Q2 2025 Mitek Systems Inc Earnings Call

Good afternoon, and welcome to the Mitek fiscal 2025 second quarter earnings Conference call.

All participants will be in listen only mode.

Speaker Change: Can you just please signal conference specialist by personal Starkey following zero.

After todays presentation, there will be an opportunity to ask questions.

Speaker Change: To ask a question you May press Star then one on the telephone keypad to withdraw your question. Please press Star then two.

Speaker Change: Please note this event is being recorded.

Todd: I would now like to turn the call over to Todd currently.

Speaker Change: Please go ahead.

Ed West: Thank you operator, good afternoon, and walk up to Mitek. This fiscal 'twenty to 'twenty five second quarter earnings Conference call with me on today's call are Mitek, CEO, Ed West and CFO, Dave Lyle.

Dave Lyle: Before I turn the call over to Ed I'd like to cover a few quick items.

Dave Lyle: Today Mitek issued a press release announcing its financial results for its fiscal.

Dave Lyle: 2025 second quarter ended March 31, 2025 release is available on the company's website at Mitek systems Dot com.

Dave Lyle: This call is being broadcast live over the Internet for all interested parties and the web.

Dave Lyle: <unk> cost will be archived on the Investor Relations page of the company's website.

Dave Lyle: 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. These forward looking statements may include com.

Dave Lyle: And that's about the company's plans and expectations for future performance.

Dave Lyle: Looking statements are subject to a number of risks and uncertainties, which could cause actual results to differ materially.

Dave Lyle: For all of our listeners to review, our SEC filings, including our most recent 10-K 10-Qs for a complete description of these risks our statements on this call are made as of today may eight 2025, and the company undertakes no obligation to revise or update publicly any forward looking statements contained herein.

Dave Lyle: Whether as a result of new information future events changes in expectations or otherwise.

Dave Lyle: 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 our GAAP and non-GAAP reporting and present the reconciliation between the two for the periods reported in the release.

Dave Lyle: With that said, I'll now turn the call over to MyTech's CEO, Ed West. Thank you, Todd, and good afternoon, everyone. I would like to begin with a brief overview of MyTech, who we are, the problems we solve, and why our role is more critical than ever in today's digital world.

Dave Lyle: My tech is a global leader in identity verification and fraud prevention trusted by over 7,000 organizations worldwide including top banks, Fintechs, telecoms, and marketplaces.

Dave Lyle: We earned that trust by pioneering mobile check deposit, a technology that now enables about 1.2 billion mobile deposit transactions each year.

Dave Lyle: The same technology was built to securely capture and process sensitive data using any camera enabled device, is what paved the way for our leadership and digital identity.

Dave Lyle: Today, our capabilities have expanded to include payment to fraud detection, powered by an industry-leading consortium of financial institutions, as well as identity verification and authentication, advanced biometrics and detection of deep fakes and synthetic fraud.

Dave Lyle: In high assurance industries where precision, integrity, and regulatory compliance are essential, we help our customers stay ahead of evolving threats before they cause harm.

Dave Lyle: The rise of generative AI is fundamentally reshaping the threat landscape, giving fraudsters access to powerful, low-cost tools that can mimic identities, forged documents, and bypass traditional defences.

Speaker Change: It's never been easier or cheaper for bad actors to launch attacks. Fraud has essentially been democratized. That's why my explanation to provide secure real-time identity and fraud prevention is more relevant and more necessary than ever.

Speaker Change: As I noted earlier this year, our priorities this year have been to drive organic growth, increase the percentage of SaaS revenue, expand margins and increase free cash flow conversions.

Speaker Change: With that context, here are four key takeaways from the second quarter, each aligned with the transformation framework we outlined on prior calls.

Speaker Change: First, we made tangible progress strengthening the foundation for scalable, profitable, organic growth by improving sales execution, our technology platform and operational efficiency. Thank you.

