Mitek Systems Q2 Earnings Call Highlights

Key Points

• Mitek posted a record Q2 with revenue of $54.8 million and adjusted EBITDA of $22.3 million, driven by 28% growth in Fraud and Identity revenue even as Check Verification declined 8% on timing-related renewal pressure.
• The business is shifting toward SaaS and committed contracts, with total SaaS revenue up 18% and now about 44% of revenue over the last 12 months, which management says is improving visibility and revenue quality.
• Mitek raised full-year FY2026 guidance to $189 million-$198 million in revenue and $103 million-$108 million for Fraud and Identity revenue, while lifting adjusted EBITDA margin guidance to 30%-33% amid rising demand for AI-fraud defenses.

Mitek Systems NASDAQ: MITK reported fiscal second-quarter 2026 results that Chief Executive Officer Ed West described as a “strong” quarter, highlighted by record revenue and record adjusted EBITDA as demand for fraud and identity tools increased amid what management called an accelerating wave of AI-assisted fraud.

West said Mitek provides “verification, authentication, and fraud decisioning infrastructure” across digital customer journeys, including account opening, login, check deposit, and high-risk transactions. He argued that the proliferation of synthetic and AI-enabled fraud is increasing the need for network-driven fraud detection and shared intelligence across institutions.

Record quarter as Fraud and Identity growth offset Check Verification decline

Chief Financial Officer Dave Lyle said second-quarter revenue totaled $54.8 million, up 6% year-over-year, marking a record for the company. Lyle said Fraud and Identity revenue grew 28% while Check Verification revenue declined 8%, which he attributed to renewal timing against a strong prior-year comparison.

Lyle reported adjusted EBITDA of $22.3 million, also a record, representing a margin of approximately 41%. He cited revenue scale, mix, higher capitalized costs, and “strong drop-through from Check Verification and our seasonally strongest renewal quarter” as contributors.

On profitability, Lyle reported non-GAAP net income of $18.5 million and adjusted diluted earnings per share of $0.38, with a non-GAAP tax expense of roughly 15% of pretax income.

SaaS mix increases; management points to improving revenue quality

West and Lyle emphasized the continued shift toward SaaS. Lyle said total SaaS revenue grew 18% year-over-year and now represents approximately 44% of revenue over the last 12 months, up from 40% a year ago. West said the company estimates a growing portion of SaaS revenue is coming from committed contractual arrangements rather than pay-as-you-go or overage structures, which management said improves visibility and durability.

Discussing margins, Lyle said non-GAAP gross profit was $46.6 million and non-GAAP gross margin was 85%, down about 270 basis points year-over-year. He attributed roughly half the decline to a mix shift toward faster-growing SaaS and services, which have lower margins than software license revenue, and the remainder to implementation activity tied to early-stage pilots where costs precede revenue.

Lyle also said margins in Check Fraud Defender (CFD) expanded during the quarter due to an internal rearchitecture that reduced compute costs for processing transactional data through the analytics pipeline.

Customer commitments deepen; consortium and new offerings expand

West said Fraud and Identity remains Mitek’s “growth engine,” with customers becoming more engaged “both contractually and technologically.” He cited examples of customers shifting from variable pricing to committed contracts, including a “flagship” customer—one of the largest banks in the U.K.—moving to a multi-year, multi-million-dollar committed structure that increased annual spend. He also cited a renewal and expansion with a “leading European information services customer” into a larger committed relationship.

West said customers are expanding beyond initial onboarding workflows into additional stages of the customer lifecycle, including login, profile changes, account recovery, step-up authentication, and higher-risk transactions. He pointed to customer expansions that included:

• A major U.K. bank expanding fraud decisioning across customer journeys
• A leading U.K. digital bank expanding into Germany while adding fraud capabilities
• A major European customer adopting MiPass as part of an authentication strategy

West highlighted growth in the company’s data network, saying Check Fraud Defender annual contract value (ACV) now exceeds $19 million, up more than 50% year-over-year. He said contributing datasets cover over 60% of U.S. checking accounts and annualized volumes are “measured in the billions.” West said Mitek added another top 10 financial institution to the network, with another top 10 institution in pilot.

