Mitek Systems Aktie

Good afternoon, ladies and gentlemen, and welcome to the Mitek Reports Fiscal Second Quarter 2026 Financial Results.

[Operator Instructions] This call is being recorded on Thursday, May 7, 2026. I would now like to turn the conference call over to Mr. Ryan Flanagan with IRC. Please go ahead.

Thank you, operator. Good afternoon, and thank you for joining us today to discuss Mitek's Fiscal Second Quarter 2026 financial results.

Joining me today are Chief Executive Officer, Ed West; and Chief Financial Officer, Dave Lyle. Please note that today's call will include forward-looking statements and because these statements are based on the company's current intent, expectations and projections, they are not guarantees of future performance, and a variety of factors could cause actual results to differ materially. A description of these risks and uncertainties can be found in our 10-Q filing dated May 7, 2026, and our other SEC filings.

These forward-looking statements include, but are not limited to, our expectations around customer demand for our products and services, expansion of our Check Fraud Defender or CFD, data consortium, the ongoing stability of our check verification business, our growth and investment plans, expected improvements in gross profit and unit economics, improvement to operating leverage and scale, expected free cash flow conversion rates and our FY '26 financial outlook and guidance.

Except as required by law, we do not undertake any obligation to update these forward-looking statements. This call will also include references to non-GAAP adjusted results. Please reference this afternoon's press release and our Investor Relations website for further information regarding forward-looking statements and reconciliations of GAAP to non-GAAP financial measures.

And with that, I'd like to turn the call over to Ed.

Thanks, Ryan. Good afternoon, everyone, and thank you for joining us today. For those less familiar with Mitek, we provide the verification, authentication and fraud decisioning infrastructure that high assurance institutions rely on to protect customers and stop fraud across a broad digital life cycle, whether someone is opening an account, logging in, depositing a check, approving a high-risk payment our role is to help determine whether that person, session, document, check or transaction can be trusted.

By leveraging our data network, leading digital fraud detection solutions, expertise and history in financial services, we believe that we are well aligned to how the market is evolving to fight increasingly sophisticated synthetic AI-assisted fraud. This quarter's progress is a good indicator of that alignment. The team delivered a strong fiscal second quarter, including record revenue and record adjusted EBITDA.

With that as context, I'd like to walk through four key takeaways from this past quarter.

First, Fraud and Identity remains our growth engine with revenue up 28% year-over-year. Due to our data network, platform and expertise, our customers are becoming more engaged with Mitek, both contractually and technologically.

Second, our check verification solutions remain a durable cash-generative foundation for the business with long-standing relationships that support broader Fraud and Identity growth.

Third, the quality of our revenue base continues to improve. Total SaaS revenue grew 18% year-over-year and now represents approximately 44% of total last 12 months revenue.

And fourth, execution is showing up in the numbers, record revenue and profitability, healthy cash flow and a significantly stronger balance sheet.

The consistent theme across all of this is that our Unify and Grow ethos is working. Fraud demand is increasing. Customers are expanding with us. Our platform is becoming more valuable as data and participation scale, and we are translating that progress into stronger financial performance.

Underpinning that progress is a demand environment that continues to strengthen and AI is exacerbating it, increasing the scale, speed and unpredictability of attacks. AI is lowering the cost of and making it easier to create fake identities, manipulated documents, deep fake images, cloned voices and coordinated attacks at high velocity and scale. That is making legacy tools less effective, particularly during periods of changing attack volume. This environment plays directly to Mitek's strengths.

Customers increasingly need a trusted partner with flexible infrastructure that scales, combined with multiple fraud detection signals and proprietary network-based data to drive better trust decisions without adding unnecessary friction or cost. Just as importantly, fraud rarely stays isolated to one institution. Once vulnerabilities are identified, attacks often spread across multiple organizations, increasing the value of a broader network that can recognize patterns early and help customers benefit from shared intelligence that no single institution can generate alone.

As fraud becomes more complex, more coordinated and more expensive to manage, we believe the need for modern identity verification, authentication and fraud decisioning solutions will continue to grow.

Now back to our first key takeaway. As institutions confront this environment, they are gravitating toward a multilayered approach that is showing up in our results with Fraud and Identity revenue up 28% year-over-year. High-quality institutions are engaging more deeply with Mitek through stronger contractual commitments, broader platform adoption and growing participation in our data network.

Reflecting this, several relationships deepened during the quarter. A flagship customer, one of the largest banks in the United Kingdom, evolved from a predominantly variable pay-as-you-go model to a new multiyear, multimillion dollar committed structure, increasing annual spend.

We saw a similar pattern with a leading European information services customer, which renewed into a larger committed relationship that included expansion. These examples reflect a broader trend. As customers scale with Mitek, they increasingly choose larger multiyear contractual commitments. a positive indicator of customer confidence that improves visibility, strengthens revenue quality and supports long-term value creation.

Customers are also expanding their use of Mitek beyond a single onboarding workflow to address the broader customer life cycle, including account login, profile changes, account recovery, step-up authentication and higher risk transactions. We saw clear examples of this during the quarter. A major U.K. bank expanded fraud decisioning across customer journeys.

A leading U.K. digital bank broadens relationship into Germany while adding fraud capabilities and a major European customer adopted MiPass at a part of a broader authentication strategy.

Finally, participation in our data network continues to grow. Check Fraud Defender ACV now exceeds $19 million, up more than 50% year-over-year, with contributing data sets covering over 60% of U.S. checking accounts and annualized volumes now measured in the billions. Checks remain a meaningful part of the U.S. financial system, and those workflows produce rich image and behavioral data that is highly valuable for fraud detection.

As participation grows, the network strengthens through greater volumes. More institutions contributing means a richer view of cross-institutional fraud patterns, better outcomes and stronger customer ROI. During the quarter, we added another top 10 financial institution with another top 10 FI currently in pilot.

This proprietary visibility is also where our broader Fraud and Identity strategy gains its edge. Few participants see U.S. check activity at this scale, and those signals translate into stronger decisioning across adjacent workloads.

We saw that play out this quarter with the launch of the first phase of Positive Pay Plus, which strengthens controls at the point of presentment by comparing issued checks against presented items in real time and automating historically manual decisions. Because it leverages existing infrastructure with no new integration required for many customers, adoption friction is low and time to value is fast.

We added a new top U.S. regional bank for these capabilities and expanded within a large existing customer. It's a clear example of how our check verification footprint creates an expansion opportunity, one that drives broader F&I platform adoption and gives customers a stronger fraud detection signal than they could build on their own. Importantly, this value is resonating beyond the largest institutions. Through partners such as Abreigo and our recently announced TyFone integration, we are broadening access to consortium-powered fraud intelligence for community and regional banks who face meaningful fraud losses and operational strain of their own.

We also continue to extend the platform through strategic ecosystem partnerships that broaden reach and simplify deployment for customers. including our recently announced integration with Ping Identity to help customers embed identity verification more seamlessly across the customer journey and our partnership with Synectics Solutions, which brings Mitek's identity capabilities into the insurance market through its fraud orchestration platform.

On to our second key takeaway. Check verification continues to operate as a durable and highly cash-generative part of Mitek and represents trusted positions with many of the largest financial institutions in North America. During the quarter, we saw multiple meaningful renewals, extensions and license wins across leading processors and financial institutions, including activity tied to key partners such as FIS, Jack Henry and Candescent as well as additional international wins.

These relationships provide deep connectivity into the FI ecosystem and reinforce the critical role our solutions play in supporting high-volume mission-critical workflows. Importantly, we're seeing these relationships evolve as customers look to address rising check fraud, exception handling and workflow complexity.

Many institutions that have historically relied on Mitek for Mobile Deposit are now expanding into adjacent fraud use cases. Now to our third key takeaway, we continue to improve the quality and durability of our revenue base.

This quarter, SaaS revenue grew 18% year-over-year and represented approximately 44% of the total last 12-month revenue, up 40% from a year ago. We view this as a meaningful indicator of the continued evolution of our business model towards a larger, higher-quality recurring revenue base, and this mix improvement is being driven by SaaS growth.

We now estimate that a substantial and growing portion of our SaaS revenue is generated from committed contractual arrangements rather than variable pay go or overage structures. This enhances visibility, improves durability and reduces reliance on more volatile consumption patterns over time.

Given our revenue is increasingly tied to transaction activity, usage volumes and customer workflows rather than seat-based pricing, our model is well aligned to where the market is going. As digital interactions grow and more decisions move into automated or machine-to-machine environments, we believe our model is well positioned to scale alongside that activity.

Taken together, these shifts are helping create a business that is increasingly recurring, visible, scalable and resilient. And on to our fourth and final takeaway. Consistent execution is translating into stronger profitability, healthy cash generation and a significantly improved balance sheet. We delivered record revenue and record adjusted EBITDA quarter, reflecting the benefits of growth, improving mix and continued operating discipline across the business.

We're also seeing leverage in the model as we scale, supported by automation, tooling efficiencies, focused investment and a disciplined cost structure. At the same time, we have taken meaningful steps to strengthen the balance sheet.

Following the retirement of our convertible notes, we remain in a healthy net cash position with added flexibility, resilience and a simplified capital structure. On capital allocation, we continue to take a balanced and disciplined approach, returning capital to shareholders through share repurchases while preserving strategic flexibility.

While Dave will cover the financial details shortly, the takeaway is straightforward. Our Unify and Grow ethos is creating a more profitable and more resilient Mitek better positioned to generate and allocate capital from a position of strength.

In closing, we remain confident in the direction of the business. The market continues to reinforce a simple reality. As AI makes fraud cheaper, faster and more scalable, trust becomes more valuable. In an AI-driven fraud environment, we believe Mitek's relevance increases.

We sit at the center of that shift by building a network-driven business that is designed to secure our customers' digital interactions, supported by deep integrations, proprietary data and long-standing customer relationships.

With that, I'd now like to turn the call over to Dave to walk through the financial results and our raised outlook in more detail.

Thanks, Ed. I'll review our second quarter results and then walk through our updated outlook for the rest of the year.

Second quarter fiscal 2026 was a record revenue quarter for Mitek with total revenue of $54.8 million, up 6% year-over-year. Fraud and Identity grew 28% and check verification declined 8% on renewal timing against a strong prior year comparison.

Total SaaS revenue grew 18%, bringing SaaS to approximately 44% of last 12 months revenue, up from 40% a year ago and improving the overall mix. Adjusted EBITDA set a Mitek record at $22.3 million, a margin of approximately 41% .

Revenue scale, favorable mix, higher capitalized costs and strong drop-through from check verification and our seasonally strongest renewal quarter all contributed.

Looking at revenue by portfolio. Fraud and Identity revenue grew 28% year-over-year, reflecting continued demand for identity verification, authentication and fraud prevention across the customer life cycle. Fraud and Identity SaaS revenue again led the way at 19% growth, driven by healthy transaction volumes, adoption of higher-value workflows and momentum in Check Fraud Defender.

The bridge between 19% Fraud and Identity SaaS growth and 28% total Fraud and Identity growth reflects another strong quarter of biometric software licensing, making a second consecutive quarter where license activity contributed meaningfully. Customers are deepening relationships through multiyear commitments and expanded deployments, which can drive higher upfront license revenue recognition.

Biometrics license activity is lumpy by nature, and we expect it to step down sequentially from these first half highs as we move through the back half of the year. With SaaS being the substantial majority of Fraud and Identity revenue, we expect portfolio growth to track SaaS growth more closely over time.

Turning to Check verification. Revenue for the quarter was $29.1 million, driven by seasonally strong renewals and customer upgrades from legacy CheckReader to our modernized Check Intelligence solutions. On a trailing 12-month basis, check verification revenue was $88.2 million, consistent with the range we have seen previously. Overall, check verification remains a durable, highly profitable and cash-generative portfolio. The trusted relationships it anchors are also create a strategic foundation for broader growth in Fraud and Identity.

Non-GAAP gross profit for the quarter was $46.6 million and non-GAAP gross margin was 85%, a decline of approximately 270 basis points year-over-year. Roughly half of the change was mix shift towards faster-growing SaaS and services, which carry lower gross margins than software license revenue at close to 100%. The remainder was the implementation activity in early-stage pilots where costs occur ahead of revenue.

We expect this to moderate over the next few quarters as those customers move into production, and we have already factored that trajectory into our gross margin outlook for the balance of the year. Beneath the headline, CFD SaaS margins actually expanded this quarter as a re-architecture of how CFD transactional data is stored, materially reduced the compute cost of moving it through our analytics pipeline. We expect these efficiencies to compound as transaction volumes scale.

Taken together, the underlying margin profile remains strong with attractive unit economics across the platform with gross profit dollars per customer journey expanding as adoption deepens.

Total non-GAAP operating expense was $24.8 million, improving 4% year-over-year. As a percentage of revenue, operating expense improved approximately 440 basis points to 45%, driven by revenue growth, cost discipline and prioritized investment in our highest return growth opportunities.

Non-GAAP sales and marketing expense was $8.5 million, down from $9.5 million last year. As a percentage of revenue, sales and marketing improved by approximately 290 basis points to 15%. This reflects a more focused go-to-market model, tighter marketing spending and growing ability to sell the broader portfolio through a unified commercial approach.

Non-GAAP R&D expense was $7.1 million, down from $8.4 million last year. As a percentage of revenue, R&D declined by approximately 330 basis points to 13%. The reported reduction reflects capitalized development activity and higher revenue. On a cash basis, R&D investment is actually up approximately 8.5% year-to-date.

In AI-based decisioning, fraud intelligence and biometrics innovation. And finally, non-GAAP G&A expense was $9.2 million, up from $7.8 million last year. As a percentage of revenue, G&A increased by approximately 170 basis points to 17%. This year-over-year increase is amplified by an unusually low prior year comparison, which benefited from a bad debt expense reversal. This quarter's G&A reflects a more normalized base going forward. We continue to drive discipline, automation and efficiency across our corporate functions, and we expect to see those actions deliver leverage over the coming years.

As I mentioned, adjusted EBITDA was a record $22.3 million, up 10% year-over-year at a margin of approximately 41%. Non-GAAP income tax expense was approximately 15% of pretax income, resulting in non-GAAP net income of $18.5 million and adjusted diluted earnings per share of $0.38.

Free cash flow for the quarter was negative $2.5 million, while trailing 12-month free cash flow was approximately $45 million, representing approximately 72% conversion of adjusted EBITDA. Quarterly free cash flow was driven by timing-related working capital, most notably higher accounts receivable from late quarter billings, which we substantially collected in April.