Speaker Change: 2. Our identity portfolio continues to build momentum reaching over $71 million in the last 12 months revenue driven by strong transaction growth.

Speaker Change: Third, Check Fraud Defender continues to expand rapidly. We now have data sets on 23% of U.S. check-in accounts, up meaningfully from the last quarter.

Speaker Change: 4th, we are enforcing financial discipline, lowering spend intensity while delivering meaningful EBITDA leverage and improving free cash flow, all under an umbrella of strict oversight of capital allocation.

Speaker Change: Now let me discuss each of these, starting with our efforts to strengthen the foundation of our company.

Speaker Change: In the second quarter, we made meaningful progress in identity sales execution, notably without adding headcount [inaudible]

Speaker Change: We have restructured compensation plans to focus on driving high-quality recurring revenue.

Aligning frontline incentives with our strategic goals.

Speaker Change: The shift is already paying off with growth driven by new customer wins, expansion with existing accounts and increased adoption of newer identity and fraud related products, all supported by tighter ideal customer profile alignment and a more focused go-to-market approach.

Speaker Change: On the R&D front, we are leveraging our AI and machine learning resources to help manage the business better.

Speaker Change: We launched a fully modernized document onboarding system, reducing document onboarding cycle times.

Speaker Change: When a government agency introduces a new document, such as a redesigned driver's license, our systems initially flags it as unclassified because it's unfamiliar. This triggers manual reviews, increasing operational burden, and lowering the user experience.

Speaker Change: With the recent system upgrades, we've improved new document cycle times, reducing reliance on manual intervention and enabling faster, more scalable support for global document libraries.

Speaker Change: This rollout began in the US and will soon expand to Europe and the UK, improving automation rates and strengthening our product scalability in high assurance markets.

Speaker Change: These efforts also complement our broader initiative to automate more transactions, enhance scalability and streamline the customer experience.

Speaker Change: In addition, we strengthen our leadership team with the appointment of Garrett Daffy as COO. Approved by an operator in identity and fraud prevention, Garrett will focus on scaling automation, product development, and data analytics, all core to our path toward durable profitable growth.

Speaker Change: Now if turning to identity, we saw a meaningful progress in the two key drivers of profitability.

Speaker Change: Stronger transaction mix and a greater automation, resulting in the need for fewer manual review agents

Speaker Change: We're tracking towards our 80 to 85 million dollar Fulcrum Point for identity with the last 12 months revenue as 71.4 million exiting the second quarter.

Speaker Change: As a reminder, improvements in unit economics, especially gross profit per transaction, could lower that breaking threshold over time.

Speaker Change: My VIP continued to outpace the rest of the portfolio, further shifting the transaction mix

Speaker Change: Liveness, SMS, and Deep Fake Detection, versus the single-step journey's typical of Mobile Verify. This richer signal set is driving higher revenue per journey and stronger unit level profitability.

Speaker Change: On the automation front, improved AI models, reduced manual reviews, driving down per transaction cost and lifting our services' gross margin by 230 basis points over last year.

Speaker Change: Advancing us further along our path to scalable, sustainable profitability and identity.

Speaker Change: Another key milestone this quarter is the increasing traction with my pass, our biometric authentication solution, which replaces credentials with biometric login tied to a verified identity, critical of for high assurance sectors.

Speaker Change: Finally, we began expanding our relationships with existing customers by adding real-time deep-fake detections and other synthetic attacks through our Digital Fraud Defender solution.

Speaker Change: These advanced signal-rich solutions, position-mitek to lead in an increasingly AI-driven

Speaker Change: To summarize, identity growth is being driven by two key trends, both directly aligned with our strategy.

Speaker Change: First, identity journeys are becoming more layered with customers adding additional verification and authentication steps to strengthen security. This shift reflects the increasing complexity of digital identity and demonstrates that we are successfully executing on our strategy.

Speaker Change: In second, we believe usage of our platform will continue to expand beyond initial onboarding to include reauthentication throughout the customer life cycle.

