioned some of them over here how are we getting automating more transactions running on the identity side, how are we integrating those multiple platforms.

Speaker Change: So we're gone through from either hair.

Speaker Change: Heritage ones or acquired.

Speaker Change: So we want the team aligned to so now having clarity to that these programs and I mentioned some of them over here how are we getting automating more transactions running on the identity side, how are we integrating those multiple platforms.

Speaker Change: The company used to have for getting those to one.

Speaker Change: Continuing to tune.

Speaker Change: AI.

Speaker Change: Rhythms, and making sure our machine learning algorithms are.

Speaker Change: <unk> taken the latest datasets to improve the level of automation.

Speaker Change: So we're gone through from either.

Speaker Change: Heritage ones or acquire didn't.

Speaker Change: Getting our sales team geared towards the path.

Speaker Change: The company used to have for getting those to one.

Speaker Change: Products that actually drive the needle in terms of both margin and scalability. So she is gearing the organization.

Speaker Change: Continuing to tune.

Speaker Change: AI algorithms and making sure our machine learning algorithms are.

Speaker Change: I think we'll make a lot of headway on it this year, but it will evolve into next year.

Speaker Change: <unk> taken the latest datasets to improve the level of automation.

Speaker Change: There will probably be more things, where we see more and more opportunities, but I guess the overarching point is its about clarity and gearing for the organization to drive towards.

Speaker Change: Getting our sales team geared towards the path.

Speaker Change: Products that actually drive the needle in terms of both margin and scalability. So she is gearing the organization.

Speaker Change: Organic growth and scaling margins.

Speaker Change: And having.

Speaker Change: I think we'll make a lot of headway on it this year, but it will evolve into next year.

Speaker Change: Customers that our goals have been raving fans and that they want to push and do more with with mitek.

Understood.

Speaker Change: He definitely hear you on obviously, having an integrated tech stack or approach from a product perspective as well.

Speaker Change: Organic growth and scaling margins.

Speaker Change: We will definitely help on the organic growth rate, but what about the actual execution of that in the sense of these projects.

Speaker Change: And having.

Speaker Change: Customers that our goals have been raving fans and if they want to push and do more with what mitek.

Speaker Change: You can also get expensive right, because sometimes you need a lot of bodies to throw out to get the problem solved within some reasonable timeframe.

Speaker Change: Understood.

Speaker Change: Yeah definitely hear you on obviously, having an integrated tech stack or approach from a product perspective, as well as will definitely help on the organic growth rate, but what about the actual execution of that in the sense of these projects.

Speaker Change: How are you guys managing that part of the question because when we look across.

Speaker Change: The industry, we see others that have gone through some of these programs.

Speaker Change:

Speaker Change: We can also get expensive right.

Speaker Change: So they're not cheap per se and so usually you'll see things like expenses.

Speaker Change: Sometimes you need a lot of bodies to throw out.

Speaker Change: Adjusted out of the numbers, we see anything like that or is this somehow you're managing within your existing cost structure.

Speaker Change: To get the problem solved within some reasonable timeframe.

Speaker Change: How are you guys managing that part of your question because when we look across.

Speaker Change: Yes.

Speaker Change: Predict the future on May or May not say, but I would tell you.

Speaker Change: The industry, we see others that have gone through some of these programs.

Speaker Change: The guidance that.

Speaker Change: We outline in the Dave walk through incorporates.

Speaker Change:

Speaker Change: Theyre not cheap per se and so usually youll see things like expenses.

Speaker Change: These actions these investments.

Speaker Change: Frankly, some of the efficiencies of redundancies that we've already incurred.

Speaker Change: Just out of the numbers, we see anything like that or is this somehow you're managing within your existing cost structure.

Speaker Change: <unk> incurred.

Speaker Change: In the company and have taken action on those already and we also outlined the incremental investments on product enhancements and scale that we are investing in on the CFT salute.

Speaker Change: Yes.

Speaker Change: Predict the future on May or May not say, if I would tell you the guidance that we outlined in the Dave walked through incorporates these.

These actions these investments.

Speaker Change: Solution. This year, that's all that's in the numbers.

Speaker Change: And so if something were to come along that has an extremely compelling.

Speaker Change: Some of the efficiencies of redundancies that we have already.

Speaker Change: Incurred.

Speaker Change: ROI that we feel strong about that requires an incremental investment we would discuss discuss that but based on everything that we talk through right. Now that's a those are in the numbers and we want to drive upside from those results.

Speaker Change: Solution. This year, that's all that's in the numbers.

Speaker Change: Okay, that's actually really good to hear.

Speaker Change: And so if something were to come along that has an extremely compelling.

Speaker Change: And then maybe a question for you Dave here.

Speaker Change: ROI that we feel strong about that requires an incremental investment we would discuss discuss that but based on everything that we've talked through right. Now that's a those are in the numbers and we want to drive upside from those results.

Speaker Change: When we think about the guidance.

Dave Lyle: The guidance on trying to.

Dave Lyle: <unk> fiscal <unk>.

Dave Lyle: And then kind of a modest build up after that.

Speaker Change: Is that kind of the normalized level of expenses here or do we expect to see incremental cost savings coming in obviously I assume all of this is incorporated within the numbers, but just kind of that.

Speaker Change: Okay, that's actually really good to hear.

Speaker Change: Hmm.

And then maybe a question for you Dave here.

Speaker Change: When we think about the guidance on kind of the <unk>.

Speaker Change: Puts and takes on.

