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MITEK SYSTEMS INC (MITK)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered modest top-line growth with total revenue of $45.7M (+2% y/y) and non-GAAP diluted EPS of $0.22; both exceeded S&P Global consensus for revenue ($43.68M*) and EPS ($0.188*). Adjusted EBITDA was $13.1M (28.6% margin), up 170 bps y/y .
  • Guidance tightened and effectively raised: FY25 revenue range to $174–$177M (implies Q4 revenue of $39–$42M) and adjusted EBITDA margin to 28–29% (from 26–29%) .
  • SaaS momentum is accelerating (Q3 SaaS revenue $19.3M, +23% y/y) as identity and fraud solutions scale; management emphasized platform unification and operational discipline as drivers of margin improvement .
  • Strategic narrative: Identity portfolio approaching durable profitability; Check Fraud Defender ACV ~$13.1M (+56% y/y) with expanding consortium coverage (~¼ of U.S. checking accounts), positioning Mitek for a broader enterprise fraud platform .

What Went Well and What Went Wrong

What Went Well

  • SaaS growth accelerated: “SaaS revenue growth accelerating to 23% year over year,” reaching $19.3M in Q3; clear demand for identity/fraud solutions .
  • Margin and cash discipline: Adjusted EBITDA margin rose to 28.6% (+170 bps y/y) and LTM free cash flow reached $55.8M (99% conversion), reflecting cost discipline and unit economics improvement .
  • Identity profitability inflection: Management highlighted approaching the “fulcrum point” where identity contributes positively on a durable, fully burdened basis; LTM identity revenue at $75M and efficiency gains lowered breakeven to “less than $80M” .

What Went Wrong

  • Deposits software decline: Deposits software fell to $17.5M from $21.8M (-19.6% y/y) on renewal timing; management emphasized LTM stability and 1.2B mobile deposit transactions annually, but quarterly mix remains volatile .
  • Slight gross margin compression: Non-GAAP gross margin dipped to 85.0% from 86.0% y/y due to a mix shift away from higher-margin deposits products .
  • Non-GAAP net income eased y/y: $10.2M vs $12.0M prior year, reflecting the mix shift and continued investment in platform integration despite operational efficiencies .

Financial Results

Year-over-Year (Q3 2025 vs Q3 2024)

MetricQ3 2024Q3 2025
Revenue ($USD Millions)$45.0 $45.7
GAAP Diluted EPS ($)$0.00 $0.05
Non-GAAP Diluted EPS ($)$0.25 $0.22
GAAP Gross Margin (%)78.3% 77.7%
Adjusted EBITDA ($USD Millions)$12.1 $13.1
Adjusted EBITDA Margin (%)26.9% 28.6%

Sequential Trend (Fiscal 2025)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$37.3 $51.9 $45.7
Non-GAAP Diluted EPS ($)$0.15 $0.36 $0.22
Adjusted EBITDA Margin (%)21.0% 38.8% 28.6%

Segment/Revenue Mix (Q3 2025 vs Q3 2024)

SegmentQ3 2024 ($USD 000s)Q3 2025 ($USD 000s)
Deposits Software$21,793 $17,529
Deposits SaaS$1,700 $2,627
Deposits Maintenance$5,536 $5,754
Deposits Prof. Services & Other$257 $312
Identity Software & Hardware$869 $1,978
Identity SaaS$13,964 $16,632
Identity Maintenance$477 $529
Identity Prof. Services & Other$380 $368
Total Revenue$44,976 $45,729

KPIs

KPIValue
SaaS Revenue ($USD Millions, Q3)$19.3 (+23% y/y)
SaaS Mix (LTM)>41% of total revenue
Identity LTM Revenue$75M (+13% y/y)
Check Fraud Defender ACV~$13.1M (+56% y/y)
Free Cash Flow (LTM)$55.8M; 99% EBITDA conversion
Cash & Investments$175.4M (June 30, 2025)
Convertible Notes$150.0M current; plan to retire by Feb 2026; $100M facility secured