Speaker Change: such as during wire transfers or high risk activities where high assurance businesses rely on my tech's advanced capabilities like lightness detection and biometrics and authenticate against a verified identity.

Speaker Change: So now, turning to the third key takeaway, our check for all defender solution made good progress in Q2 across both direct and partner channels.

Speaker Change: ACV grew to nearly 13 million, and we now have data set coverage on approximately 23% of all US checking accounts, up from 18% when we last updated the market.

Speaker Change: This coverage is a leading indicator of value for the consortium members, as well as future growth. It allows us to engage with banks whose checks we already see through consortium operations.

Speaker Change: On the direct side, we close two major relationships, including a top 10 and a top 50 U.S. Bank. We also advanced our relationship with another top 10 bank currently using our on-premise solution.

Speaker Change: This institution is now running a full-volume pilot across mobile, branch, ATM, and inclaring channels highlighting growing interest in our real-time cloud-based consortium model.

Speaker Change: On the partner side, which helps us serve the broader long tail of regional banks, Obrigo added multiple new clients during this quarter and another new partner signed 30 new FIs. Our pipeline is solid and we're in advanced conversations with additional potential partners.

Speaker Change: While sales cycles and banking remain long and complex, the payoff is high. Our solutions become mission critical once deployed, generating strong lifetime value and long-term recurring revenue.

Speaker Change: And that brings us to our fourth and final take away. Continued progress towards a more durable, growing, and cast generative business model.

Speaker Change: Sass Revenue grew 15% year over year in Q2 and now accounts for 40% of total last 12 months revenue up from 39% last quarter.

Speaker Change: Evidence of our steady transition to a more recurring revenue model.

Speaker Change: We're also driving sharper financial discipline. non-GAAP cash adjustments were down to a low single digit percentage point of revenue from 9% a year ago. Highlighting stronger execution and cost control.

Speaker Change: Over the last 12 months, we've generated $47 million in free cash flow on $56 million of Adjustity of a DAW, an 86% conversion rate. This cash strength gives us flexibility to prudently invest in innovation, strengthen our balance sheet and return capital to shareholders.

Speaker Change: Dave will speak more about our Catholic allocation strategy a little later.

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Speaker Change: Now before I wrap up, I want to zoom out and speak briefly about the broader opportunity in digital identity and fraud prevention.

Speaker Change: As we strengthen our position in this market it's important to reflect on how the landscape is evolving and why my tech is well positioned to lead. There are three primary ways to verify or authenticate someone's identity.

Speaker Change: Something you know, such as a password or a pen, something you have, such as a phone or an ID, or something that you are, such as biometrics and behavioral signals.

Speaker Change: The most of the world, including the high assurance industries, is still relied on the first two. While these methods remain important, they are no longer sufficient on their own. In today's AI-driven threat environment, stand-alone authentication must give way to a layered signal-rich approach. In today's AI-driven threat environment, stand-alone authentication must give way to a layered signal-rich approach.

Speaker Change: The gap between the sensitivity of digital transactions and the strength of protections is significant and widening

Speaker Change: My text view is that the identity must be verified directly by something you are, and continuously, not just at Logan. That means layering biometrics, behavioral data, and proprietary identity signals to truly know who a user is. [inaudible]

Speaker Change: But even biometrics alone aren't enough. According to the EDF Research Institute, the vast majority of systems today cannot detect defects. Our technology is built specifically to mitigate that gap.

Speaker Change: Broad today is global, scalable, and alarmingly accessible. What was once limited to skilled criminals is now powered by off-the-shelf toolkits and cheap, guaranteed AI, making advanced to tax available to anyone anywhere and at a low cost.

Speaker Change: across my recent conversations with customers and prospects in North America. The United Kingdom and Europe , the message has been consistent.

that the threat is real, growing and reshaping enterprise priorities.

Speaker Change: At Mitek, we're building a unified platform that combines fraud prevention, identity verification and biometric authentication to help organizations stay secure in an AI-driven world.