This is typical of our fiscal second quarter when a concentration of check verification annual renewals closes late in the quarter, temporarily increasing receivables and reducing cash conversion. On a trailing 12-month basis, free cash flow remains healthy and within our 70% to 80% long-term conversion range. Our capital allocation priorities are unchanged, investing in high-return growth, maintaining balance sheet strength and returning excess capital to shareholders.

We ended the quarter with $78 million of cash and investments and $54.5 million of total debt, resulting in a net cash position of $23.1 million. As we discussed in our last call, during the quarter, we fully retired our $155 million convertible notes and drew $50 million on our term loan facility, reducing total debt by approximately $105 million versus the prior quarter and extending our nearest debt maturity to 2030, simplifying the capital structure and adding flexibility and resilience.

We also returned $8 million to shareholders through share repurchases. As a reminder, we previously announced a new $50 million share repurchase program, which provides ongoing flexibility to return capital opportunistically.

Turning to our updated fiscal 2026 outlook. We are raising full year revenue guidance to $189 million to $198 million, which now represents 8% year-over-year growth at the midpoint. The raise reflects stronger first half execution and improved visibility, particularly within Fraud and Identity, where SaaS continues to lead growth.

We are also raising our full year Fraud and Identity revenue outlook to $103 million to $108 million, representing approximately 17% growth at the midpoint. For the fiscal third quarter, we expect revenue in the range of $49 million to $53 million. This implies fiscal fourth quarter revenue in the range of $41 million to $46 million, broadly in line with last year's fiscal fourth quarter, reflecting check verification, renewal timing and the step down in biometrics license from a strong first half.

Importantly, we anticipate Fraud and Identity SaaS will continue to step up sequentially through the balance of the year, which is a better proxy for the underlying growth trajectory of the business. We expect non-GAAP operating expense in fiscal Q3 to be in the range of $25 million to $26 million, up modestly from fiscal Q2, reflecting our continued investment in R&D.

Turning to profitability. We are raising our fiscal 2026 adjusted EBITDA margin guidance range to 30% to 33%, reflecting stronger first half revenue, operating discipline and an increasingly favorable SaaS mix. From a modeling perspective, we expect non-GAAP gross margin to remain in the low 80s range for the rest of the year.

We continue to expect capital expenditures of approximately 3.5% of revenue and depreciation and amortization of approximately 1% of revenue for the full year. Overall, our results reflect our Unify and Grow Ethos, a more focused and scalable Mitek, delivering stronger growth, expanding profitability and durable cash generation with the flexibility to allocate capital from a position of strength.

With that, operator, we are ready to take questions.

[Operator Instructions] Your first question comes from Mike Grondahl from Northland Capital Markets.

This is Logan on for Mike. With the rise in Gen AI fraud, can you give some color around how customer urgency has changed over the last 6 to 12 months, especially with the larger banks?

Sure. Logan, thanks for the question. We have seen an increase in interest and demand because of the increase in attacks. As I mentioned in my comments, just with the cost and speed of cost going down, the speed, the ubiquity of access to very sophisticated models for fraudsters to use around the world.

They're obviously attacking locations where they want to steal or have an attack or go to an account takeover. And so, we're seeing increasing issues, which is also increasing outreach and interest in working with them, partnering with them. Very importantly, we used a highly layered approach, bringing forth our knowledge, our expertise, working with financial institutions in a highly regulated environment, model governance controls and bringing in our capabilities, not just on the verification, but also the biometrics and seeking for various types of attacks that a fraudster might utilize, whether manipulating the documents, whether an injection attack, a deep fake or other presentation.

And so, we'll use a layered approach and also bring in other third parties to work with our customers to help prevent, detect and prevent the fraud. So, demand has been increasing in that, and I think that's going to continue to do so. Attacks have been and they're morphing and changing. So it's a high focus of interest and not just in financial institutions. We've actually been seeing more recently increasing demand from other sectors, which we're predominantly approaching through partners to approach other high-risk digital interactions.

Could you double-click on that? What other verticals are you exploring for Gen AI fraud to combat that?

Well, in terms of vertical, in terms of a customer standpoint where someone who might be utilizing AI for fraud, like insurance. I mentioned a partnership with Synectics, who has a fraud orchestration platform, working with insurance industries. We have a close partnership with them, and that's a very large vertical. It's related to financial services and that's supporting.

Another one is the government, like in the United Kingdom, working through other channel partners who have relationships with various ministries in the United Kingdom or other governments in Europe, working to them for support government. We also have healthcare of interest because of the records, the access in healthcare have seen an approach. So that's several beyond just financial services.

Clearly, our expertise has been centered for a long time on financial services and understanding the regulatory, the approach, the expertise, the knowledge but, and then working through these partners who have a lot of expertise in some of these other verticals, utilizing our tools and capability.

Your next question comes from Derek Greenberg from Maxim Group.

On the quarter. I wanted to talk about the Fraud and Identity segment in terms of just the overall economics of that business. I know historically, the deposits have been the cash cow. I was wondering when do you expect this segment to turn profitable in the Fraud and Identity.

We haven't talked about Fraud and Identity as a segment with or without profitability. We did, if you remember a year ago before we changed the way we categorized our product portfolio. We had talked about getting identity to profitability, which we had done a year ago. And then we shuffled some products around to make more sense into different product groups, Fraud and Identity, and check verification.

That being said, historically, check verification has been a very profitable heritage business for us. It not only generates a lot of cash for us, but it's pretty important strategically as we've merged Mitek into One Mitek and it's helping our Fraud and Identity products grow. But in terms of specific profitability metrics, we haven't put those out at this point.

Got it. That's helpful color. I guess I was just curious how to think about, I mean, the margins this quarter, 41% adjusted EBITDA margins. I was wondering as identity eventually matures and scales, how much upside you see from what we saw this quarter in terms of margin?

Yes. First of all, I think we're at the very early innings given how fast the market is growing and how large it already is, I think the opportunity is there for us. And I think we have leading-edge products to be able to compete. You'll see in the, if you look at our adjusted EBITDA guidance for the entire year, 30% to 33%. We've been raising that 2 quarters in a row. We feel pretty confident in that range.

The adjusted EBITDA in Q2 is typically our highest quarter for adjusted EBITDA, but that's mostly driven by check verification is seasonally strongest in Q2. Typically, Q3 is second and then Q1 and Q4 are typically weakest. So you see more, a little more pressure on adjusted EBITDA margins.

All in all, if you kind of look at the core of what's driving our growth, it's Fraud and Identity SaaS.

Fraud and Identity SaaS has pretty consistently been in kind of the, call it, 20% range, fluctuates a little bit quarter-to-quarter depending on overages that there's certain seasonality in Q1 and Q3. But otherwise, I think we feel pretty good about those kinds of growth rates in that core part of the business. And when I say that, I really mean product portfolio that includes Mobile Verify, MiVIP, Check Fraud Defender, MiPass, those kinds of products.

And Derek, I would just add on to what David is saying there. It's a mindset that we've had since working together for the last 1.5 years in the organization and across the company. It's just that mindset of continuous improvement, continuing to drive scale, efficiency as we're seeing now with such a strong focus and growth, as Dave talked about, how even going through the remainder of the year with the growth within SaaS and F&I SaaS, the scale each quarter progresses, more and more scale, more volume, better unit economics across the business.

We've been implementing with new tooling, new capabilities, more efficiency, how we're utilizing various tools across the business. So we're actually very encouraged year-to-date progress, how we see that going and seeing improved unit economics over time. That said, we're highly focused on growth and continuing to capitalize on the opportunity that's ahead of us.

Okay. Got it. One last question. I was wondering just maybe if you could talk about in terms of the growth, if you're seeing more from current customers on the platform, expanding workflows and transactions or if it's more driven by new customer sign-ups on the platform? Or is it kind of just broad-based?

I would say it's broad, where a large part of the growth has been, has come from is relationships that have continued to expand. As I mentioned, and as you know, in particular, on the Fraud and Identity side, we work with numerous large financial institutions and other large high assurance businesses that have multiple divisions, operating in multiple countries, multiple products.

And what we find is even though the sales cycle is long and working with them and starting to roll out in the implementation of the systems, but over time, as the relationships grow, we find we are expanding to different margins. or different markets, different product uses, capabilities, other step-up functions. And so that's where a lot of the growth has come in addition to signing up several new relationships over the last several quarters, some of the largest financial institutions in North America as well as Europe and through, and other partners, but we're early on through that.

Last, I would just say one last comment. I think you've also noticed like on part of the business on fraud, where we're amping up more of a focus on our partners. We've announced several new partner, channel partner relationships and now having them out bringing on additional institutions like onto our fraud platform, and that's really been accelerating over the last several months. And we see we have, there's more to go on that front, too.

Your last question comes from George Sutton from Craig-Hallum.

Logan on for George. I wanted to follow up on kind of the comments you were just making there. I mean you talked quite a bit today about expanding with existing customers and kind of that upsell motion. I was hoping you could just shed some light on what's enabling the success there. I mean, does that just kind of have to do with the better market environment? Or is some of that drawn to the changes in the go-to-market that you've been making over the last year?

I mean I wouldn't say there's any one. It's just having a full focus with these organizations. What's important is establishing and building trust. Trust doesn't happen overnight. It's earned over time and credibility and having the results and the team. We have terrific people working with these organizations and working and partnering with them, in particular, when there's a fraud attack and where they may be the subject of fraud coming on and about how we can work with them, having our systems and people and bringing in the expertise associated with that. And then many of these institutions, as you know, they're highly regulated.

The regulatory knowledge and expertise, model governance is very important. That is our language. that we speak with them. And then from a go-to-market standpoint is in dialogue and conversations and trying to broaden with them and support them in many other ways. That said, we are, we continue to bring on new relationships, too, but we may be early on and they just expand over time with them. So there's also the benefit like within SaaS, it's a layered approach where you continue to add on additional contracts, and we see that layering on benefit over time as we bring in expansions and the new relationships, and it all just adds up incremental.

Yes, you'll see expanded geographies, expanded use cases. That gives us more journeys. We get more transactions per journeys with more journeys. So you get some nice unit economics and revenue expansion, gross profit expansion also.

So one of the key focuses kind of in the industry seems to be the idea of having more kind of layers of protection on each engagement or session, if you will, which I think you've touched on a bit today. I was wondering if you could just talk about sort of how that changes the scope of your monetization opportunity on the Fraud and Identity side.

I think it's what Dave just mentioned, where you're bringing in, it's a multilayered approach, bringing in additional signals beyond just doing the verification or authentication, bringing in digital signals with the biometrics seeking for either deepfake or an injection attack or some sort of other layered data that comes in for that particular journey. We could also be bringing in other third-party data as well, maybe looking at a geo or device in the utilization of that particular transaction. So think of a journey within multiple transactions. The more volume, the more throughput, better unit economics for each transaction or.

And your last question comes from Jonathan Ho from William Blair.

I wanted to maybe try to better understand with all the concerns out there with Claude Mythos, have your discussions changed at all with banks? Or has prioritization potentially risen for Fraud and Identity solutions just given what's potentially coming down the pipe? And how do you think about maybe exploiting some of that increased concern over time?

Jonathan, the answer, the simple answer is yes in terms of the dialogue has increased. But I would say that's not just from Mythos or changes with Claude, just really AI in general and the proliferation of fraud attacks and the sophisticated nature of that. obviously, thinking about with Mythos coming out and what that does from a cyber standpoint and looking for vulnerabilities, all of this comes back to the same key point, which is around how are we protecting our franchise, how are we protecting our interactions with our customers. That's where we come in and having the conversation on that digital interaction and making sure we're protecting it to the greatest extent possible, continuing to bring in new solutions, ideas, thoughts around that based on our technologies and capabilities and experience.

So, the trend clearly is continuing to go up. Over time, the relevance of Mitek has gone up significantly within the conversations. I would tell you when I started first at the company 1.5 years ago, just the profile who we're having in dialogue with the importance across the organization is at the highest levels of many of these institutions and the high assurance businesses that we work with because of the concern and the fraud and the sophisticated nature of the fraud that's now prevalent in the world.

Thank you. Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation, and you may now disconnect. Have a great day, everybody. Thank you.

Good afternoon, ladies and gentlemen, and welcome to Mitek Reports Fiscal First Quarter 2026 Financial Results. [Operator Instructions] This call is being recorded on Thursday, February 5, 2026. I would now like to turn the conference over to Ryan Flanagan with ICR. Please go ahead.

Thank you, operator. Good afternoon, and thank you for joining us today to discuss Mitek's Fiscal First Quarter 2026 Financial Results. Joining me today are Chief Executive Officer, Ed West; and Chief Financial Officer, Dave Lyle.

Please note that today's call will include forward-looking statements, and because these statements are based on the company's current intent, expectations and projections, they are not guarantees of future performance and a variety of factors could cause actual results to differ materially. A description of these risks and uncertainties can be found in our 10-Q filing dated February 5, 2026, and our other SEC filings.

These forward-looking statements include, but are not limited to, our expectations around customer demand for our products and services, expansion of our Check Fraud Defender or CFD, data consortium, the ongoing stability of our Check Verification business, our growth and investment plans, expected improvements in gross profits and unit economics, improvement to operating leverage and scale, expected free cash flow conversion rates and our FY '26 financial outlook and guidance. Except as required by law, we do not undertake any obligation to update these forward-looking statements.

This call will also include references to non-GAAP adjusted results. Please reference this afternoon's press release and our Investor Relations website for further information regarding forward-looking statements and reconciliations of GAAP to non-GAAP financial measures.

With that, I'd like to turn the call over to Ed.

Thanks, Ryan. Good afternoon, everyone, and thank you for joining us today. For those less familiar with Mitek, we provide the verification, authentication and fraud decisioning infrastructure that high assurance institutions rely on to onboard customers, authenticate users and transactions and in essence, to protect what's real across digital interactions.

Turning to our results. We delivered a strong fiscal first quarter and are raising our outlook as early execution against our Unify and Grow ethos continues to take hold in fiscal '26. And with that as context, there are several key takeaways from this past quarter. First, generative AI is accelerating synthetic fraud globally, driving a growing need for our solutions. Second, Fraud and Identity revenue grew 30% year-over-year. Third, SaaS revenue grew 21% year-over-year, representing 43% of last 12 months revenue. Fourth, Check Verification continues to be stable with 1.2 billion transactions annually. Fifth, we simplified the balance sheet by paying off our convertible notes and today announced a new $50 million share repurchase program. And finally, our Unify and Grow ethos is taking hold. One Mitek is working.

Last quarter, I outlined our Unify and Grow operating ethos for 2026. The key elements of this plan are to fortify and unify our business and invest in key areas to accelerate growth.

