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, one 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 returning 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.…

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 three 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…

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] 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 one or two 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 needs 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 the -- 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 built 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 around the world.

And your next question comes from the line of Jake Roberts 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 and the growing in 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 of that compiles, I think, and 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 One 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 One 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 and gets better and better. And last year was a year about fixing the foundation and integrating these various businesses, getting people to working together as one 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 in 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. 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 groove 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 -- that hardware product. 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.

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? Just 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 just in terms of the -- 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 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 -- but I think we've outlined the amount of investment here and continuing to drive performance from there.

So, Ed, maybe a clarification on 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 to 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...

Sure. Yes. I would say we want to be prudent and balanced with the business. anybody can say they always can invest more. There are 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 in capital allocation and maintaining that flexibility. But right now, we feel good about where we are, 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 their time. 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 FIIs 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. But these are very large institutions. They take their time. They've got built-in processes that 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 MiVIP 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 attacks, presentation attacks, 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 and 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 liveness 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, it logically would start impacting other organizations as well and seeing other use cases where it's important to bring these biometric liveness and other 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? Are 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, being a 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 into and meet with an institution, we'll already have insights and data sets on their customers that they didn't give to us, but because we see it in many other financial institutions so frequently that we've been able to build up 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 both 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.

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

Yes. The way we kind of look at it is looking historically at the stability in the overall transactional volume that we see for 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, Allen, there was a very large channel partner deal that allowed us to -- or required us to recognize four years of revenue in a single quarter in 2023, essentially taking out sequential years ahead of additional 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. And 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 upsides. 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, has been around $1.2 billion versus the rev rec based on those 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 due 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.