Speaker Change: This platform approach is driving broadening demand, deeper customer engagement and turning our innovation into durable profitable growth. With that, I'd like to turn it over today for financial highlights and our outlook.

Dave Lyle: Thanks Ed. I'll start by walking through our results for the quarter highlighting the drivers behind our performance and from there I'll share some additional insights into how we're approaching the balance of the year. First our fiscal Q225 results.

Dave Lyle: Total revenue reached a record, $51.9 million, up 11% year over year in the second quarter. As expected, deposit products revenue increased 14% year over year, driven by strong mobile deposit renewal activity.

Dave Lyle: Our Identity Products Revenue increased by 4% Euro-Infitter and was highlighted by a strong 9%-year-over-year growth in Identity SaaS Revenue and continued strength in our Identity Transaction Volumes.

Dave Lyle: Our non-GAAP gross profit for the quarter was $45.6 million, representing an 88% non-GAAP gross margin, and the majority bidot came in at $20.2 million, representing a 39% margin.

Dave Lyle: Both slightly exceeded our expectations due to the mixed benefits of revenue outperformance.

Dave Lyle: and our near 100% gross margin deposit software license business combined with better than expected operating expenses due to the company-wide focus on cost controls.

Dave Lyle: Turning now to the specifics of our revenue performance, let's start with the positive products.

Dave Lyle: Deposit revenue grew 14% year-over-year to $33.7 million, primarily due to a 10% increase in our deposit software license revenue, relating specifically to our mobile deposit and check intelligence software products.

Dave Lyle: This increase was consistent with expected renewal patterns as customers returned to repurchase mobile check deposit transactions.

Dave Lyle: As we've noted before, due to lumpiness inherent to term license revenue, which makes up 70% of deposit's products revenue, we encourage investors to focus on long-term trends.

to that end.

Dave Lyle: Ending Fiscal Q224 and Consistent with the longer-term average of 70 million.

Dave Lyle: This stability reflects our consistent 1.2 billion transaction run rate, which continues to offset broader declines and check usage as mobile adoption grows.

Dave Lyle: In addition to strong performance in license revenue, deposit maintenance revenue grew 10% year over year, reflecting a healthy cadence of contract renewals following continued strength in software licensing.

Dave Lyle: While CheckFraud Defender remains in the early stages of monetization were encouraged by its growing traction with deposit SaaS revenue rising 64% year over year, driven by increased adoption of this solution.

Dave Lyle: Overall, it was a strong quarter for our deposits products supported by robust license renewals, solid maintenance growth, and accelerated sass momentum.

Dave Lyle: Now turning to our Identity Product portfolio, which grew 4% year-over-year to 18.2 million driven by a 9% increase in identity SaaS revenue.

Dave Lyle: This growth was supported by continued strong transaction volumes across both my VIP and mobile verify, consistent with trends we've seen in recent quarters.

Dave Lyle: While Q1 benefited from unusually high overjectivity at premium pricing tiers, we're pleased to see the underlying strength of the business continuing Q2.

Dave Lyle: We're also seeing an increasingly diversified mix of verification steps attached to each identity transaction on my VIP, such as face match,

Dave Lyle: While these can carry lower pre-unit pricing, they boost engagement and volume, reflecting how our platform is being used in more complex workflows.

Dave Lyle: Given the ongoing mix shift towards lower price but higher volume verification steps, we view gross profit dollars as an informative indicator of our underlying unit economics.

Dave Lyle: In Q2, Rose Prophet from our Services and Other Revenue Category, which includes Identity SAS, increased nearly 18% year-over-year, more accurately reflecting the expanding contribution in improving efficiency of our Identity offerings.

Ed West: Turning to Total SAS Revenue, we continue to see strong performance across both our fraud and identity SAS offerings with Total SAS Revenue growing 15% year over year. As Ed noted, we're making solid progress towards our goal of SAS Revenue representing a majority of our business.