I'll touch briefly on how we're executing against each of the 4 pillars that I outlined last quarter, starting with fortifying Check Verification. Our Check Verification portfolio continues to serve as a critical and convenient infrastructure for our customers. During the quarter, we sustained an annual run rate of approximately 1.2 billion mobile deposit transactions, while last 12 months revenue remained stable at approximately $91 million. Even though the broader check market continues its gradual secular decline, mobile deposit volumes have remained resilient, reflecting deeper penetration as well as the embedded mission-critical role these workflows play across financial institutions.

Check Verification renewal activity and expansions were solid and came in at the high end of our expectations for the quarter. Overall, we are encouraged by the outperformance in Check Verification and its continued role as a durable cash-generative foundation for the business. The long-standing relationships in this portfolio continue to open doors for broader senior-level Fraud and Identity conversations with partners and processors that historically engage with Mitek primarily through Check Verification.

Now turning to our second pillar, which is unifying and scaling our Fraud and Identity portfolio, which now represents a majority of the business. As fraud accelerates its march towards being democratized as a result of generative AI and attackers become more sophisticated, customers are moving away from siloed point-in-time verification towards more continuous signal-rich decisioning. In response, we are going to market as One Mitek with unified workflows that combine documents, biometrics, liveness and data insights into a single platform experience. Our first quarter results reflect solid progress in executing against that strategy.

During the quarter, transaction volumes experienced attractive growth levels as customers responded to the increase in fraud and activity. As fraud becomes more democratized and easier to execute at scale, customers are routing more transactions through our solutions to detect, assess and mitigate risk in real time. This reflects 2 structural dynamics taking hold across our platform. First, customers are running more journeys across more use cases. Existing customers are extending beyond onboarding into authentication and other in-life workflows, while new customers are coming to Mitek specifically for those journeys.

Because authentication and in-life verification are persistent needs rather than onetime events, they apply across a much broader set of industries than onboarding alone, expanding the relevance of our platform beyond traditional financial services.

And second, we're seeing more transactions per journey as we continue to add additional capabilities, data sources and third-party checks alongside our proprietary technologies, each journey becomes richer, more secure and more valuable to the customer. That increased richness drives higher value capture per journey for us as customers rely on Mitek for more of the decisioning within a single workflow. Importantly, the momentum we're seeing is broad-based across geographies and customer segments, reflecting platform-led adoption rather than reliance on any single customer, product or use case. In North America, performance was driven by large enterprise renewals and targeted expansions, including a new platform entry point at a top 5 financial institution with clear expansion potential.

In EMEA, we made tangible progress migrating several legacy customers onto MiVIP in Spain, enabling new digital channel use cases and supporting expansion across various industries beyond core banking use cases, including telecommunications, insurance, mobility and payments. Taken together, these wins reinforce 2 important themes. First, growth is increasingly being driven by more journeys and more transactions per journey rather than isolated point solutions or pricing changes. Second, MiVIP-led journeys are continuing to deliver higher gross profit per journey as richer, more secure workflows create greater value for our customers and improved economics as the platform scales.

Now alongside this momentum, Check Fraud Defender continued to scale as a core component of our broader Fraud and Identity portfolio. While our identity solutions focus on verifying and reverifying who a customer is across the life cycle, Check Fraud Defender addresses a complementary problem, preventing payment fraud through consortium-based network intelligence. During the quarter, we continued to expand participation across the consortium with new institutions joining and existing participants deepening their engagement. As a result, annualized contract value across Check Fraud Defender now stands at approximately $17 million, up 44% year-over-year, reflecting continued momentum and growing confidence in the value of the network.

Data sets compiled in the consortium now cover in excess of 50% of U.S. checking accounts, including institutions in production and active pilots, representing billions in transactions annually. As coverage expands, detection accuracy and loss prevention outcomes continue to improve, reinforcing the network effects that underpin the model and strengthening the value proposition for all participants. Each transaction contributes behavioral and payment-related signals that enhance the intelligence of the platform over time, allowing risk models to continuously improve as scale increases. We believe this growing data asset will represent a durable competitive advantage that is extremely difficult to replicate through point solutions or isolated on-premise deployments.

Taken together, our Check Fraud Defender product continues to scale as intended, expanding coverage, strengthening network effects and delivering increasingly differentiated fraud prevention outcomes as participation grows.

Now progress across Fraud and Identity would not be possible without deliberate targeted investment, which brings me to our third pillar, which is investing where we believe we can lead and differentiate. Our investments continue to be focused on innovation and strengthening the core of the platform and extending its capabilities in areas that matter most to customers and can create competitive advantages. During the quarter, investments included targeted work to improve platform infrastructure, automation and model performance as well as continued expansion of capabilities within MiVIP and our fraud solutions. The objective is to deliver more accurate insights and decisions while improving scalability and operating leverage over time.

Equally important, we are investing in the organization itself. During the quarter, we reallocated resources towards higher-value initiatives, upgraded key skill sets across product, engineering and go-to-market and sharpened accountability to improve execution, speed and consistency. I feel good about the team's progress, and we all recognize that we must continue to execute to capitalize on the growing opportunity in front of us.

I want to turn now to our fourth and final pillar, which is disciplined capital allocation. Execution and investment discipline ultimately show up in how capital is deployed. As we scale the platform and advance Unify and Grow, we are focused on ensuring that operational progress is matched by a strong balance sheet and deliberate capital deployment. At a high level, our approach is simple. We protect financial flexibility, we invest in high ROI organic opportunities aligned with our road map, and we return excess capital to shareholders, all with an eye towards maximizing shareholder value.

We have also taken deliberate actions to strengthen flexibility and simplify the balance sheet, including the retirement of our convertible senior notes. With that behind us, today, we also announced a new $50 million share repurchase authorization.

This quarter reflects the operating cadence that we've been building towards, which is disciplined execution, hitting singles and doubles and compounding progress as data, participation and customer engagement reinforce one another across the platform, essentially creating a durable flywheel or network effect grounded in trust, long-standing customer relationships and proven performance in highly regulated mission-critical environments. As AI lowers the cost of writing code and accelerates the pace and sophistication of fraud, these attributes become more valuable for us. Our customers are not simply buying software features. They are buying real-time risk mitigation and reduction, regulatory confidence and a trusted intermediary with a long track record in regulated industries across multiple geographies.

Mitek is uniquely positioned to aggregate signals, govern models and continuously improve outcomes in ways that a single institution or point solution approach simply cannot. We believe this will lead to a strong competitive differentiation and business durability and ultimately translates into long-term shareholder value.

Now with all that as context, I'd like to turn the call over to Dave to walk through our financial performance for the quarter and review our updated guidance.

Thanks, Ed. I'll start with a review of our first quarter financial performance. I'll then touch on our balance sheet and recent capital allocation actions particularly in light of the fact that we retired our $155 million convertible senior notes in full, drew $50 million on our term loan and authorized a new $50 million share repurchase program. Finally, I'll close with our updated outlook.

For the first quarter of fiscal 2026, total revenue was $44.2 million, up 19% year-over-year, driven by strength across the portfolio, led by 30% growth in Fraud and Identity, 21% growth in Fraud and Identity SaaS and overall SaaS growth of 21%. Adjusted EBITDA was $13.3 million, up 69% year-over-year, representing a margin of 30%, driven by revenue scale, mix and incremental capitalized R&D.

Looking at revenue by portfolio. Fraud and Identity revenue was $25.5 million, up 30% year-over-year or $5.9 million. Growth was driven by $3.6 million of SaaS growth led by MiVIP and Check Fraud Defender, reflecting continued transaction volume momentum and broad-based adoption across the portfolio with the balance coming from stand-alone biometrics licensing, primarily from volume overages.

Turning to Check Verification. Revenue for the quarter was $18.8 million, up 6% year-over-year. On an LTM basis, Check Verification revenue was approximately $91 million, consistent with a year ago, with annual transaction volumes remaining broadly stable at approximately $1.2 billion, reflecting the durability of the franchise. Within the quarter, performance was driven by renewals, strong services activity and continued conversions from CheckReader to Check Intelligence with incremental license activity increasing late in the quarter.

Non-GAAP gross margin was 82%, a decline of approximately 280 basis points year-over-year. The majority of the decline was related to early-stage Check Fraud Defender pilot deployments that incurred costs in the quarter ahead of associated revenue, which we expect to moderate as those pilots convert into full production. We also saw pressure from SaaS and services delivery economics as we supported higher volumes, onboarding activity and customer implementations. Finally, revenue mix continued to impact margins as SaaS and services continue to represent a higher proportion of revenue.

Despite this near-term pressure, underlying unit economics across the platform remain attractive. We continue to see more transactions per journey and increasing gross profit dollars per journey as adoption scales, which we believe supports operating leverage on these costs as volumes mature.

Total non-GAAP operating expense for the quarter was $23.2 million, improving 3% from last year. As revenue scale, operating expense as a percentage of revenue improved by approximately 1,200 basis points to 52%. This operating leverage reflects a combination of revenue growth, the disciplined redirection of spend toward higher ROI investment and an increase in capitalized software development consistent with the nature of the work being performed.

Sales and marketing expense was $7.9 million, down from $8.7 million last year, with sales and marketing as a percentage of revenue improving by approximately 550 basis points to 18%. This improvement reflects a more focused platform-led go-to-market model where teams are selling the full portfolio in a more unified way across existing customers, partners and new customer opportunities, allowing us to scale more efficiently while continuing to invest behind growth initiatives.

Non-GAAP R&D expense was $7.6 million, up 6% from $7.2 million last year, with R&D as a percentage of revenue declining by approximately 215 basis points to 17%. This reduction as a percentage of revenue is fully explained by a higher proportion of development work that required capitalization in the quarter and reflects continued execution of our Unify and Grow strategy, including the realignment of R&D talent toward platform-level reusable capabilities that support enterprise scale adoption. Capitalized development remained a low single-digit percentage of revenue, consistent with software peers operating in an investment phase. The full cash impact of these investments is reflected in free cash flow, which remains our key measure of underlying performance.

Finally, non-GAAP G&A expense was $7.7 million, down from $8.1 million last year, with G&A as a percentage of revenue improving by approximately 430 basis points to 17%. This improvement reflects continued operating discipline and simplification across core corporate functions we cited last quarter, including more standardized contracting and procurement, increased automation across finance and administrative workflows, tighter vendor management and continued consolidation of internal systems.

Strong fiscal Q1 revenue performance and operating leverage translated into an increase in adjusted EBITDA of 69% year-over-year or $13.3 million, representing an adjusted EBITDA margin of 30%, an improvement of roughly 900 basis points versus last year. Non-GAAP income tax expense was approximately 12% of pretax income, resulting in non-GAAP net income of $12.4 million and adjusted EPS of $0.26 per diluted share, representing approximately 80% growth year-over-year. Overall, first quarter results reflect continued improvement in earnings quality with revenue growth, operating leverage and earnings per share scaling together.

Free cash flow for the quarter was $6.6 million and $60.5 million on a last 12-month basis, representing 102% conversion of LTM adjusted EBITDA compared to 83% last year. This elevated conversion reflects nonstructural tailwinds that will moderate over time, including interest arbitrage prior to the repayment of our convertible notes, a step change improvement in working capital efficiency and temporarily lower cash taxes in 2026 and 2027 following recent tax legislation. Over the longer term, we continue to view free cash flow conversion of approximately 70% to 80% of adjusted EBITDA as a more representative steady-state range consistent with recurring revenue software peers.

Our capital allocation priorities remain disciplined and unchanged. We prioritize funding high ROI growth initiatives, maintaining balance sheet resilience and returning excess capital to shareholders. We ended the quarter with $192 million of cash and investments and approximately $159 million of total debt, resulting in a net cash position of $33 million. Subsequent to quarter end, we retired our $155 million convertible senior notes in full and drew $50 million on our term loan. These actions were neutral to net cash, simplified the balance sheet and extended our debt maturity profile to 2030.

Turning to capital return. During the first quarter, we repurchased approximately $10 million of shares, which left approximately $11 million remaining under the authorization at quarter end. Since quarter end, through February 4, we repurchased an additional $7 million, leaving just over $4 million remaining under the current authorization. Given our confidence in the business and cash generation profile, today, we announced a new 2-year $50 million repurchase authorization, which will become effective upon completion of the current program. At current equity levels, we believe disciplined share repurchases represent an attractive use of capital and a compelling opportunity to drive long-term per share value creation.

Turning to our updated fiscal 2026 outlook. We are raising our fiscal 2026 revenue guidance range by $2 million to $187 million to $197 million compared to our prior range of $185 million to $195 million. This update reflects 2 distinct factors. First, we increased the lower end of the implied Check Verification range by $1 million, reflecting completed renewals and improved visibility into remaining fiscal year activity. Second, we increased the lower end of the Fraud and Identity range by $1 million and the upper end of the range by nearly $2 million, resulting in a new annual range of $102 million to $107 million. This increase reflects strong first quarter execution, continued momentum into Q2 and improved visibility into deal timing and customer expansion early in the year.

For the second fiscal quarter, we expect revenue to be in the range of $50 million to $55 million. The variability in this range primarily reflects the timing of Check Verification license renewals, where revenue can shift between quarters based on closing timing rather than changes in demand or execution. Q2 is typically our most active quarter for Check Verification and a small number of large renewals can be recognized on a single day, resulting in wider than usual quarterly guidance range.

As visibility improves through the year, we currently expect second half revenue to be more heavily weighted to fiscal Q3, driven by the timing of Check Verification license renewals.

Turning to profitability. We are updating our fiscal 2026 adjusted EBITDA margin guidance to 29% to 32%, up from our prior range of 27% to 30%. The 200 basis points increase is driven primarily by a higher level of capitalized software development than we assumed when we set guidance in December. Following a complete quarter of execution, we now have greater confidence that a larger portion of our development activity requires capitalization. Importantly, on a cash basis, total R&D spend is higher year-over-year, reflecting our investment road map and these costs are fully reflected in free cash flow.

From a cash flow and modeling perspective, we expect capital expenditures to be approximately 3% of revenue and depreciation and amortization to be approximately 1% of revenue, and reflecting increased capitalization of R&D and an overall increase in cash R&D investment year-over-year.

We continue to expect gross margins to remain in the low 80% range with operating expenses stepping up sequentially through the year as we invest behind our growth initiatives. More broadly, these outcomes reflect continued progress under our Unify and Grow ethos as the organization operates more cohesively as One Mitek. Execution across the platform is becoming more consistent. Investments are increasingly aligned to scale capabilities, and that discipline is increasingly showing up in growth, margins and free cash flow.

