Q1 2025 Earnings Summary
- Expansion and growth in the Identity segment, particularly with MiVIP platform, showing strong performance and potential to drive double-digit growth in the future.
- Strong expansion in the Check Fraud Defender (CFD) business, including signing a top 10 financial institution, with CFD's annual contract value (ACV) approaching $12 million.
- Reducing pricing pressures in the Mobile Verify product and strategic push towards MiVIP platform, which offers higher value and better margins.
- Long sales cycles for key products may delay revenue growth, as securing large financial institutions can take over a year. For instance, the sales cycle for signing a top 10 bank for Check Fraud Defender took over a year.
- Delays in closing significant deals in the Identity segment, including larger ID R&D deals and banking campaigns for ID verification, which have been pushed out and are expected to start contributing in the second half of '25 and into '26.
- Restructuring and integration efforts may disrupt operations, as the company is still working through platform integrations and had reductions in headcount, including sales and engineering. There is "still a lot of work to be done," which could affect execution in the near term.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -1% | The slight YoY decline was primarily due to the non-recurrence of certain large software/hardware deals recognized in the prior period, partially offset by continued growth in transactional SaaS revenue. Market conditions remained stable overall, but the product mix shift affected short-term revenue recognition. |
Net Income | -219% | The steeper net loss YoY stemmed from higher operating expenses (especially R&D and G&A) along with a reduction in higher-margin software revenue. Company-specific investments in product development further increased costs, while external demand conditions did not fully offset these expenses. |
EPS (Diluted) | -233% | The EPS decline followed the drop in net income, magnified by the lower revenue contribution from one-time software contracts. Forward-looking, the company expects improved EPS if SaaS revenue continues growing and operating expenses are curtailed over time. |
Stock-Based Compensation | -57% | This reduction reflects changes in the company’s compensation structure and lower new equity grants compared to the prior period. Market factors around attracting talent remained competitive, but the timing and mix of awards were scaled back, thus lowering the quarter’s expense. |
Cash & Cash Equivalents | +54% | The increase was driven by stronger operating cash flows and lower outflows for stock repurchases relative to the prior period, bolstered by the maturity of short-term investments. This company-specific strategy to shore up liquidity positions Mitek for potential future investments in product and market expansion. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2025 | $170 million to $180 million | $170 million to $180 million | no change |
Adjusted EBITDA Margin | FY 2025 | 24% to 28% | 25% to 28% | raised |
Non-GAAP Operating Expense | Q2 2025 | no prior guidance | $26 million, plus or minus $1 million | no prior guidance |
Depreciation Expense | Q2 2025 | no prior guidance | 70 basis points of revenue | no prior guidance |
Non-GAAP Operating Expense Trend | FY 2025 | no prior guidance | Modestly increase sequentially | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Check Fraud Defender (CFD) expansion and ACV growth | • Q2 2024: Over 25 signed CFD contracts; no specific ACV reported • Q3 2024: Top 5 bank on consortium in real time, ~40 banks contracted, strong ROI • Q4 2024: ACV exceeded $10M; plan to double in fiscal 2025 | • Q1 2025: ACV near $12M; another top 10 FI signed; still aiming to double for FY25 | Consistent growth driver; strong momentum in new customer wins. |
Ongoing Identity segment development and profitability challenges (including ID R&D and MiVIP) | • Q2 2024: Goal to reach Identity profitability by Q4 2024; pushing MiVIP as core • Q3 2024: Revenue shortfalls from ID R&D biometrics; long sales cycles; MiVIP focus • Q4 2024: Identity still dilutive; MiVIP transaction growth; targeting $80–$85M to become margin accretive | • Q1 2025: Last 12 months’ Identity revenue $70.7M; MiVIP volumes +60%; ID R&D recognized for passive liveness | Steady push toward profitability; increasing MiVIP mix and advanced ID R&D capabilities. |
Pricing pressures in Mobile Verify and broader identity solutions | • Q2 2024: Competitors’ aggressive pricing; heritage document verification under pressure • Q3 2024: Some large renewals at lower rates but minimal churn • Q4 2024: Ongoing price pressure reduced identity revenue growth | • Q1 2025: Pricing pressure moderated, allowing transaction growth to boost revenue | Sentiment improved with reduced pricing headwinds in Mobile Verify. |
Elevated operating expenses and margin expansion efforts | • Q2 2024: Elevated G&A from delayed filings; targeting normalizing costs by Q4 • Q3 2024: GAAP OPEX $37.8M; focus on cost control while investing in growth • Q4 2024: Non-GAAP OPEX $22.1M, lowered by one-time items; improved margins | • Q1 2025: Non-GAAP OPEX $24M (below $26M forecast); adjusted EBITDA margin 21% | Continued effort to balance investment with disciplined spending and margin gains. |