Speaker Change: That component of the expense line.

Speaker Change: <unk> fiscal <unk>.

Speaker Change: Are you talking about more about what's going to happen after 2025.

Speaker Change: And then kind of a modest build up after that.

Speaker Change: Is that kind of the normalized level of expenses here or do we expect to see incremental cost savings.

Speaker Change: That is correct yes.

Speaker Change: Yes.

We think if we can.

Speaker Change: Coming in obviously I assume all of this is incorporated within the numbers, but just kind of the.

Speaker Change: Execute on what.

Speaker Change: <unk> plan when he laid out I think we can see margin expansion beyond that we just don't want to get ahead of ourselves and start guiding past 'twenty five but certainly we think if we can get operating efficiency efficiencies, we should be able to see margin expansion.

Speaker Change: Puts and takes on.

Speaker Change: That component of the expense line.

Speaker Change: Are you talking about more about what's going to happen after 2025.

Speaker Change: That is correct yes.

Speaker Change: Yes.

Speaker Change: We think if we can.

Speaker Change: Got it.

Speaker Change: Execute on what ads.

Speaker Change: Yes.

And then I guess.

The final question here just.

Speaker Change: If I heard this correctly there were some commentary around the reduction of some modest level of production spend EMEA identity business.

Speaker Change: Can you provide additional color on that especially one that's a business that you are investing to build.

Speaker Change: Got it.

Speaker Change: Yes.

Speaker Change: And then I guess.

Speaker Change: Yes. So this is.

Speaker Change: No.

The final question here.

Speaker Change: <unk> focus I didn't mention that and said that the spending for the identity products.

Speaker Change:

Speaker Change: If I heard this correctly there were some commentary around the reduction of some modest level of reduction in spend in the identity business.

Speaker Change: We'll actually be flat to slightly down for this fiscal year.

Speaker Change: I think this is just a recognition there's been a lot of investment.

Speaker Change: Can you provide additional color on that especially one that's a business that you are investing to build.

Speaker Change: On that over the last.

Speaker Change: Last couple of years.

Speaker Change: Yes. So this is oh.

Speaker Change: And the results we want to drive results and performance. So we geared the team the organization to the products to make sure. They are scaling that their customer satisfaction is there that the customer experiences there that we can cross sell by integrating these platforms. So that's in there and we're investing.

About focus I didn't mention that and said that the spending for the identity products.

Speaker Change: We'll actually be flat to slightly down for this fiscal year.

Speaker Change: I think this is just a recognition theres been a lot of investment.

Speaker Change: On that over the last.

Speaker Change: Last couple of years.

Speaker Change: In the product, we just announced the DFT with digital defender, which frankly, we think is at the forefront of the market right now based on what's happened with <unk>. So the goal is to.

Speaker Change: And the results we want to drive results and performance. So we've geared the team the organization to the products to make sure. They are scaling that their customer satisfaction is there that the customer experiences there that we can cross sell by integrating these platforms. So that's in there and we're investing.

Speaker Change: It was to have the.

Speaker Change: Efficient.

Speaker Change: Drive productivity.

Speaker Change: Getting back to a double digit organic growth in <unk>.

Speaker Change: Yeah.

Speaker Change: In the product, we just announced the DFT with digital saw defender, which frankly, we think is at the forefront of the market right now based on what's happening with <unk>. So the goal is to.

Speaker Change: Being prudent with how and where we're investing so we're trying to balance all of those interests.

Speaker Change: And have the relationships so.

Speaker Change: I'm not concerned about the Cubs are changes or the cost side impacting the customer experience or innovation, it's actually the opposite because we're focused we're actually able to achieve it.

Speaker Change: It was to have the.

Speaker Change: Efficient.

Speaker Change: Drive productivity.

Speaker Change: And getting back to a double digit organic growth.

Speaker Change: Being prudent with our with how and where we're investing so we're trying to balance all of those interests.

Speaker Change: Got it okay I appreciate the time guys. Thank you.

Speaker Change: Alright, well, thank you very much.

And have their relationships, so I'm not concerned about the cuts or changes or the cost side impacting the customer experience or innovation, it's actually the opposite because we're focused we're actually able to achieve it.

Speaker Change: Operator, I was going to kind of close out here for a minute.

Speaker Change: We've covered a lot of information today I want to thank you for your time.

Speaker Change: We're highly enthusiastic about the changes, we're making and the prospects for growth for the company.

Speaker Change: This focused operating discipline combined with the effective sales execution should position us for attractive organic growth as we exit this year and as mentioned we will keep you updated on our quarterly progress towards the milestones that were outlined as well as any actions that are taken as necessary to enhance shareholder value and allow us to say. Additionally.

Speaker Change: Got it okay I appreciate the time guys. Thank you.

Speaker Change: Alright, well, thank you very much.

Speaker Change: Operator, I'm, just going to kind of close out here for a minute.

Speaker Change: We've covered a lot of information today I want to thank you for your time.

We're highly enthusiastic about the changes, we're making and the other prospects for growth for the company.

<unk>.

Speaker Change: <unk> I will be attending the Needham growth conference on January 14th and just look forward to hopefully we'll be able to meet some of you all in person. There next month. So till then thank you very much and we thank you for your support of Mitek Great day.

Speaker Change: Oh for instance, now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: David I will be attending the Needham growth conference on January 14th and just look forward to hopefully we'll be able to meet some of you all in person there and next month. So till then thank you very much and we thank you for your support of Mitek Great day.

Speaker Change: Conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

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