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$170–$180 $174–$177 Tightened; midpoint raised
Adjusted EBITDA Margin (%)FY 202526–29 28–29 Raised lower end
Implied Revenue ($USD Millions)Q4 2025n/a$39–$42 New disclosure
Non-GAAP Operating Expenses ($USD Millions)Q4 2025n/a$25–$26 New disclosure
Depreciation (% of Revenue)Q4 2025n/a~0.8% New disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
SaaS mix shiftQ1: SaaS +29% y/y; raised EBITDA margin floor; integration underway . Q2: Record revenue; SaaS +15% y/y; raised EBITDA margin range; credit facility to retire notes .Q3: SaaS +23% y/y; LTM SaaS 41%+; continued margin strength .Positive, accelerating
Identity profitabilityQ1/Q2: Progress on identity scaling; platform integration focus .Approaching fulcrum for durable profitability; breakeven below $80M LTM; identity contributing positively .Improving structurally
Fraud platform (Check Fraud Defender)Q2: Momentum noted; consortium building .ACV ~$13.1M (+56% y/y); ~¼ U.S. checking accounts visibility; enterprise fraud platform vision .Scaling and broadening
Operational excellenceQ1/Q2: Cost discipline; margin expansion .Vendor audits, contract consolidation; G&A efficiency; 99% FCF conversion LTM .Strengthening
Capital allocation & balance sheetQ2: $75M term loan; $25M revolver; plan to retire 2026 notes .$175.4M cash/investments; $100M facility undrawn; buyback authorization remaining $21M .Flexible/liquidity robust

Management Commentary

  • CEO: “We’re executing on what we said we would do: shifting to SaaS, streamlining our operations internally, and aligning our product investments and go-to-market strategy around a unified, integrated platform… laying the groundwork for durable, profitable growth” .
  • CFO: “Non-GAAP gross margin… improved ~200 bps y/y on services… identity volumes scale combined with automation and delivery efficiency… trends reinforce our confidence that as the business continues shifting towards SaaS, the underlying margin profile will continue to strengthen” .
  • CEO on Identity profitability: “We are nearing the fulcrum point… improved the Fulcrum point to less than $80,000,000… Identity… helping fund the broader business” .
  • CEO on enterprise fraud: “Check Fraud Defender continues to scale… visibility into check activity from ~¼ of all U.S. checking accounts… foundation towards a broader enterprise fraud platform” .

Q&A Highlights

  • Growth trajectory: Team refrained from 2026 guidance but reiterated focus on platform unification, SaaS-led growth, and reinvestment via cost discipline .
  • Deposits stability vs quarterly variability: Decline in Q3 deposits software revenue driven by renewal timing; LTM transactions stable (~1.2B) and pricing actions offset volume pressure .
  • Fraud pipeline: Nearly 40 new FIs joined via partners; multiple large FIs in pilot and contract discussions; confidence in doubling ACV over time, though timing remains procedural .
  • Automation-driven margins: Services gross margin improved ~200 bps y/y; more headroom via migration from point solutions to MyVIP orchestration .
  • Capital allocation: Intend to retire converts economically; $100M facility secured; $21M repurchase authorization remaining; balanced reinvestment and shareholder returns .

Estimates Context

Results vs S&P Global consensus:

MetricQ1 2025Q2 2025Q3 2025
Revenue (Actual $USD Millions)$37.254 $51.929 $45.729
Revenue Consensus Mean ($USD Millions)*$36.204*$47.466*$43.683*
Primary EPS (Actual, $)$0.15 $0.36 $0.22
Primary EPS Consensus Mean ($)*$0.145*$0.258*$0.188*
  • Beats were broad-based in Q3: revenue +$2.0M vs consensus and EPS +$0.032 vs consensus; Q2 was a notable beat on both revenue and EPS as well .
  • FY25 consensus stands at revenue ~$175.64M* and EPS ~$0.898*; company tightened guidance to $174–$177M and 28–29% adjusted EBITDA margin, implying consensus alignment near the midpoint .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Mix shift to SaaS is a key structural driver: Q3 SaaS +23% y/y, LTM SaaS >41%, supporting higher visibility and margin resilience as identity volumes scale .
  • Identity nearing durable profitability: Fulcrum breakeven lowered to < $80M LTM with improving contribution and automation—an inflection that reduces historical margin drag .
  • Fraud platform optionality: Check Fraud Defender scaling (ACV ~$13.1M, +56% y/y) and consortium breadth (~¼ U.S. checking accounts) create a data-rich foundation to expand into enterprise fraud across payment types .
  • Guidance tightening is a positive signal: FY25 revenue $174–$177M and adjusted EBITDA margin 28–29% imply Q4 revenue $39–$42M with continued cost discipline (Q4 opex $25–$26M) .
  • Deposits stability best viewed on LTM basis: Quarterly renewal timing can swing software revenue, but management cites resilient ~1.2B annual transactions and pricing actions to offset secular check declines .
  • Balance sheet flexibility: $175.4M cash/investments and undrawn $100M facility position Mitek to retire 2026 converts opportunistically while maintaining buyback capacity ($21M remaining) .
  • Near-term trading lens: Raised guidance and recurring SaaS momentum are catalysts; watch Q4 identity usage/overage dynamics and any contract conversions in Check Fraud Defender to sustain estimate beats .