Delayed SEC filings and remediation costs after Q2 2024 | • Q2 2024: Discussed as contributing to elevated expenses; expected to normalize by Q4 • Q3 2024: No mention • Q4 2024: No mention | • Q1 2025: No mention | Phased out as an active concern post-Q2 2024. |
CEO transition concerns resolved with new leadership in Q4 2024 | • Q2 2024: CEO transition announced; interim CEO appointed • Q3 2024: Still in process • Q4 2024: Edward West became CEO; strategic plan underway | • Q1 2025: Leadership stable under Ed West; focus on execution | Concerns resolved; new CEO in place and moving forward. |
MiVIP platform introduced in Q1 2025 as a strategic growth driver | • Q2 2024: MiVIP referenced as key identity orchestration but not “new” • Q3 2024: Emphasized for integrating multiple signals; higher value proposition • Q4 2024: Strong growth in Tier 1 accounts; multiple signals integrated | • Q1 2025: Highlighted as a key strategic platform; ~60% transaction growth; central to identity roadmap | Newly spotlighted in Q1 2025 as a major driver of durable growth. |
Reduced pricing pressure in Mobile Verify by Q1 2025 | • Q2 2024: Ongoing competitor-driven pressures • Q3 2024: Lower renewal rates, zero churn • Q4 2024: Still a headwind | • Q1 2025: Company notes eased pricing competition in Mobile Verify | Changed sentiment; pricing relief signaled in current quarter. |
Long sales cycles with major financial institutions | • Q2 2024: Large banks slow to adopt CFD; fosters 12-18+ month cycles • Q3 2024: Delays in ID R&D deals with multinational FIs • Q4 2024: Revenue from large banks likely materializing in 2025–2026 | • Q1 2025: Acknowledged protracted cycles; strong pipeline but drawn-out deal close | Continues to affect timing of revenue ramps across product lines. |
Integration and restructuring affecting near-term execution and cost management | • Q2 2024: Some restructuring costs, forecasting G&A normalization in Q4 • Q3 2024: ID R&D integration, portfolio optimization hamper near-term profitability • Q4 2024: Consolidating platforms, aiming for synergy and margin lift | • Q1 2025: Restructuring largely done; improved execution focus and cost discipline | Near-term disruption expected to deliver greater efficiency and stable ops going forward. |
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Return to Double-Digit Growth
Q: Confident in returning to double-digit growth CAGR?
A: CEO Edward West expressed confidence in returning to double-digit growth, highlighting encouraging progress and early wins. He mentioned positive customer engagements, especially around fraud solutions, AI, and digital threat vectors. They are executing initiatives this year and plan to report back closer to the end of the year on new products and outlook for 2026 and beyond. -
Check Fraud Defender Revenue Potential
Q: What's the revenue potential of Check Fraud Defender with top 10 bank?
A: While Edward West couldn't provide specific revenue figures, he stated that the opportunity is compelling for both parties and very attractive for Mitek. The sales cycle with large financial institutions can be over a year, but they are seeing growth in partnerships and expanding opportunity lists as banks face increasing fraud threats. -
Impact of Restructuring on Execution
Q: Any disruption from recent restructuring efforts?
A: Edward West explained that the near-term restructuring was completed in Q1, including reductions, and they are now focused on executing and driving the business. He noted they have the team in place and are focused on simplifying and delivering product enhancements without expecting further major changes. -
Identity Segment Margin Outlook
Q: Will Identity segment stop dragging margins at $80–$85M revenue?
A: CFO David Lyle indicated that if they continue optimizing operations and achieve their goals, the Identity segment could become margin accretive at $80–$85 million revenue. Edward West added that their objective is to reach that point sooner rather than later in a durable way. -
Update on Large ID R&D Deals
Q: Status of large ID R&D deals and banking campaigns?
A: The deals are expected to eventually close but involve long sales cycles. They anticipate seeing benefits in the second half of 2025 and into 2026. Edward West highlighted their market-leading passive liveness capabilities attested by the U.S. Department of Homeland Security, which is increasingly important due to rising digital fraud. -
MiVIP Push and Pricing Pressure
Q: Has pricing pressure lessened outside MiVIP?
A: Edward West stated that their focus is on growing MiVIP, their full orchestration platform, which provides more value to partners. As more business shifts to MiVIP, pricing pressures are expected to lessen over time. They are integrating the best algorithms into VIP and see this direction positively impacting the competitive environment. -
Mobile Deposits and Check Reorders
Q: How did mobile check reorders perform?
A: CFO David Lyle mentioned that mobile check reorders came in as expected, with a relatively solid quarter matching their projections.