With that, operator, we are ready to take questions.

[Operator Instructions] Your first question comes from Allen with Maxim Group.

For your Fraud and Identity segment, can you discuss a little the competitive environment and why you think you're winning? And in what cases would you maybe be losing?

Thanks for the question. So the way we see the environment, frankly, through the tight relationships that we have with many institutions around the world, the environment is growing and the needs are growing driven by AI, generative AI and the synthetic fraud that's accelerating and frankly, all applications that we see across the board. That's creating more demand, more need. And I think we're pretty well situated because of our broad platform, the capabilities going back to our heritage as well as the capabilities around biometrics, the liveness to detect synthetic fraud, deep fake detection and other risk elements. And we're increasingly combining other data elements in this to make it a data-rich experience and detection and assessment for our customers. And I think that's also unique in the market when you combine it with our heritage with high assurance businesses like financial institutions. That becomes a smaller and smaller group that in the market. And so we feel good about the position. And as I mentioned in my talks, the durability of the business by adding more and more data into the business, and the more customers that come in, the richer the environment becomes, and it's that network effect and it offers richer signals. So again, we look forward to that and continue to build and grow.

Your next call comes from Jake. Jake, with William Blair.

This is Jacob Zerbib on for Jacob Roberge, and congrats on the solid quarter. I wanted to ask, great to see the Check Verification business continuing to do well. I guess from a growth perspective, how are you thinking about the pricing lever for growth over the longer term? And then I have one follow-up after that.

So thank you, Jacob. And we were very pleased with the outcome from this past quarter. So I mentioned in my comments around renewals, renewals and expansions coming in at the high end of expectations. The pricing continues on its very strong foundation that we have and relationships with our core partners. We're also having broad discussions around expanding, expanding in particular around Fraud and Identity on the market and bringing in the broader suite of solutions that we can bring forth to help support our partners' growth, which we look forward to continuing to deepen those conversations. Overall in the market, as I mentioned, checks continue to decline. But fortunately, our solution clearly shows us the convenience and the mission-critical nature for financial institutions, and obviously, as a result, the penetration continues to deepen, and we still see stable activity with nominal prices.

Got it. And then you talked a lot about the linking between Fraud and Identity. You called it out over the past couple of calls. Can you talk a little bit about what you're doing from a go-to-market perspective to help drive that value for customers?

Absolutely. It is -- because of the growing need and it's why it was so important, as we announced this past quarter around our focus, around Unify and Grow, bringing all of our capabilities and solutions together into a single platform approach, and that also includes our go-to-market team from a sales standpoint that we're now showing up at customers and prospects as one business bringing forward the full suite, and we see both fraud solutions as well as identity as well as authentication capabilities, deep fake detection, all being offered in an integrated way and have trained our sales team to talk more broadly against that.

And also another important aspect, I believe, is that we've moved way up the stack within our core customers in terms of who we're talking with and meeting with at the institutions as Head of Fraud, Head of Product, Head of the Retail Bank because of the mission-critical nature of what we're providing, not only on new customer onboarding, but ongoing customer engagement through authentication and synthetic fraud detection. So because we're bringing all this together, that has changed. We're also now been bringing in people looking at other markets, other verticals beyond the heritage financial institutions and financial services. We now have relationships and business through other partner channels who are also taking us into other verticals as well, including government, insurance, telecom as well as our own hunters on that front as well. So a lot of investment is taken, and we'll continue to invest more because of the demand that we've seen and growing.

Your next call comes from Mike with Northland Securities.

First question, just has there been any expansion of the sales force like in terms of headcount or marketing budget? Just kind of curious on those 2 after the last question.

Yes. I'll start off with some and then Dave can elaborate as well. Yes, we have expanded headcount. We've gone through a lot of changes, as I mentioned in the last question, in terms of consolidating the people and the training, bringing on additional hunters and capabilities as we also expand into other markets. We brought in more on the channel partner side as well, expanding to the channel capabilities, as well as SDRs and qualification and delivering leads and opportunities into the sales team.

The marketing dollars, I mean, that can be jumpy from quarter-to-quarter up and down in terms of where we see and where we're investing. I don't know, Dave, if you want to talk more about what we see and the changes ahead there.

Sure. We talked about in the last call that we would be investing in 2026, both in R&D on a whole bunch of different fronts as well as sales and marketing, specifically on GTM, go-to-market. You'll see that across the year quarter-to-quarter as we both hire sales force talent, but also enforce and enhance some of the programs that we have out there.

I guess like would you say the sales force is expanding headcount 5%? Can you quantify it at all?

Yes. We haven't gone to that level of guidance detail, but we're not going to see -- if you're asking, are we going to see a big spike here to start generating revenue? The answer is no. Ed talked about in his prior comments in prior quarter that the unification of the sales force has created some real synergy and having everybody sell the entire portfolio is really helping. We're already seeing the results of that in the numbers. And I think that will continue. So we should get some more leverage, revenue leverage out of the existing sales force and then putting some more talent on the team should be able to accelerate that.

And Mike, it's an area where we'll continue to invest in making sure we're bringing in the skills and talent. And we're seeing the demand continuing to increase on both the direct as well as the channel side, which is why we're broadening out on both sides, but we've also been able to drive more efficiency through the tighter arrangement, offsetting some of that investment.

Got it. Next, with Check Fraud Defender, it sounded like you guys have maybe started a couple of interesting, maybe a couple of larger pilots. Any more color you can provide there?

Yes, we have with the pilots that are underway, as I mentioned, one of the ways to -- of looking at that is the data sets that have now been accumulated from all the data that's coming through. We're now seeing volume and transactions literally in the billions of transactions that are going through on an annualized basis now. Those pilots continue to track. We're very pleased with the progress, pleased with the platform, the progress of the platform, the deepening engagement with our customers, the value that's being returned and the size of the institutions that are now continuing to seek and potentially participate overall into the consortium that the more data that comes in, the more partners that come in, the more and more valuable that franchise and data asset is. So we're encouraged by the progress and enthusiastic about continuing to build it out.

Yes. The point about increase in coverage is really important because as the coverage increases, the value per participant increases, which improves conversion and expansion economics.

Great. Yes, 50% kind of jumped out at me. Maybe last year -- is there an average life to a pilot? Like are some of these getting to a point where they got to convert? Or is that next quarter, we'll hear that? Or is that something over the course of '26?

There's not an average life. Obviously, this is a relatively new solution and continuing to bring in more partners, and we'll keep you updated as progress ensues. So it's -- we feel good and encouraged about the progress so far. Obviously, we'd like them all to be quicker, but -- and we'll continue to try to accelerate that.

[Operator Instructions] Now it's George with Craig-Hallum.

This is Logan on for George. Congrats on another nice quarter here. Ed, when we think about what is obviously a very rapidly changing kind of environment out there when it comes to AI-driven fraud, synthetic fraud, things of that nature, are you seeing that creep into sales cycles at all on the Fraud and Identity side where maybe FIs are pushing a bit more, there's a bit more urgency to kind of bring you guys in?

Yes. Thank you, Logan. Great question. If an institution has been through an attack, yes, we do see that moving potentially more quickly on it from a sales cycle standpoint. This is a comprehensive solution, bringing in a lot of different factors can take time. And frankly, what we've seen mostly is a first level of engagement and going off on to a certain part of the business, let's just say, for example, maybe starts off at FI and opening up digital checking accounts, then that can broaden into auto loans and broaden into mortgages and credit cards and moving into various other countries. So that's where we see that engagement continuing to broaden out and then also into fuller authentication from verification and continuing to get deeper and then bringing in other signals. And if there has been an attack or something they've experienced or vulnerability, we do see those times accelerate.

And I guess on a similar note, like are you seeing kind of more activity maybe from some of your channel partners on that side, just kind of there's more engagement from them?

Yes, there is and bringing additional opportunities. That's where if we look at some of the channel partners who operate outside of financial services are bringing us -- coming into as a partner into other verticals, for example, government or insurance verticals, which has been terrific and seeing opportunities and also opportunities around authentication, like, for example, with MiPass on that front, and that's also in multiple countries. And when we talk about with our core partners in financial services, they all recognize and you mentioned to me, the number one issue that they're hearing from their customers today is around synthetic fraud. It's one of the top topics out there, which is why we're -- they're bringing their in full force to help support both our partners' growth and solutions for their customers.

There are no further questions at this time. I'll turn the call back over to Ed West.

Great. Thank you, operator. And we want to thank you for joining our quarterly progress report today. And speaking for our terrific and enthusiastic employees, we all look forward to executing on the growing opportunity ahead for Mitek. So thank you very much, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Mitek Reports Fiscal 2025 Fourth Quarter and Full Year Financial Results. [Operator Instructions] This call is being recorded on Thursday, December 11, 2025. And I would now like to turn the conference over to Ryan Flanagan with ICR. Thank you. Please go ahead.

Thank you, operator. Good afternoon, and thank you for joining us today to discuss Mitek's Fiscal Fourth Quarter and Full Year Fiscal 2025 financial results. Joining me today are Chief Executive Officer, Ed West; and Chief Financial Officer, Dave Lyle. Please note that today's call will include forward-looking statements, and because these statements are based on the company's current intent, expectations and projections, they are not guarantees of future performance, and a variety of factors could cause actual results to differ materially.

A description of these risks and uncertainties can be found in our 10-K filing dated December 11, 2025, and our other SEC filings. These forward-looking statements include, but are not limited to, our expectations around consumer demand for our products and services, expansion of our Check fraud Defender, or CFD, Data Consortium the ongoing stability of our check verification business, our growth and investment plans, expected improvements in gross profits and unit economics, improvement to operating leverage and scale, expected free cash flow conversion rate and our FY '26 financial outlook and guidance except as required by law, we do not undertake any obligation to update these forward-looking statements.

This call will also include references to non-GAAP adjusted results. Please reference this afternoon's press release and our Investor Relations website for further information regarding forward-looking statements and reconciliations of GAAP to non-GAAP financial measures. With that, I'd like to turn the call over to Ed. Ed?

Thank you, Ryan. Good afternoon, everyone, and thank you for joining us today. For those less familiar with Mitek, we provide the identity verification, authentication and fraud decisioning infrastructure that high assurance institutions rely on to onboard customers, authenticate users and protect what's real across digital interactions. We closed fiscal '25 with a strong fourth quarter, coming in ahead of our expectations driven by broad-based demand across our portfolio of business. As we reflect upon fiscal '25, 1 constant stands out.

The fraud landscape is changing at an extraordinary pace as generative AI is accelerating both the volume and sophistication of fraud and identity-based attacks. AI is lowering the cost of creating deep fakes and synthetic identities for fraudsters. The Deloitte Center for Financial Services estimates that AI-enabled fraud in the United States could reach $40 billion by 2027, and recent industry research shows that a majority of financial institutions now view synthetic identity fraud as their most urgent emerging threat.

In recent conversations with several of our largest banking partners, we have heard the same message. AI-enabled fraud attempts have risen sharply over the past year and institutions are turning to Mitek with a clear mandate to help protect their customers and their business as these attacks scale. Before turning to key takeaways, I want to highlight a brief operational update. To deliver on our commitment to improve transparency and provide a simpler view for our investors that matches how customers buy and how we are operating, we're updating our external reporting beginning this quarter.

We are now disaggregating our revenues between fraud and identity and check verification. Customers are increasingly asking us to address fraud holistically, not as an isolated identity or payments problems. This has led to tighter integration across our identity, biometrics, authentication and fraud capabilities. Both solutions are included in the fraud and identity portfolio. Check verification includes the heritage Mobile Deposit and Check intelligence solutions. With synthetic fraud accelerating, financial institutions are clear about what they need, fewer point solutions and a core partner who could help secure digital interactions across the entire customer journey.

I would now like to discuss a few key takeaways for you as we exit fiscal '25. First, fraud and identity now accounts for over half of our total business, growing more than 15% year-over-year, it is now firmly established as our growth engine for revenue and SaaS expansion. Second, SaaS revenue growth accelerated to 21% in fiscal '25, a meaningful acceleration from mid-single digits in fiscal '24, while the mix of SaaS increased to 43% of total revenue. These trends contribute to an improvement in the quality and predictability of our revenue. And third, we strengthened the company's foundation in fiscal '25 operationally, commercially and technically setting a stronger base for fiscal '26.

Adjusted EBITDA margins were 30%, and we improved execution across go-to-market and customer delivery. We are now reinvesting in R&D, go-to-market expansion and advanced decisioning to create a more unified and insight-rich customer journey. At the start of the year, we said fiscal '25 would focus on the fundamentals, fixing the foundation and restoring operational discipline required for scalable, profitable growth. Our results this year show that we've done exactly that. We simplified how we run the company, consolidating go-to-market and the product and R&D groups are now under unified leadership.

As a result, non-GAAP operating expenses declined 2%, while revenue grew nearly 5%, driving improved efficiency and an 11% increase in revenue per employee. Our identity portfolio was again a major driver of performance. Over the past year, we consistently highlighted that increasing automation and cost efficiencies, combined with continued revenue growth was a key factor to reaching a profitability fulcrum point on a fully burdened basis. With automation now at approximately 90% and identity revenue at roughly $77 million, an increase of 12% year-over-year, that profitability fulcrum point has now been achieved.

At the same time, we're seeing a clear shift towards higher assurance identity journeys that require more verification steps and despite that added complexity, our high level of automation is enabling scale while continuing to expand margins. We see this playing out in both North America and EMEA. In North America, several of our largest financial institutions expanded with us across multiple business units and moved identity earlier in the onboarding flow combining identity verification with fraud checks in a single stack.

In EMEA, banks in the U.K. and Europe are adding new use cases in adopting authentication products such as MyPass while digital ID initiatives in markets like Spain and Italy are beginning to drive higher verification and authentication volumes. SaaS revenue mix rose to 43% of total revenues, keeping us firmly on track toward the goal we laid out for SaaS to approach half of total revenue. We are also seeing strong leverage in our platform model with gross profit per journey materially higher than that of a single signal workflow.

Check Fraud Defender continues to gain traction. ACV grew 50% year-over-year, while data sets configured in the consortium expanded to over 1/4 of all U.S. checking accounts and that figure is approaching 50% when including FIs in pilot phase. We believe the expansion and data set coverage of checking accounts in the U.S. is quite unique and is a leading indicator of the value for consortium members because accuracy and value scale with consortium breadth.