Ed West: Last 12 months, or LTM SAS, revenue now accounts for 40% of total revenue up from 35% a year ago.

Ed West: Identity SaaS Revenue may experience quarterly fluctuations based on customer overjectivity as seen in G1.

Ed West: Moving down the PNL, we maintain strong unit economics, achieving an 88% non-gafterous margin for the quarter.

Ed West: This was driven by our near 100% gross margins on our software license revenue, mostly mobile deposit, and a notable 75% gross margin on our services and other revenue, mostly mobile verify and my VIP, reflecting continued improvement.

and up 230 basis points year over year. [inaudible]

Ed West: These results reflect the financial benefits of our efforts to increase automation, improve cost efficiencies, and drive cultural integration, particularly within our identity portfolio.

Ed West: non-GAAP operating expense for the quarter total 25.7 million, a 1.7 million sequential increase from fiscal Q1, the increase was primarily driven by higher R&D as well as continued investment in marketing and cloud related initiatives.

We are particularly pleased with our progress on DNA expenses.

Ed West: NGAT-GNA fell 1.8 million year-over-year to 15% of revenue down from 21% a year ago.

Ed West: This improvement was widespread and reflects our ongoing efforts to build the more scalable and efficient GNA organization while maintaining strong controls and governance.

Ed West: This discipline is also evident in the declining gap between our non-GAAP and gap operating expenses, which reflects fewer non-recurring cash items.

Ed West: The 8.3 million difference between our non-GAAP and gap operating expenses in Q2 reflects a half million dollars in cash adjustment and 7.8 million in non-cash accounting adjustments.

Ed West: This represents a significant improvement from Q2 fiscal year 24, when cash adjustments totaled $4.4 million.

Ed West: The $3.9 million year-over-year reduction reflects lower non-recurring oddities, legal costs, executive transition expenses, and restructuring charges.

Ed West: After factoring in other income, interest expenses and taxes, this equates to 16.7 million in non-GAAP net income, or a 36 cents for deluded share based on 46.6 million deluded shares outstanding.

Ed West: Turning to our balance sheet and capital allocation strategy over the last 12 months we generated 47.1 million in free cash flow and returned 27.2 million to shareholders through share repurchases.

Ed West: These two factors account for most of the change in our cash and investments balance, which increased by 22.1 million over the past 12 months.

Ed West: Importantly, we ended the quarter in a near net cash position with 152.4 million in cash and investments against 155.3 million in face value of convertible senior notes due in February 26th.

Ed West: Given the low 75 basis points coupon and the notes conversion feature is deep out of the money, we continue to earn a favorable spread by holding cash and plan to wait as long as practical before redeeming.

Ed West: To support this strategy and strengthen our overall capital allocation position, yesterday we closed a $100 million senior credit facility with Silicon Valley Bank, a division of First Citizens Bank.

Ed West: This includes a $75 million delayed draw turn loan available in tranches through February 2026 to retire our convertible notes and a $25 million revolver for general corporate purposes.

Ed West: Both mature in May 2030 and are structured with favorable terms, extended duration of five years and ample flexibility to support our long-term growth in capital allocation plans

Ed West: Our strong financial position supports a disciplined opportunistic capital allocation strategy, enabling us to balance share of purchases when valuation is compelling with high return investments in growth, all with a singular focus on maximizing free cash flow per share.

Ed West: Before turning to our outlook, a brief note on the macro environment. While the broader environment

Remains uncertain. We continue to see resilience in our business.

Ed West: As a software company today, we are largely insulated from trade-related disruptions.

Ed West: and Security-related IT spending has historically remained steady even in constrained budget environment.

Ed West: Our Global Customer Base also provides diversification against regional volatility, and we have not seen any cancellations tied to the macro backdrop.

Ed West: That said, given potential for evolving macroeconomic headwinds, we are approaching our fiscal 2025 outlook with appropriate discipline and caution.

