Q3 2026 Mitek Systems Inc Earnings Call Transcript
Key Points
- Total revenue grew 18% year-over-year, exceeding expectations, with record fraud and identity revenue and record total SaaS revenue up 36%.
- Check Fraud Defender ACV grew 73% year-over-year, with a top five US bank moving into the consortium and Fiserv now live as a reseller, expanding the network to thousands of institutions.
- The consortium data network now covers approximately 70% of US checking accounts, enhancing its value and opening adjacent opportunities like Positive Pay Plus, which added its first non-bank design partner.
- Adjusted EBITDA margin expanded to approximately 38%, with non-GAAP operating expenses down 1% year-over-year, demonstrating strong operating leverage and efficient cash conversion (70% free cash flow).
- The company raised its full-year fiscal 2026 revenue guidance to $195-$200 million and fraud and identity revenue to $105-$109 million, reflecting confidence in continued growth.
- Identity transaction volumes surged due to unexpected age verification demand in EMEA, driving volumes well above prior quarters and showcasing the platform's scalability.
- The revenue base is becoming more durable, with SaaS now approximately 46% of trailing 12-month revenue, up from 41% a year ago, and a growing share from multi-year committed contracts.
- Fraud and identity revenue growth of 14% was near the low end of the targeted mid-to-high teens range, partly due to a one-quarter impact from converting a large on-premise license customer to a SaaS agreement.
- The unexpected age verification surge in Q3 is not expected to repeat, with fraud and identity SaaS expected to ease modestly sequentially in Q4, indicating potential volatility.
- Check verification revenue growth of 24% was driven by renewal timing rather than underlying growth, and the company expects this revenue to soften gradually over time due to secular decline in check usage.
- Free cash flow conversion declined to 70% from 99% a year ago, driven by working capital timing, higher cash taxes, lower net interest income, and increased capitalized development costs.
- The company faces potential pressure in 2027 from renewal timing and the continued secular decline in checks, which could impact check verification revenue.
- R&D expense reported a 3% decline year-over-year, but this is largely due to software capitalization; on a cash basis, R&D rose 17%, indicating higher investment that may pressure near-term profitability.
Good afternoon, ladies and gentlemen, and welcome to Mitek Reports fiscal third quarter 2026 financial results. (Operator Instructions) This call is being recorded on August 6, 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 third 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 guaranteed to 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 August 6, 2026, and our other SEC filings. These forward-looking statements include but are not limited to our expectations around
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