Check Fraud Defender ACV for the year came in below our initial goal primarily due to the timing of large enterprise deployments. Several large FIs move through multi-stage validation and procurement cycles more slowly than anticipated, shifting the decisions into fiscal '26 but not changing the underlying demand. Our expanding footprint is already driving tangible customer outcomes. At our October sales kickoff, multiple large FI shared that Mitek is preventing millions of dollars of fraud. This feedback underscores the differentiated value of our consortium and the strength of the model as we scale into full production.

All of these efforts made fiscal '25 translated into higher margins and stronger free cash flow, which Dave will cover in more detail. With a more unified foundation in place, we are entering fiscal '26 from a position of strength and with a clear mandate from our customers. They want us to unify even more of what we do and help them grow safely. While fiscal '25 was about strengthening the foundation, fiscal '26 is about moving into our next phase, unify and grow. Unifying our identity, authentication and fraud capabilities into a cohesive insights-driven platform and scaling it across our customer base.

When we help institutions open more accounts digitally move more transactions through safer channels and key bad actors out, we then deepen our role in their core customer journeys and grow our SaaS revenue. To guide this next phase, we have organized fiscal '26 around 4 key pillars that we want to share with you. Our first pillar is to fortify our check verification franchise. The durable platform, including mobile deposit and Check intelligence that established our long-standing relationship with many in North America's largest financial institutions and has earned us a reputation as a market leader through scale and accuracy.

This franchise remains one of the strongest assets in our business, providing the reliability and trust that our customers expect. Despite periodic fluctuations from license renewal timing, check verification has remained remarkably stable over the last several years. That stability reflects the scale and mission-critical nature of a portfolio that supports approximately 1.2 billion mobile check deposit transactions every year with high margins and high levels of reliability.

Our second pillar is to unify our fraud and identity capabilities and expand that portfolio. Fiscal '26 is about showing up as one Mitek across that full journey, increasing our fraud and identity SaaS footprint by enabling customers to grow digital adoption and transaction volume without corresponding increases and fraud losses or manual cost. Fraud and identity now represents just over half of our business and remains our fastest-growing portfolio. The continued shift towards SaaS, high automation and multi-signal journeys is improving margins across the broader portfolio. In fiscal '26, we plan to grow the fraud and identity portfolio through deeper signal-rich identities earnings, broaden engagement with customers across additional lines of business and geographies, expand the check fraud defender consortium and continue to drive commercial expansion across our customer and geographic base and growing network of channel partners.

Customers are increasingly deploying multi-signal workflows that combine documents, biometrics liveness, behavioral analytics and third-party data, which materially improves their economics by reducing fraud losses, lowering manual review and improving conversion. At the same time, as more institutions contribute data to the CFD consortium, detection accuracy improves and loss rates decline, strengthening the value of the network for every participant, including Mitek.

Our third pillar for fiscal '26 is to invest in the areas that we believe we have a clear advantage in where we can lead. As I mentioned earlier, our customers do not just want us to deliver signals. They want a partner who can lead them through this shift by returning data-driven insights or a simple risk-adjusted decision they can act on in real time. This is why our fiscal '26 investments are focused on AI-supported insights and decisioning, biometrics data and intelligence and targeted go-to-market and delivery capacity. Given our history and expertise, we have a strong basis of differentiation with financial institutions and high assurance use cases.

This is where incremental investment dollars will have the greatest impact. You will see this focus reflected in our financials. We expanded adjusted EBITDA margin to 30% in fiscal '25 and we are deliberately reinvesting to fund these initiatives in fiscal '26, while still delivering attractive margins. We expect improvements in gross profit dollars and unit economics as richer decisioning increases value per workflow. You will see more of our OpEx shift towards R&D and go-to-market as we fund these higher ROI initiatives. Fiscal '25 proved we can grow margins through operating leverage and scale. Fiscal '26 is about investing behind the capabilities where we can lead in evolving our solution set all with the goal to accelerate growth.

Our fourth pillar is maximizing value through disciplined capital allocation. To lead in the areas where we hold an advantage, every dollar of capital must be deployed deliberately to earn a high return. Either reinvested into the capabilities that strengthen our long-term leadership in growth or return to shareholders. We will measure our impact via improving revenue quality and growth, margin durability and strength in free cash flow conversion, all with a clear capital allocation framework to ensure that we maintain a strong balance sheet while balancing investments with returning capital to shareholders.

Our unify and grow framework reflects where the market is moving and how our customers are asking us to partner with them. By unifying our capabilities and reinvesting in the technology, data and decision layers where we have a structural advantage we are positioning Mitek for durable recurring high-quality organic growth. We expect to expand our SaaS base, increase fraud and identity revenue and extend the reach and value of our consortium.

Now before I turn it over to Dave, I also want to recognize our nearly 600 teammates around the world and our trusted partners. Fiscal '25 was a year of meaningful change across the entire company, operationally, commercially and technically and the team delivered with focus, discipline and a deep commitment to our strong purpose-driven mission of protecting our customers and their users. The progress we made this year, including simplifying how we operate, elevating customer support, strengthening the core technology behind our platform and returning to growth reflects the commitment and execution of our people.

Their work is the foundation for the results you're hearing today and gives us confidence as we enter fiscal '26. With that, I'll hand it over to Dave.

Thanks, Ed. As you just heard, we are exiting fiscal 2025 with a clear framework for fiscal 2026. This afternoon, I will focus my commentary on 3 areas. First, I'll review our fourth quarter results and will discuss revenue using the historical deposits and identity categories. Then I will review our full year performance using the new fraud and identity and check verification reporting structure. And then finally, I'll walk through our fiscal 2026 outlook and how it supports the pillars Ed laid out.

Starting with fourth quarter results. Total Q4 revenue was $44.8 million, up 4% year-over-year with SaaS revenue growth of 19% being a highlight. Revenue results exceeded the midpoint of our guidance range by roughly $4 million as several large deposit deals closed sooner than forecast from higher transactional volumes and we saw stronger-than-expected identity transaction volumes.

Identity revenue was $21 million, up 7% year-over-year, driven by 14% SaaS growth from continued transactional volume overages, and deposits revenue was $23.8 million, up 1% year-over-year, driven by growth in CFD SaaS revenue. Q4 non-GAAP gross margin was 84%, down approximately 200 basis points year-over-year, driven by higher investment in SaaS services delivery.

Q4 non-GAAP operating expense was just under $25 million, improving 5% sequentially from Q3 driven by lower external services spending and the timing of marketing events. On a year-over-year basis, Q4 non-GAAP operating expense increased by approximately $3 million, normalizing for a reduction in bonus accruals and a reversal of doubtful accounts in the prior year underlying operating expense was essentially flat.

Tying this all together, adjusted EBITDA was $12.9 million in the quarter or a 28.7% margin. After other income, interest and tax, non-GAAP net income came in at $11.1 million or $0.24 per diluted share on 47.3 million shares. As Ed mentioned earlier, we have updated our external reporting. Under the new structure, deposits maps to check verification, identity, maps to fraud and identity, and Check Fraud Defender has moved from deposits to fraud and identity. We are also simplifying our revenue categories. Going forward, the primary change will be the combination of license and maintenance into a single line to better reflect how customers contract and pay for those items.

The 10-K provides results in both the prior disaggregated format and the new reporting format, allowing investors to compare historical performance across the 2 presentations. With that framing, I will now talk back through full year 2025 performance. Starting with fraud and identity for fiscal year 2025. Fraud and Identity revenue was $90 million, up 15% year-over-year with growth led by our SaaS offerings, primarily driven by continued volume expansion in our core customer base.

What stands out this year is how consistent customer behavior has become across regions and customer tiers. Large banks and enterprise customers are converging on the same pattern. Shifting identity earlier in the onboarding flow, consolidating fraud and identity workflows and standardizing unbundled stacks rather than fragmented point solutions.

Taken together, fraud and identity is now operating at increased scale and more durable economics, positioning us well for continued growth in fiscal 2026. Turning to check verification, comprised of our Mobile Deposit and Check Intelligence products. This portfolio remains an important cash flow generator for the company. Check verification revenue for fiscal 2025 was $90 million compared with $94 million in fiscal 2024, a variance mostly related to deal timing year-over-year.

This year's performance reflects the resiliency of a portfolio that has operated in a relatively defined annual revenue range for several years despite overall check volume declines in the U.S. and the digestion effects of an unusually large revenue recognition event in fiscal 2023 from a single large channel partner when we recognized roughly 4 years' worth of revenue in a single quarter.

On a consolidated basis, total revenue for fiscal 2025 was about $180 million, split evenly between fraud and identity and check verification. Our 4% consolidated revenue growth breaks down cleanly as follows: SaaS, which grew 21% year-over-year, contributed roughly 8 points of growth. Licensed software and support reduced growth by roughly 4 points as expected, reflecting the ongoing overall mix shift from software term licenses to recurring SaaS.

For the full year, non-GAAP gross margin was about 85% compared with about 86% in fiscal 2024. The modest step down is consistent with our transition to a heavier SaaS and services mix. SaaS and services carried blended margins in the mid-70s percent range versus nearly 100% for licensed software. As is typical with a mix shift towards SaaS, the margin rate compresses slightly, but absolute gross profit dollars continue to grow. Importantly, automation and richer identity fraud journeys are lifting gross profit per journey, which offsets some of the mix impact and supports long-term scale.

Non-GAAP operating expense for fiscal 2025 was $100.9 million, improving 2% from last year and an improvement in operating expense intensity from 60% to 56% of revenue. Breaking that down in G&A, vendor consolidation and tighter procurement reduced external spending, bringing G&A intensity down from 20% of revenue to 18%. We also streamlined finance and accounting processes, which lowered our reliance on external advisers.

Sales and marketing intensity improved from almost 22% to 21%, driven by stronger alignment between marketing programs and pipeline generation and a shift away from higher cost event-driven activity toward digital and partner-led demand generation. R&D intensity improved from 18% to 17% of revenue as we completed several platform consolidation initiatives, reduced reliance on higher-cost contractors and increased engineering productivity through automation and broader adoption of AI-assisted development tools.

Adjusted EBITDA for fiscal 2025 grew by 15% to $54 million, representing a margin of 30%, up from 27% a year ago. Non-GAAP net income for fiscal 2025 was $45 million and roughly flat with fiscal 2024, even though adjusted EBITDA increased by 15%. This result was driven primarily by a higher non-GAAP tax rate, 21% in fiscal 2025 compared to 9% in fiscal 2024. The increase reflects higher pretax income across jurisdictions and lower tax deductions from stock-based compensation and other payroll-related items.

Free cash flow for the full year was $54 million, which equates to 100% conversion of adjusted EBITDA compared with just under 65% last year. While operational discipline and lower non-GAAP cash adjustments contributed, this conversion level is above what we consider a longer-term steady state. And it's important to highlight a couple of nonstructural tailwinds that will dissipate over time.

First, following the expected payoff of our 75 basis points convertible debt on February 1, 2026, and we will no longer receive the interest arbitrage benefit. Second, there is an initial working capital step-up step change benefit as revenue mix changes which should be followed by an ongoing but smaller growth linked benefit as SaaS base expands. And third, by 2028, we will have exhausted the benefits associated with the catch-up provisions within the recent tax legislation which will lower the cash tax rate during fiscal year 2026 and fiscal year 2027. Taking these items into consideration, over the longer term, we believe a more realistic steady state is around 75% conversion, which we believe is consistent with recurring revenue software peers.

Our approach to capital allocation remains consistent and disciplined. We first fund high-return initiatives in the business while ensuring the balance sheet remains resilient, balanced with returning excess capital to shareholders. We ended the year with about $196 million of cash and investments and approximately $157 million of total debt, resulting in $40 million net cash position. Combined with our committed term loan and revolving credit facilities, this provides full flexibility to retire the $155 million of convertible debt maturing in early calendar 2026, while preserving ample liquidity to fund product development and enable additional share repurchases.

Regarding share repurchases, in fiscal 2025, we repurchased approximately $5 million of shares and since fiscal year-end through December 10, we have repurchased an additional $7.7 million, leaving $13.6 million remaining in the current authorization to execute through May 2026.

Let me now turn to our fiscal 2026 outlook. We expect fiscal 2026 revenue of $185 million to $195 million, implying roughly 6% at the midpoint. This range reflects the balance of stable check verification and accelerating fraud and identity demand. With the first quarter nearly complete, Q1 revenue is tracking to between $41 million and $44 million. We expect fiscal 2026 to be slightly more back half weighted, reflecting a gradual ramp in fraud and identity SaaS.

We expect fraud and identity product portfolio revenue of $101 million to $105 million in fiscal 2026, which would represent approximately 15% growth at the midpoint, and we maintain the same growth rate we delivered in fiscal 2025. We expect modest gross margin pressure in fiscal 2026 largely due to mix shift towards SaaS and services as we invest ahead of expected demand growth. PAUSE We still expect gross profit dollars to continue to rise despite this compression, assuming the midpoint of the revenue guidance range.

On operating expenses, we expect to increase R&D intensity as we accelerate development. This investment will be funded by continued leverage in G&A and by lower sales and marketing intensity as we unify our go-to-market teams, automate more of the cycle and improve sales operations and analytics. Taken together, these offsets allow us to maintain or improve overall operating expense intensity versus fiscal 2025, even as we invest behind our product road map.

We expect fiscal 2026 adjusted EBITDA margins in the 27% to 30% range. At the midpoint, this implies adjusted EBITDA dollars remaining roughly flat year-over-year, reflecting deliberate reinvestment rather than a step back in earnings power. We believe that rising demand for fraud and identity solutions and strong unit economics makes this a good place -- a good balance between delivering profitability and deploying capital into high-return R&D and go-to-market initiatives.

We also expect adjusted EBITDA to continue converting to free cash flow at attractive rates during fiscal 2026 with normalization towards our long-term target over time. Regarding taxes, we expect fiscal 2026 non-GAAP tax expense, which reflects cash taxes to decline meaningfully from fiscal 2025. This change is driven by changes in U.S. tax legislation, particularly the revised treatment of capitalized R&D.

As a result, we expect the fiscal 2026 non-GAAP tax rate of roughly 10% of non-GAAP pretax income. Before we turn to Q&A, I want to highlight an important milestone. Over the last several quarters, we said we would finish the cleanup of material weaknesses in our internal controls. As disclosed in our filings today, we have now fully remediated all previously reported material weaknesses. This outcome reflects multiyear investment in people, systems and technology to strengthen our processes and control environment.

This is a significant accomplishment and a meaningful step forward for the company. We want to thank our teams across the organization and particularly our accounting team for their discipline, commitment and very hard work throughout the process. Finally, our updated investor presentation in the Q4 and full year supplemental financial package are available on our Investor Relations website, including trended historical data for our new product categories and revenue classification.