Ed West: With regard to revenue, we are maintaining our full year revenue guidance range of $170 to $180 million.

Ed West: Based on the midpoint of our guidance and typical seasonal patterns, we expect Q3 revenue to modestly exceed Q4, reflecting normal customer buying behavior and the expected timing because several term-based licensed renewals.

Ed West: On the profitability front, we are raising our full-year adjusted EBITDA margins, guidance range to 26-29% up from our prior range of 25-28%.

Ed West: This increase reflects our strong first half performance and the sustained impact of recent efficiency improvements while still preserving flexibility to invest strategically

Ed West: For Fiscal 2-3, we expect non-GAF operating expenses to be in the range of 26-27 million with depreciation and expense around 70 basis points of revenue.

Ed West: While we continue to manage costs with discipline, we anticipate modest sequential increases in our non-GAAP operating expenses through year end as we selectively rampiring. Invest in Go-to-Market initiatives and support innovation across our product portfolio. Invest in Go-to-Market initiatives and support innovation across our product portfolio.

Ed West: With that, I'll turn the call back over to the operator for questions.

We will now begin the question and answer session.

Speaker Change: To ask the question, you may press star then one on your telephone keypad. If you're using the speak phone, please pick up your hands up before pressing the keys.

Ed West: To withdraw your question, please press stars and two. At this time, we'll pause more material

Speaker Change: Our first question will come from Jake Roberge with William Blair. You may now go ahead.

Jake Roberg: Yeah, thanks for taking the questions and really nice results on both the top and bottom line.

Speaker Change: Now that you've been at Mitek for a few quarters, can you talk about some things that have gone well that far and maybe a few things that have been a bit more difficult for you? And then obviously some turbulent times in the market, so would love to get your take on what you're seeing from customers.

Speaker Change: Sounds like things have been largely stable but would be great to hear what you saw from some of your your more usage or transactional based businesses as you progress through the month of April .

Sure. Well, thanks Jake.

Speaker Change: I appreciate the word, and frankly, it all goes to the employees across Mitek, you know, around the world who just did it.

Speaker Change: Terrific job this past quarter and frankly since I've been here for the six months a lot was underway and a lot of execution has occurred and so we couldn't be more pleased with the results and attraction that we were able to see and realize this past quarter.

Speaker Change: and meeting with customers' prospects whether it be here in North America, Canada, UK, Europe , and Frank's and learning about what's working, what's not, the strategy where we're going, and understanding their needs, and frankly that's shaping a lot of the feedback the comments.

Speaker Change: that you heard on my prepared comments about where we're going, what we're seeing, the focus on fraud and identity and pulling that together across our platform. So our priorities are highly aligned.

Speaker Change: to what we've heard in the market, what I've heard, and then just executing against that. And so one of the things that I've felt most encouraged about it coming here...

As far as the foremost, the company's heritage and experience, the expertise [inaudible]

Speaker Change: The trust earned over decades of working with financial institutions, you know, over 7,000 FIs.

on Identity and the biometric side, combining those things together together.

Speaker Change: to address the evolution of fraud in the market is what really sets us apart from others, and I've heard that loud and clear from customers and prospects and it's how we're moving our technology.

Speaker Change: So think of us as, you know, around fraud and identity, this coming together from payments to verification to authentication across the platform. On the last part of your question, just to get about, you know, how things progressing?

Dave Lyle: To encourage, and as Dave mentioned, that we haven't seen, you know, cancellations or something for the macro environment, frankly, I think we're fraud. It's moving in our direction, which is highly encouraging to us.

Speaker Change: I will say that, you know, we're still, we're, you know, gaining our sea legs, history, one quarter, you know, we're not going to ring the bell after one quarter but it's a nice one to have behind us

Dave Lyle: Things will go up and down over time, but we really like the hand that we've been dealt and look forward to an extreme against that going forward.

Speaker Change: Okay, that's helpful. And then just on guidance, you obviously had a strong quartering, good to see the EBITDA race, but on the maintain top line guide, can you talk about whether there were any kind of pull forwards that helped drive the strength in the quarter or whether that maintain top line guide is really just reflecting some added prudence related to the current macro environment. And then just on the maintain top line guide is really just reflecting some added prudence related to the current macro

Speaker Change: Deposit customer, order earlier than we expected in Q2 rather than in Q3.

That was probably the majority of the over achievement versus art. [inaudible]

Our Expectations

Speaker Change: There was another customer that actually ordered on the mobile deposit side more than we expected. That's a good thing, so we were excited to see that happen too.

Speaker Change: Okay, and then, if I could just sneak one more in, great to hear, you know, data on, I think, 23% of checking accounts. I think the target was to reach 20 million ACV by the end of the year, so could you just talk about how you're progressing toward those targets?

Speaker Change: Sure, so on the first part about that around the data sets on now 23% and that's up significantly. The volumes that we're seeing going through our platform are ramping pretty substantially. More and more partners, as I mentioned, now both direct and...

Speaker Change: and Interactive Partners coming in, more and more information. Those are all great leading indicators.

Speaker Change: of what's ahead. And so we like the progress, of course, I would say. Going back, Jake, one of your questions from several questions ago about one of the things we see that

Speaker Change: That's, you know, in the frustrating part, these things take time the time, you know, like to tell time by a watch, not by a calendar.

Speaker Change: and we need to, how do we accelerate the cycles and the process to bring some of these to recognize a revenue sooner and close them out and get them up and running?

Speaker Change: But, you know, we're in it for the long haul, so some of these things take longer. But we like the direction, we like where we're headed and feel good about, you know, moving forward against our goals.

Jake Roberg: Very helpful. Takes your taking the questions and congrats on the solid results. Thanks, Jake.

Speaker Change: Our next question will come from Mike Grondahl with Northland Securities. You may now go ahead.

Speaker Change: Hey guys, this is Luke on from Mike. Congrats on the quarter. Just wanted to touch on your earlier comments on the modernized document onboarding system. I wonder if there's any sort of way to quantify just how much quicker this process is with this sort of automation and cycle

Speaker Change: Good afternoon, Lyle, thanks for the announcement. We've just done it in the US and now we're moving to broaden that out over the UK and Europe .

Speaker Change: because when it takes so long, when you're seeing that our systems are seeing this unclassified, you know, we're having to then do a lot of this manually, it's taking longer.

Speaker Change: for customers and the customer experience. So the more we can accelerate and rapidly accelerate that, the better. I don't have data for you exactly the percentage. You know, over time, we'll see it. I don't want to be premature on...

Speaker Change: on Zachary what the number would be, but it's potentially meaningful from a cycle time, and then again goes back to a line to we talked about earlier. It's also another great acknowledgement.

for our terrific, you know, machine learning, AI resources, and R&D.

Speaker Change: that, hey, looking at the business, how do we continue to improve profitability, scalability, automate different functions across the system? This is something the team jumped on and brought to life. So we'll keep you uprised.

got it thanks for that and then

Speaker Change: Just on fast revenue of 15% year-over-year, now accounts for 40% of revenue mix. I think that was up from 39 last quarter. I guess just how do you kind of see this mix trending in the years to come? And where do you kind of expect that to normalize that at the current business?

Speaker Change: Well, what we outlined at the earlier part of the year is that, you know, our goal was to, you know, going into 26, you know, as soon as we could to see the majority of our revenue.

Speaker Change: You know, focusing on payments with checks, as well as all the identity, all the SAS side on the identity verification, the biometric, later into the products that are all SAS. So it's really a combination of those that are driving that and we just...

Speaker Change: Aspire to, you know, we want all sides of the P&L to go up, but we just like to see that that's asked to become a majority to add more durability and...

Speaker Change: Consistency to our top side. Yeah, and the reason we have optimism around it is those are the products that are kind of moving from their nascent stage and starting to really grow. So that's where we have the most growth potential. And those are all staff products.