With that, operator, we are ready to take questions.

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] One moment, please, for your first question.

And your first question comes from the line of Mike Grondahl from Northland.

Dave, if your SaaS business is doing really well, if you had to sort of distill 1 or 2 drivers behind that growth, how would you describe those?

Mike, as you point out, we did see an acceleration of SaaS growth throughout the year and feel really good about where the year is ending up. Underlying demand, frankly, what's the big driver of this is what's happening in the market. And we feel like Mitek is really well positioned based on what all is happening with the growth in synthetic fraud because of generative AI. And the growth we're seeing there, the rising fraud, frankly, essentially fraud being democratized that's been a driver of the need because of our partnerships and credibility of working with some of the largest financial institutions around the world.

So we're seeing growth in the overall relationships in terms of new products, new solutions with those institutions. We're seeing growth in transactions. As I mentioned, bringing up our verification process and also fraud checks earlier up as new customers are coming on board. We're seeing more in authentication because of this. And frankly, just with that market continuing to expand, we feel very good about the growth there. going forward.

So that's the key driver of this. And frankly, the -- what we capture in terms of the outlook this year has been -- is capturing that increasing demand.

Got it. And then any more details you can share on Check Fraud Defender, number of banks or revenue or just kind of progress momentum you're seeing there?

Well, as I mentioned on the call, we saw 50% growth in overall ACV. And probably the biggest metric there, Mike, to be really very encouraging is the amount of data sets that we now have compiled and configured within the consortium. So today, we're over 25% of all checking accounts in the U.S., in the United States, we have visibility into and build those data sets.

And when you include the institutions who are currently in pilot phase, that actually approaches 50%, nearly 50% of all U.S. checking accounts. That is, we believe, a significant asset for the consortium and ultimately, this franchise and it goes back to what I mentioned a minute ago about more signals that we can provide customers around potential fraud and insight, the more valuable the franchise is.

So the progress there, the data sets that are being built, the momentum, the engagement with financial institutions and some of the largest institutions in this country, are seeing the benefits and it goes back to your previous question, hey, what's driving all this? And it's just the accelerating growth of fraud and synthetic fraud and around the world.

And your next question comes from the line of Jake Roberge from William Blair.

Great to see the strong results, good quarter there. Ed, when you initially joined, you talked about getting organic growth back above 10%, obviously, still building some things out on the fraud side. But now that you've been here for over a year, do you feel like you're starting to get more visibility into that path with SaaS really starting to accelerate this year?

Yes. Great question, and thanks for the comment on the results. Again, a lot of work by everybody across this company. Having seen the accelerating growth in SaaS as we were just talking about, over 21% growth in the growing and demand. But what's most important about getting to that -- our goals, where we want to is that longer-term double-digit growth rate and organic growth. The good news is the market is moving in the right direction.

We feel like Mitek is really well positioned to capitalize on that, and it's going back to that credibility that we have some of the largest financial institutions in the world, the growing need for fraud and identity detection. All that compiles I think, it leads to decent confidence in going to our longer-term growth objectives there.

Okay. That's helpful. And then now that you've done a lot of the heavy lifting on consolidating the platforms and also kind of your go-to-market motion into 1 Mitek over the past year. What inning do you feel like we're in with those changes on both the go-to-market and product into the 1 Mitek story? And then how do you feel like the visibility into the business has changed over the past year now that you're not operating several different sales forces and systems?

Well, obviously, that improves every day. It gets better and better. And last year was a year about fixed the foundation and integrating these various businesses, getting people working together as 1 solution and having that strong purpose-driven mission. But frankly, we've moved from that phase and now into the unify and grow where we've got to bring together that integrated platform approach and driving more data and insight and signals, richer signals to provide insights to our core customers.

We're early on and there because that's -- we're bringing these pieces together. We have a lot of capability and credibility and insights, but that's why building out these various forms, whether that's building up the consortium, bringing more value to those enterprise, we're early on in that. That's still not a mature business as we've talked about.

And then also fighting the fraud, that evolves and change every day. I think we've got a good grasp on having the discipline on how we're operating across the platform. Now I think we're just now beginning to get into the group of really seeing that come together in terms of value creation for our customers and ultimately for Mitek.

Very helpful. And then, Dave, if I could just sneak one more in. I know you're still sunsetting some of the legacy hardware assets. Can you help us understand what that headwind will be on revenue growth this year? And will those hardware products be fully sunsetted this year?

Sure. Yes. We've actually expected a more rapid falloff as you know, in revenue from those hardware products, it just survived for longer than we thought, which actually is a good thing from a revenue perspective. But we're down into the immateriality level of revenue dollars. So it will have a little bit of an impact, but nothing like it's had historically in the last couple of years.

Thank you Jake. Next question, operator.

And your next question comes from the line of Surinder Thind from Jefferies.

Ed, can you maybe talk about the level of investment that you're making at this point? Is that kind of a normalized pace? Or are we early in an investment cycle where maybe there's a lot of ideas to pursue, given how things are changing. Any color on that as you think about the year ahead and obviously the next couple of years?

Sure. Well, I think Dave outlined in his remarks is in terms of what that investment looks like this year. And that's really driven, as you know, we've been very disciplined about the operations, driving margin, the performance, integrating the business. This is really been driven by the confidence that we see where we're positioned with customers, what's happening in the market and how do we accelerate growth because of what's happening and making sure we're capitalizing on that as a business for everyone involved.

Longer term, we continue to -- we're very margin focused. We want to continue to grow free cash flow and margins. So I think we've outlined the amount of investment here and continuing to drive performance from there.

So Ed, maybe a clarification from my part. I guess what I was trying to ask is more about like are we in a period where you could -- if you wanted to invest even more at this point? Or are you pursuing all of the ideas that you want to pursue in relationship? Obviously, I understand you have to balance margins and stuff. But just -- that's what I was trying to get a better handle on the longer term...

Yes. I would say we want to be prudent and balanced with the business. Anybody could say they always can invest more. There clearly continue to be things, but we just want to be prudent. We want to deliver the results and be a balance in it, just like we've talked about capital allocation and maintaining that flexibility. But right now, we feel good about where we are in the position and what we have.

Yes. We think, Surinder, we have the kind of right balance like Ed was talking about the big focus, as Ed also stated on R&D, more specifically on AI decisioning, biometrics and fraud intelligence. And then on the go-to-market side of the equation, it's time to strike a little harder there and put a little more investment there. Most of the investment is going to be in R&D. And I think this is a good pace to do it looking into 2026.

Got it. And then when we kind of think about -- you talked a little bit about Check Fraud Defender and all the good stuff that's going on -- you also highlighted the idea that some of the larger financial institutions are taking maritime. Is that something that might potentially change as we go ahead? Or is that just, as you've now kind of worked through this process, that's just how it is, meaning that if you layer on a number of these FIs taking time, ultimately, the growth rate would accelerate, right?

But I'm just trying to understand the dynamic there of how we think about the decision-making at the large FIs and what that really means for the FD's growth rate?

Yes. I think the more data that you have, the incremental value creation just increases. And so the more value everybody sees that should accelerate over time. And we've continued to build out the business, the insights and the value there. These are very large institutions. They take their time. They've got built-in processes they go through.

The good news is it's coming along. It's been happening and will continue. We think that, that would accelerate over time. But our focus is getting the data and the insight that then we can share with the customers and create more value for them and Mitek.

And your next question comes from the line of George Sutton from Craig Hallum.

Nice results. So when we're talking about synthetic fraud, I wondered if we can get a little more granular in terms of how the discussions with the customers are going you've been trying to migrate folks from point solutions into the -- my VIP platform and the full stack. Is synthetic fraud helping drive those discussions? Or are you seeing new interest from new parties specific around synthetic fraud?

Well, going to the former -- thank you, George, is synthetic fraud obviously, whether they're injection tax, presentation into acts template attacks that are happening, deepfakes, all this and that's accelerating. And the reason we take a highly layered approach to detection, which is why having that orchestration in VIP is very important.

And the more insight and signals we can bring to that the more detection we can deliver. That's why, again, we have unique assets with the biometric and wideness capabilities, combined with other signals. We can bring in other third-party signals and all these different pieces come together in a platform approach to provide more data. And as that synthetic fraud is increasing, is helping out on that detection.

But it's changing. It's changing daily. Some of the fraud vectors change rapidly, and that's why staying in front of that and having that core partner is very important. I think as this continues to grow, as your second point of that, logically, we start impacting other organizations as well and seeing other use cases where it's important to bring these biometric, the liveness another fraud detection and synthetic fraud detection capabilities to bear on applications that we may not have been thinking about a year or so ago that we're now seeing today.

Got you. So I wondered if we could walk through the pilot process for the banks, these large banks. Obviously, the network effect is starting to occur here. I'm just curious, how are they viewing their pilot process, they're obviously looking for incremental value of being part of the consortium versus something they would have identified themselves. Can you just walk through kind of the touch points there?

You just outlined it, part of the consortium, start seeing the value of, okay, now I'm seeing data, have access to data that I didn't have on my own. For example, where we can talk about the amount of the coverage. A lot of times, we'll go in to and meet with an institution, we'll already have insights and data sets on their customers that they didn't give to us, because we see it in many other financial institutions so frequently that we've been able to build out that profile to then have that conversation.

That gets folks' attention. Now they start seeing the benefit of being a part of a consortium versus just having an on-premise software solution themselves. That is now maybe not seeing all of the signal rich capabilities about being a part of a broader consortium. So now just going through that just takes time. You walk through, you get the data, you do the test, do the pilot and it just evolves over time and getting people more broad.

You're talking about very large institutions who have done it in certain ways. And the more data they have, they see now they see the benefits and then participate in the consortium. We have multiple, top 10 institutions, some of the largest in the country in -- working with us. And so we're encouraged about the progress at what we see ahead.

Got you. Just one other thing, we're 80% or so through the fiscal first quarter. And we also line up with the fiscal year-ends of most of your customers. I'm just curious if you can -- are there any sort of things you would point to that might be a focus for this quarter versus what you were seeing in Q3? Or any meaningful deltas?

No meaningful deltas other than just continued directionally, I think, has informed the guidance that we've outlined for the year, and Dave walked through about the year. And frankly, we gave you some more color on the quarter based on where we are.

And your next question comes from the line of Allen Klee from Maxim Group.

Yes. Could you comment a little on the mobile deposit business on, in terms of -- it looks like if you back in, you're implying a decline. Are you thinking that this business is kind of going to be in secular decline or some stability at some point? Or how are you thinking about it?

Well, I tell you, let me just turn it over to Dave to walk through in terms of your point there, Alan, is kind of backing into what that means from a guidance.

Yes, we -- the way we kind of look at it is looking historically at the stability in the overall transactional volume that we see from Mobile Deposit. It's been a $1.2 billion plus for years, right? And so we've managed pretty well just through adoption, I think, to keep those volumes where they -- in a pretty stable position. What we've seen over the past couple of years is more about deal timing from a revenue perspective.

If you remember, Alan, there was a very large channel partner deal that allowed us to or required us to recognize 4 years of revenue in a single quarter in 2023, essentially taking out sequential years ahead of additional of revenue from that customer. That circles back, by the way, next year in 2027 where we'll have a renewal there.

But that creates -- the digestion of that deal created some pretty big declines over the years. So we also have depending on when larger customers run out of transactions and have to renew, that timing matters in a pretty significant way. You even saw some of that at the end of Q4, where we had some expected upside.

And when you have expected upsides in that time period, it's usually because they run out of transactions earlier, which is a good thing. So we know that overall checks are coming down over time. And eventually, they will start to see a more secular decline from our transaction volume. But right now, we're seeing stability in that -- in the volumes.

Yes. So just kind of long-term takeaway or to summarize that, is just separating out the underlying transaction volumes, which is right is been around $1.2 billion versus the rev rec based on the ongoing purchases of the volumes.

Okay. And then just from a capital structure perspective, is it reasonable to assume that you will pay off the entire amount of the convert when it comes sue or that you might use some of your facilities to keep more cash around?

Yes, the decision -- so first of all, yes, we're going to pay the debt off completely when it's due February 1, 2026. We haven't yet communicated how we're going to do that. We have that $100 million facility, the $75 million term and the $25 million revolver to give us flexibility. We'll make that decision closer to the time we actually pay it off. It could be a combination of both borrowings as well as cash from our cash balance.

And as Dave pointed out, we have close to end of the year, roughly $196 million in cash plus those facilities.

There are no further questions at this time. I will now hand the call back to Mr. Ed West for any closing remarks.

Great. Well, thank you. Thank you very much for your interest and time. You've got a highly enthusiastic team and company based on the position where we see things evolving in the market and very energized about what's happening. So thank you for your interest, and we look forward to visiting with you all over this next quarter. Have a great day.

And this concludes today's call. Thank you for participating. You may all disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Mitek Reports Fiscal 2025 Third Quarter Financial Results. [Operator Instructions] This call is being recorded on Thursday, August 7, 2025.

I would now like to turn the conference over to Ryan Flanagan, ICR. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Mitek's Fiscal 2025 Third Quarter Earnings Conference Call. With me on today's call are: Mitek's CEO, Ed West; and CFO, Dave Lyle. 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 financial results for the fiscal 2025 third quarter ended June 30, 2025. That release is available on the company's website at miteksystems.com. This call is being broadcast live over the Internet for all interested parties, and the webcast will be archived on the Investor Relations page of the company's website.

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 comments about the company's plans and expectations for future performance. Forward-looking statements are subject to a number of risks and uncertainties, which could cause actual results to differ materially.

We encourage all our listeners to review our SEC filings, including our most recent 10-Ks and 10-Qs for a complete description of these risks. Our statements on this call are made as of today, August 7, 2025, and the company undertakes no obligation to revise or update publicly any forward-looking statements contained herein, whether as a result of new information, future events, changes in expectations or otherwise.

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 2 for periods reported in the release.

With that said, I'll now turn the call over to Mitek's CEO, Ed West. Ed?

Great. Thanks, Ryan. Good afternoon, and thank you for joining us today, and welcome to our Q3 update call. This has been a solid quarter in terms of business performance. But even more importantly, it marks a quarter of disciplined execution against the objectives that we outlined at the beginning of the year.

Let me start with 3 key takeaways from the quarter:

First, based on the growth and operational efficiencies that we've implemented, we are rapidly approaching the fulcrum point for durable profitability in our Identity product portfolio.

Second, our Fraud and Identity solutions continue to grow and scale, posting 23% year-over-year SaaS revenue growth and representing over 41% of total revenue for the last 12 months.

And third, we're running the business with sharper operational discipline. Free cash flow for the last 12 months was $56 million, representing a 99% conversion rate.

Now for those of you newer to the Mitek story, we provide the core Identity and Fraud infrastructure that high assurance businesses rely on to operate securely in today's dynamic threat environment. Our technology verifies identities and documents, authenticates users and detects fraud from onboarding to login to transactions. We serve over 7,000 organizations globally, including top banks, fintechs and telecom providers.

Mitek's platform has become important for companies that need to balance security with a seamless user experience, especially today when fraud is increasingly driven by generative AI and synthetic identity attacks. Generative AI has essentially allowed fraud to be democratized.

Our solutions span the customer journey from onboarding to authentication to transaction monitoring. This includes our identity verification and orchestration platform, MiVIP, which helps customers onboard users securely and at scale, biometric authentication tools like MiPass and our mobile deposit technology, which has revolutionized consumer banking and supports approximately 1.2 billion transactions annually. Each solution is underpinned by advanced AI, proprietary biometrics and automation technologies and are all delivered via software solutions.

Underlying this platform is a powerful and growing data asset, our fraud prevention consortium, now encompassing approximately 1/4 of all U.S. checking accounts or around 100 million accounts. That footprint continues to expand as we onboard new financial institutions and as existing members contribute more data, whether through newly opened accounts or checks received from customers at other banks. In either case, the data flows through our systems to detect fraud.

Now let's move to the progress against the 4 strategic pillars that we outlined in prior quarters. As a reminder, those 4 pillars are: first, strengthening our foundation; second, scaling Identity; third, expanding Fraud solutions; and fourth, driving operational excellence.

On the first pillar, which is strengthening our foundation, this quarter, we continued transforming how we operate with tangible changes now visible across every function of the business. Teams across R&D, Marketing, Product, Engineering and G&A are being aligned on platform execution with simpler systems and clear accountability, enabling reinvestment without increasing our cost base as we position Mitek to drive durable, profitable growth in fiscal '26 and beyond.

Over the last 12 months, we improved our unit economics by automating more of our transactions and modernizing our technology stack, which has improved our cost of goods sold. Overall, our non-GAAP operating expense intensity has improved from 64% down to 55% of last 12 months revenue, driven primarily by reductions in vendor spend. These actions have not only lowered our structural cost base, but they've also sharpened our execution with a heightened focus on profitability.

On the technology front, we made further progress automating key workflows and laying the groundwork for a unified, scalable platform. We've also expanded our use of the AI-assisted development tools across engineering, helping us activate customers more efficiently. Behind the scenes we've continued building out our data science capabilities, which is an important evolution in our shift towards intelligence-driven fraud prevention.

Now moving on to the second pillar, which is scaling Identity. We are nearing the fulcrum point where our Identity product portfolio is contributing positively on a fully burdened and durable basis. We are making excellent progress towards this important milestone. Trailing 12-month Identity revenue has reached $75 million, up 13% year-over-year. During this time, we have also improved the fulcrum point to less than $80 million on a fully burdened basis and a result of the efficiency and scale gains. This is not just a financial milestone, it's a structural turning point.

Identity, which was previously a margin drag, is now helping fund the broader business. It's important to note that on a contribution basis before allocating overhead, Identity is contributing positively today. That shift reflects the disciplined execution over the past year, driven by increased automation, improved gross profit per transaction and transaction volumes reaching a scale that efficiently leverages a predominantly fixed cost base.

MiVIP continues to lead the portfolio in transaction growth with more identity journeys incorporating advanced verification steps like liveness detection, face match, deep fake analysis and behavioral signals. These multilayered workflows are materially improving unit economics.

Just as important, we're seeing real convergence between Identity and Fraud. Customers are increasingly looking to deploy both together across onboarding, transaction verification and step-up authentication. This convergence is accelerating our evolution into a unified full stack platform that secures the customer journey from first touch through transaction verification to ongoing engagement.

As fraud continues to grow more sophisticated, we are seeing increased customer interest for MiPass, Mitek's authentication solution. We're fielding more authentication opportunities and embedding identity verification at critical points in the user journey to build trust, reduce friction and strengthen security. Our solution encompasses a highly secure passwordless biometric authentication, all back to a verified identity.

As an example, a leading U.K. financial institution significantly expanded its commitment to Mitek this quarter by deploying MiPass in multiple new use cases. What began as a single reauthentication use case has grown into a broad set of high-risk scenarios such as payment authorization and changes to personal information.

Unlike traditional verification, which is typically used once at sign-up, MiPass enables transactional authentication that secures interactions across the bank's existing customer base. By replacing outdated tools, MiPass is helping the institution deliver faster, more secure digital experiences at scale, saving time for consumers while strengthening fraud defenses.

Now naturally, the expanding role in Identity is closely linked to the growing demand for real-time fraud prevention, which is our third pillar. Check Fraud Defender continues to scale with annual contract value reaching approximately $13.1 million, up 56% year-over-year. Enterprise banking deployments at Check Fraud Defender tend to unfold through multistage rollouts with validation cycles and complex procurement processes.

We continue to run test cycles all the while negotiating the contracts to enroll several large, well-known FIs. Accordingly, we have good visibility towards a potential step-up in ACV growth. We're also seeing strong momentum through our channel partner network. In Q3 alone, we closed nearly 40 new FIs who joined as partners -- through partners, expanding our reach into the long tail of community and regional institutions.

As I mentioned earlier, Check Fraud Defender now has visibility into check activity from approximately 1/4 of all U.S. checking accounts, which includes mostly production and a small amount of pilot data. This trajectory highlights the growing engagement with our platform and its increasing relevance as a source of real-time industry-wide fraud intelligence. What we're building with Check Fraud Defender is just the starting point. We see this as a foundation towards a broader enterprise fraud platform.

Now on to our fourth and final pillar, building a more durable, cash-generative and fully integrated business model powered by disciplined operational excellence. While we continue to scale our Fraud and Identity solutions, we're equally focused on how we run the business, driving operational excellence that is first and foremost about the customer experience that delivers incremental value and insight while enabling us to do more with less. The latter is driven by leverage and focus.

SaaS revenue now represents over 41% of trailing 12-month revenue, up from last quarter, a steady strategic mix shift that improves visibility, enhances scalability and positions us for long-term margin expansion. At the same time, we're instilling stronger financial discipline. Through tighter cost controls and more focused execution, we accelerated EBITDA growth and achieved a 99% free cash flow conversion rate on an LTM basis, giving us the flexibility to reinvest where it matters most.

This quarter, we launched a series of company-wide efficiency initiatives spearheaded with precision and urgency by our new COO, Garrett Gafke, including a comprehensive vendor audit, renegotiation of major contracts and consolidation of legacy infrastructure. These efforts are already freeing up resources we're using to reinvest directly into the platform, advancing automation, improving performance and ultimately enhancing the customer experience.

We're also evaluating new opportunities to better align our go-to-market resources to support growth in our current geographies, strategic relationships and channel partnerships. As we look ahead to year-end, we anticipate ongoing changes to ensure our operating model is in alignment with the most compelling opportunities in Fraud and Identity. In short, we're operating with greater focus, tighter integration and a growing ability to convert operational discipline into product enhancements and innovation, margin expansion and free cash flow per share.

In closing, I would like to summarize our journey over the past 3 quarters and how the business is evolving. Mitek comes from a history of several strong assets, ranging from pioneering model -- mobile deposit, which led to the credibility with thousands of financial institutions to leading technologies in nascent but evolving digital identity space, all supported by terrific technical talent and capabilities, all of which are the very reasons that I joined. These assets were clouded by CEO and CFO turnover, material weaknesses, years of late filings as a public company and unintegrated acquisitions. And we have made clear progress in putting that chapter behind us.

We have executed against the initiatives that we outlined at the beginning of the year, streamlining and integrating the business and moving the Identity product portfolio towards durable profitability. We are approaching the fulcrum point [ for -- on ] a durable basis for Identity and believe we are well situated to reposition Mitek as a Fraud and Identity business that works with its customers to detect and prevent fraud. As a result of growing and persistent AI-driven fraud, customers are asking for integrated platforms that unify identity, authentication and fraud detection, purpose-built to protect what's real across every digital interaction, that is Mitek's purpose.

With that, I'm going to turn it over to Dave for some financial highlights and a discussion of our improved outlook.

Thanks, Ed. I'll begin with a review of our Q3 financial results, including the key drivers behind our performance and then provide context on how we're approaching the final quarter of the year and discuss our updated full year outlook.

For the third quarter, total revenue was $45.7 million, up 2% year-over-year, driven primarily by our Identity products, which grew 24% year-over-year, fueled by 19% growth in Identity SaaS and continued strength in transactional volumes. Deposits revenue came in as expected and in line with the quarterly seasonality associated with Mobile Deposit renewal timing as we outlined in prior calls.

Our non-GAAP gross margin for the quarter was 85%, about 100 basis points less than a year ago due to a slight mix shift away from our higher-margin deposits products. Non-GAAP operating expense came in at $26.3 million at the lower end of our previous guidance range. This represents a 3% year-over-year improvement, driven by a broader focus on cost discipline and operational excellence. Adjusted EBITDA was $13.1 million, representing a solid 28.6% margin and 170 basis points better than a year ago.

Turning now to the specifics of our revenue performance, starting with deposits products. Revenue was $26.2 million. As we've noted before, term license revenue, which is roughly 70% of the deposits mix can fluctuate meaningfully based on renewal timing, so we focus on trailing 12 months trends for a clearer view. Trailing 12-month license revenue totaled $69.1 million, just below our long-term average of $70 million, reflecting the continued resilience of the $1.2 billion Mobile Deposit annual transactions even as overall check volumes decline.

Notably, maintenance revenue in the deposits portfolio grew 4% year-over-year, supported by healthy renewal cycles and a few early renewal pull-ins, helping to smooth quarterly license variability.

Turning to our Fraud solutions within deposits. Check Fraud Defender continues to gain traction. Deposit SaaS revenue, where this product is primarily recognized, delivered growth of 55% year-over-year, albeit off of a small base. This was driven by organic usage growth and expansion across both direct and partner channels.

In summary, our deposits product portfolio generated $103 million in revenue over the last 12 months, up modestly from $100 million a year ago, a reflection of the resilient but slower growth profile in deposit solutions, especially as the market for check-based workflows matures. Those pressures are increasingly being offset by growth in our Fraud Prevention solutions that solve a fundamentally different and more urgent problem, detecting and preventing fraud before losses occur.

Now turning to Identity, which delivered another strong quarter with revenue up 24% year-over-year to $19.5 million, driven by a 19% increase in SaaS and solid performance across both our MiVIP platform and Mobile Verify Point solutions. SaaS growth was fueled by deeper adoption within existing accounts, especially in high assurance verticals and increased usage of complex multisignal journeys. We also saw higher-than-expected overages from several large customers, further boosting revenue.

MiVIP continues to account for a growing share of identity journeys, reflecting growing demand for end-to-end orchestration. Importantly, customers are not only running more identity checks, they're embedding more verification steps across the user life cycle from onboarding to reauthentication and fraud remediation. These deeper integrations make the platform stickier and drive more durable revenue. As Ed mentioned, Identity is progressing in the right direction with improving contribution and greater scale efficiency.

Turning to SaaS revenue and building on what Ed outlined, we continue to see strong SaaS momentum with SaaS revenue becoming an increasingly larger share of our mix today representing 41% of total trailing 12-month revenue.

Moving down the P&L. We delivered a non-GAAP gross margin of 85% in Q3, supported by strong unit economics across the business. This includes nearly 100% gross margin on software license revenue, primarily driven by Mobile Deposit and a 74% gross margin on services and other revenue, including our Identity SaaS offerings, which improved by approximately 200 basis points year-over-year.

This expansion reflects operating leverage within our fixed cost services infrastructure as Identity volumes scale, combined with ongoing improvements in automation and delivery efficiency. These gains reflect the efficiency of our platform and the automation improvements discussed earlier. These trends reinforce our confidence that as the business continues shifting towards SaaS, the underlying margin profile will continue to strengthen, giving us greater flexibility to either expand profitably or reinvest in growth as attractive opportunities arise.

Non-GAAP operating expense for the quarter were $26.3 million, up modestly from $25.7 million in Q2, driven by higher sales commissions and fiscal year-end audit costs, partially offset by lower marketing and personnel-related expenses. We are particularly pleased with the continued improvement in G&A efficiency. On an LTM basis, non-GAAP G&A expenses improved by 18% year-over-year, reflecting our progress in streamlining external services and building a more scalable, cost-effective corporate function.

Adjusted EBITDA for Q3 2025 reached $13 million, up 8% year-over-year and representing a 28.6% adjusted EBITDA margin. After factoring in other income, interest and a modest increase in tax expense, this translated to $10.2 million in non-GAAP net income or $0.22 per diluted share on 46.8 million diluted shares outstanding.

Turning to our balance sheet and capital allocation strategy. Over the last 12 months, we generated $55.8 million of free cash flow, a 99% conversion of adjusted EBITDA, reflecting strong earnings quality, higher interest income and improved working capital efficiency. As the impact of interest arbitrage goes away when our convertible notes are retired and working capital improvements are lapped, we expect free cash flow to be predominantly driven by recurring contributions from our core operations.

We ended Q3 in a healthy net cash position with over $175 million in cash and investments and $155 million in face value of convertible notes due February 2026. With the notes carrying a low 75 basis points coupon and a convertible feature trading well out of the money, we're earning favorable carry and intend to retire them at the most economically advantageous point. To support our flexibility, we already secured a $100 million credit facility in May, which remains undrawn.

Our strong financial position allows us to balance reinvestment in the business with shareholder returns. Since the authorization of our current $50 million buyback program was made in May of 2024, we've returned $29 million to shareholders, which includes $27.5 million executed through the end of Q3 '25 and $1.5 million since quarter end through end of trading yesterday, August 6, leaving $21 million remaining on the authorization.

We remain focused on disciplined capital allocation and building a more efficient, scalable business that delivers sustained free cash flow per share and long-term value. Against this backdrop, we are tightening our full year fiscal 2025 revenue guidance to a range of $174 million to $177 million with a $175.5 million midpoint, modestly above our prior guidance. This implies fourth quarter revenue of between $39 million and $42 million. This range reflects seasonally low mobile deposit revenue due to renewal deal timing with the high-end reflecting potential higher usage-based activity in Identity, which could drive incremental overages in Q4.