Speaker Change: Okay, got it. Thanks for the color there guys and appreciate you taking the questions and congrats. Thank you.

Thank you.

Speaker Change: Again, if you have a question, please press star then one. Our next question will come from Derek Greenberg with Maxim Group LLC. You may now go ahead.

Derek Greenberg: Hey guys, congrats on the quarter. My first question is just on second half seasonality. I know you outlined.

Derek Greenberg: at the beginning of the year that you expected this to be similar to 24, where 26% of revenue was in the third quarter and 25% was in the fourth quarter. I heard you talk about how some of that order volume was pulled into the second quarter.

Derek Greenberg: and there is also higher anticipated revenue from another customer. I was just wondering how the pacing of this has changed if at all going forward.

Derek Greenberg: No, typically the edges, it's not changing much from what we've guided previously.

Derek Greenberg: Typically, we see Q1 and Q4 as our lower quarters. That's related to mostly related to mobile deposits, software license revenue, which fluctuates, and it's just a deal-tining issue more than anything else.

Derek Greenberg: I said in my remarks that, you know, we thought Q3 would be a little higher than Q4, which follows the same pattern that we drew before.

Speaker Change: God it, thanks, that's helpful. And then I'm returning to your software as a service revenue goal of more than a half of total revenue. Is that for calendar 26 or fiscal 26? Can you just be more specific with?

Speaker Change: Yeah, that's a goal of ours. We didn't set necessarily for this year, but something that we do have line of sight we believe to.

Speaker Change: Okay, I got it. And then I noticed you guys had put out a press release earlier just talking about a submission to an opportunity with like the Department of Homeland Security. I was wondering if you could just talk about this a little bit more.

Speaker Change: Actually, I think what you're referring to is something that we put out where Department of Homeland Security ran an assessment looking at various

Speaker Change: Liveness Applications and Biometric, and where we had submitted on that as well as others doing both active and passive liveness.

and assessing those relative to the market.

Speaker Change: The great news is, our results were terrific, we led the industry in terms of responsiveness.

Speaker Change: with the positives and picking up fraud as well as the how fast it was.

Speaker Change: passive-livenous capabilities and the need for those now as a recognition from the market and the DHS looking at that assessing that and seeing that Mitek solutions were leading the market. [inaudible]

Okay, that makes sense. And then just my final question.

Speaker Change: In thinking of organic growth and your selling and marketing initiatives, I was wondering how much of growth we should expect to come from new business versus cross-sale and expansion with current clients.

I would just say that answer is yes.

Speaker Change: I mean, it's a focus on organic. We want to continue to add new logos and new relationships like we have been.

Speaker Change: and continue to expand with our existing relationships. We have terrific ones.

Speaker Change: We're rolling out new products, new solutions that are new to the market and obviously very timely with some of the need and the fraud that we're seeing.

Speaker Change: particularly around the biometrics, the lightness that we just talked about, and frankly...

Speaker Change: Something that's been out there, but now it's beginning to see if they is around authentication that's authenticating back to biometrically, back to a verified identity. And something that we're fairly unique and can offer in my visits with customers and prospects.

Speaker Change: You know this is what we've been hearing and very encouraged about our position on that and our focus as a company is I outlined two quarters ago and as Dave and I have talked about we're focused on organic growth and doing whatever is necessary to continue to accelerate that [inaudible]

Speaker Change: And, obviously, it's going to go up and down, quarter to quarter. Some periods look better than others, but we're encouraged about the pace right now.

Okay, great. Thanks for the color.

Speaker Change: This concludes our question and answer session. I'd like to turn the conversation back over to Todd Kehrli, pardon closing remarks.

Todd Kehrli: Thank you, operator. And thank you all for joining us today and for your continued support. As always, if you have any follow-up questions, please contact me and we can set up a follow-up call. Thanks, and have a very rest of your day. Very good. Thank you.