On profitability, we are raising our full year adjusted EBITDA margin guidance to a range of 28% to 29%, up from 26% to 29% previously. This increase reflects the flow-through of our continued improvements in operational efficiency, a leaner G&A structure and stronger unit economics across both Identity and Deposits. For the fourth quarter, we expect non-GAAP operating expenses to be in the range of $25 million to $26 million, with depreciation at approximately 80 basis points of revenue.

While we remain disciplined on cost, we will continue to invest in strategic priorities, particularly in unifying and enhancing our product portfolio. Overall, we're encouraged by continued SaaS momentum, improving unit economics and positive signals across key KPIs as we build on the operational discipline and strategic progress of the past year.

Looking ahead at fiscal year '26, our strategy centers on scaling a unified platform that integrates Identity, Authentication and Fraud. Product investments and go-to-market efforts are aligned around this foundation. And while the groundwork is well underway, we expect the benefits to build gradually over time, positioning fiscal year '26 as a year of continued execution and set up for scalable, durable growth.

Lastly, an important housekeeping item. Our updated investor presentation and Excel-based supplemental financial package for Q3 are now available on our newly revamped and redesigned Investor Relations website.

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

[Operator Instructions] And your first question comes from Mike Grondahl with Northland Securities.

This is Logan on for Mike. First, so now with SaaS revenue up 23% year-over-year and being 41% of trailing 12-month revenue, how are you guys thinking about return to double-digit growth in 2026? Is there any updates to call on your strategy?

No, we're -- a couple of things here. We're not going to guide 2026 in this call. We'll do that in our next earnings call. But just to provide some preliminary color on 2026, we think next year is going to be a year of continued execution, where we'll focus on unifying our platform and continuing to strengthen our foundation.

We anticipate also revenue growth to come out of the SaaS solutions, primarily the Fraud and Identity products. And we also anticipate that cost discipline will allow us to reinvest in the areas that matter most, which is really the long-term platform transformation.

Then, is there anything to call out? We saw that deposit software revenue was down 20% year-over-year. How are you guys viewing that going forward? Is that expected to stabilize in the coming quarters?

Well, we've seen -- on the transaction volume side, we've seen real stability quarter-to-quarter LTM. So we're pretty happy about that. We've managed to offset any reduction that we see out there in potential revenue declines with increases in ASPs over time. So we've done a good job there.

I think overall there, Logan, is, again, I think it's important for the Mobile Deposit side of the business is looking at on a trailing 12-month basis. And as Dave mentioned in his points, trailing 12-month revenue there is pretty well in line with historical levels. And as we've mentioned on previous calls that we've seen transactions around -- approximately around that 1.2 billion transactions a year on the underlying use of the solution.

So overall, it's been relatively stable. It's just not to get caught up. That's part of the problem on where -- how it was originally set up in terms of selling the software. So it just led to a very jumpiness, which is why strategically, to the first part of your question, one of our clear priorities is growing the SaaS part of the business and now seeing that at 41%. And we outlined a while back, it's our goal to try to get where the business, the majority of that is SaaS driven, to get better visibility and stability to the business.

Yes. And I'll just add one more thing here, Logan, which is if you actually look at what we said in our last earnings call about Q2. Q2 was our largest revenue quarter, really, I think, in the history of Mitek's -- Mitek history. That was driven by the deposit side. And some of that uptick that we saw was just deal timing, deal timing on the renewal side, where we actually saw some revenue get pulled in from the quarter we had expected it, which was this third quarter. So this is kind of all where we think it would be going forward. And on an LTM basis, we're feeling pretty good about it.

That was helpful. Then switching over to Check Fraud Defender. How is the pipeline looking for new partners? And anything big to call out kind of in the near term?

Well, I would tell you in terms of the ongoing dialogue and conversations, they're excellent. We're having conversations with multiple partners. As you know, we're -- we have significant relationships with many of the large OEM and processors in the industry, and we continue the ongoing dialogue there. Our current partners have been doing terrific. As I mentioned, nearly 40 new institutions [ roll -- ] came into the consortium this past quarter, and there's more underway.

At the same time, we have some fairly large institutions that are in a pilot phase right now and who are ongoing and testing and evaluating and we're having conversations and discussions with contracts there. So we're optimistic of seeing some of those convert over time. and have good visibility to it. So far, the performance there has been great. And the fact that we now have visibility to 1/4 of all checking accounts in the United States, having just built up over the last couple of years is very encouraging.

So we feel like this is an ongoing long-term opportunity. And as I mentioned in my points, strategically is a foundation for an enterprise solution for fraud detection.

That's great. And then one last one from us. What are you guys most excited about for the rest of fiscal year '25 and heading into 2026? Yes.

Just executing on exactly what we talked about. I mean we're -- the team, as I pointed out, we outlined our goals and objectives earlier in the year and just executing against those, hitting singles and doubles, integrating this business, pulling these acquisitions in, consolidating the platform and starting to see growth. We're really enthusiastic about seeing the SaaS growth, stability in the Mobile Deposit business and overall deposit software solutions, the stability there and the growth potential.

I would tell you personally, I'm most encouraged by every time I talk to customers and prospects because what we have here, I think, is a terrific asset with the history and the credibility of financial institutions and the capabilities, and technical capabilities with where the puck is going in terms of fraud, synthetic fraud, mostly by generative AI we're well positioned. We're digital identity and ongoing.

I think that was one of the reasons I touched in on one of the institutions who expanded with us this past quarter, where they're now recognizing the ability and need to take this level of security now on ongoing authentication, where we do have that closed-loop network where we can verify biometrically on a passwordless base back to a verified identity for their base. I just think we're well positioned for it, and it will continue to evolve over time and just about executing.

Your next question comes from Jake Roberge with William Blair.

Could you talk a little bit more about what you're seeing on the demand front for Check Fraud Defender? Do you still feel confident in that product hitting your $20 million ACV target? And now that you've gotten more customers on that solution, do you feel like the new logo opportunities are -- or maybe better understanding the ROI of the solution that you can start getting these new deals across the finish line quicker?

Jake, Yes, I would just say just going back to and consistent with the last discussion around the opportunities that we currently have underway and in discussion with in terms of the test we have ongoing, additional partners that we're in conversations with as well as several very large financial institutions that you know, are all evaluating and going through in the data that we see through that. And with most of those, we're in contract discussions with right now. So we're optimistic about getting in -- to our -- as we talked about with our goals and wanting to see ACV double. It's a matter of time.

When that occurs? Whether -- which month and when it occurs? I can't give you definitiveness on that, but we're optimistic about achieving that and frankly, just the ones that we have visibility to right now. The ROI is very real. People see it. It just takes time evaluating it and then kind of going through the whole procurement process. And these are significant changes for the institutions, many coming off of other internal systems that they may use or others. So there is a big change. But so far, the results speak for itself.

Okay. Very helpful. And then obviously, last year, you had the larger ID R&D deals that had pushed out a little bit. Can you give us an update on how those deals are trending? And then just how the integration of that ID R&D team has been into the broader Fraud and ID verification suite?

Yes. And you're talking about the stand-alone biometrics revenue that shows up as software revenue, the way we disclose it. And I think you're also talking about it -- it was about a year ago that a bunch of deals -- larger deals got pushed out from some larger potential customers out there. Those -- I think, some of those have changed. Some of those have -- are still staying the course and just taking longer. So we're not betting on it, but we're certainly focused on closing those deals still.

And I would say to the second part of your question strategically is some of the changes we've been making is we're integrating the business all in tightly with overall Mitek and part of the sales, in particularly on go-to-market and the team there. We're seeing, as I mentioned earlier, where Identity and Fraud are becoming closer and closer interlinked with one another.

A lot of our transactional growth is -- some of the new solutions we've rolled out with the capabilities there around whether it's liveness, injection and attack detection, presentation and attack detection, deep fake detection, those were all strong capabilities from ID R&D and now integrated into our platforms. And that's just the team integrating in on the evolution and now getting tighter and tighter from a product. That's, again, part of the efforts that we've been outlining over the last couple of calls.

Okay. That's helpful. And then if I could just sneak one more in. You all obviously brought in Garrett a couple of quarters ago. Can you just talk about some of the low-hanging fruit that he's been able to identify within the organization to help improve some of the operational efficiencies around the business?

Yes. As I mentioned, that was last quarter. And frankly, I would just say, as I pointed out in here, we kicked off various cost exercises and streamlining that and also just accelerating the pace of change in the organization, bringing focus to integrating these solutions. As we talked about at the beginning of the year, we're very serious about integrating this business as opposed to having multiple platforms for multiple acquisitions over the years.

We need to be highly integrated and being able to capture the data insight and leverage that as a business. And he is an absolute champion of that. And I would just say accelerating that pace then ultimately getting it to where the data and capabilities with that becomes a stronger and stronger asset for the company and our customers.

Your next question comes from George Sutton with Craig-Hallum.

First, I just want to make sure I have the numbers right. So on the Identity side, I believe you mentioned you -- last 12 months have had $75 million of Identity revenues and $80 million of fully burdened costs. So that fulcrum you speak to is in front of us. Did I get those numbers correct?

Yes. The $75 million, you're correct. That's on an LTM basis. When it comes to the fulcrum point, you've heard Ed and myself talk about having durable, profitable growth. We've already seen some profitability out of Identity. We're now focused on making sure that, that is durable. We think we're nearing that point pretty quickly here.

And what I mentioned, George, there is that from previous conversations where we talked about that kind of fulcrum point is roughly $80 million to $85 million because of all the actions that we've been taking over the last few quarters. We've actually been able to move that breakeven point below $80 million and seeing positive contributions now.

And frankly, what we want to see is, to Dave's point on that last statement, the second point there that is durable that, frankly, we've seen it over a trailing 12-month basis, and we're pretty close to getting there. And once that's achieved, we'll kind of declare it and move on. But I would tell you, just [ purely ] based on the actions, the activity, current visibility, it's very close to happening as we speak.

And just so I'm clear, in Identity, the goal is still to migrate customers to the platform away from the point solutions. Is that effort continuing, accelerating?

Yes. That's all correct. We're seeing the benefit of the platform. As I mentioned in my comments on VIP, that's actually where we've seen the largest amount of growth and transactional growth where we're also having more and more journeys there, but also more transactions per journey. So additional insights coming in, additional signals, as I mentioned on there. So absolutely, that's ongoing.

It will take time because obviously, there's migration. But in terms of new efforts going forward for new relationships come on, the focus is on the platform approach versus just selling a point solution.

So Ed, separate from this conversation, you've begun to talk about taking the Check Fraud Defender concept and migrating it to the broader payment market. Is this similar to what you're now starting to refer to as the Enterprise Fraud platform?

Well, that's -- it's one use. So obviously, with checks right now, we've continued to grow and grow with checks. And that is a platform in payments? And then can we go beyond just checks because of the credibility, frankly, we have with checks and checking accounts. Those transactions, they're fraud that's taking place every day with financial institutions outside of checks.

We have the visibility with checks, is there any interoperability with that through other payment types. An example, would be like check kiting. And with check kiting also then gives you visibility into other payment types such as wires or an ACH or other things. So the more we can do here, better insight for the financial institution, more fraud signals to help them detect and prevent fraud.

At the same time, in some of those financial institutions, we may be doing verifications for them, which again, is additional signals, additional insight that can be brought forth. The conversations that we have now, George, where we've kind of moved from a particular conversation on a product or in a particular department in FI to now the head of fraud.

Fraud is looking across the business, whether that be in payments, which may be a check or other form of payment, in verification, in authentication, account takeover, they care about fraud and are looking to us about being a signal-rich environment to help them prevent fraud. So that's where we see this evolving into more of an enterprise solution.

And we're pretty unique of being able to bring forth these various assets and have the deep relationships with many financial institutions.

Got you. Last question for me. You mentioned that you're seeing positive signals across a number of your KPIs. I'm wondering if you could just be more specific what you're referring to there?

Well, as we see, especially on the Fraud and Identity side, as we start to see improvements in, for instance, gross profit per transaction -- per journey as well as rapid growth in our transaction volumes, more journeys with more transactions, all of those kinds of KPIs are really important to us watching closely.

Your next question comes from Derek Greenberg with Maxim Group.

I was wondering, just looking at the balance sheet, with $175 million in cash and then generating $55 million, $56 million over the last 12 months. I was wondering if you could maybe talk a little bit about how you plan to allocate cash and cash flow going forward? I know part of that will be used towards paying off the debt in February, but thereafter, just wondering how you plan to use your resources.

Yes. At this point, we talked about -- we have a $100 million credit facility, as you know, that we put in place to help us pay -- repay the debt if we choose to use it. It's got a $75 million delayed draw term loan associated with it for that purpose. We don't have to make that decision now. We have a healthy arbitrage opportunity on our 75 basis points loan.

We also kind of have a balanced approach on our capital allocation here, invest in the business and return capital to shareholders. We still have $21 million left in our share repurchase program that we will take advantage of opportunistically. Once we get through paying the debt off, we'll determine how much of that we're using our own cash for and how much we borrowed, and then we'll determine our capital allocation approach after.

So I would just say there's also kind of a second part of that where maybe unsaid in your question is something we've been consistent and clear about for this past year, the last 3 quarters, we have a very strong focus on organic growth and deploying capital back into the business or returning it to shareholders in driving organic growth in the company, integrating the business and then having growth from our own product expansions. So that's where 100% of our focus is right now in generating the free cash flow.

Okay. Got it. And then my other question is just in prior quarters, you had outlined some of the margin improvement you received from automation on costs. I think last quarter was around 230 basis points in the services gross margin. I was wondering if you had any statistics like that for this quarter?

And going forward, if you still see potential incremental improvements from automation? Or if you think you've largely tapped that avenue as a driver of margin expansion?

Yes. We saw this quarter a 200 basis points year-over-year improvement already again. So we're feeling really good about delivering that -- the benefit of automation into our gross margins. We think we can continue to do that. We're not tapped out in terms of ability to automate more, especially as we move from our Mobile Verify Point solution to our MiVIP platform, it becomes more and more important. So we've got room to grow there.

And that's just a mindset of when we talk about operational excellence, it's just a mindset of continuing to drive improvement in the business. It will ebb and flow from quarter-to-quarter, but how do we continue to expand margin, delight customers, deliver more and more value and operate more efficiently and expand margins and free cash flow.

There are no further questions at this time. I would like to turn the call back over to Ed West.

Great. Well, thank you -- thank you very much for your time today, and we look forward to seeing you in person and talking about the business. So thank you for your support, and good day.

Ladies and gentlemen, this concludes today's conference call. Thank you so much for your participation. You may now disconnect.