West also discussed the launch of the first phase of Positive Pay Plus, which he said strengthens controls at the point of presentment by comparing issued checks against presented items in real time and automating decisions that have historically been manual. West said adoption friction is low for many customers because it can leverage existing infrastructure. He said Mitek added a new top U.S. regional bank for these capabilities and expanded within an existing large customer.

To broaden distribution, West cited partnerships including Abrigo and an integration with Tyfone to bring consortium-powered fraud intelligence to community and regional banks. He also referenced integrations with Ping Identity to embed identity verification across the customer journey and with Synectics Solutions to bring Mitek identity capabilities into the insurance market via Synectics’ fraud orchestration platform.

Check Verification remains a “durable” cash-generative foundation

While Check Verification revenue declined year-over-year in the quarter due to timing, management reiterated the strategic and financial importance of the portfolio. Lyle said Check Verification revenue was $29.1 million in Q2, driven by seasonally strong renewals and upgrades from legacy CheckReader to Check Intelligence solutions. On a trailing 12-month basis, he said Check Verification revenue was $88.2 million, consistent with the range the company has seen previously.

West said the company saw renewals, extensions, and license wins across processors and financial institutions, including activity tied to partners such as FIS, Jack Henry, and Candescent, along with additional international wins. He added that institutions are increasingly expanding from mobile deposit into adjacent fraud use cases as check fraud and exception-handling complexity rise.

Balance sheet changes and raised FY2026 outlook

Lyle said free cash flow was negative $2.5 million in the quarter due to working-capital timing, particularly accounts receivable from late-quarter billings that he said were “substantially collected in April.” Trailing 12-month free cash flow was approximately $45 million, representing about 72% conversion of adjusted EBITDA, which Lyle said is within the company’s long-term 70% to 80% conversion range.

On capital allocation, Lyle said Mitek ended the quarter with $78 million of cash and investments and $54.5 million of total debt, for a net cash position of $23.1 million. He said the company fully retired its $155 million convertible notes and drew $50 million on its term loan facility, reducing total debt by about $105 million versus the prior quarter and extending the nearest maturity to 2030. The company also repurchased $8 million of shares and reiterated its previously announced $50 million repurchase program.

For fiscal 2026, Lyle said the company is raising revenue guidance to a range of $189 million to $198 million, representing 8% year-over-year growth at the midpoint. Mitek also raised its full-year Fraud and Identity revenue outlook to $103 million to $108 million, which Lyle said implies approximately 17% growth at the midpoint. The company guided fiscal third-quarter revenue to $49 million to $53 million, implying fiscal fourth-quarter revenue of $41 million to $46 million, reflecting check verification renewal timing and an expected step-down in biometrics license activity from a strong first half.

Mitek also raised its fiscal 2026 adjusted EBITDA margin guidance to 30% to 33%. Lyle said non-GAAP gross margin is expected to remain in the low 80s for the rest of the year.

During Q&A, West said customer urgency has increased over the past six to 12 months as attacks become cheaper and faster due to AI. He also said Mitek is seeing increased demand beyond financial services, citing insurance, government (including work in the U.K. via channel partners), and healthcare as areas of interest.

About Mitek Systems NASDAQ: MITK

Mitek Systems, Inc NASDAQ: MITK is a software company specializing in mobile capture and digital identity verification solutions. Headquartered in San Diego, California, Mitek develops and licenses patented technology that enables organizations to securely capture, authenticate and process identity documents, checks and other physical media using smartphones and other digital devices. Its platforms leverage advanced image processing, machine learning and biometrics to streamline customer onboarding and prevent fraud in real time.

The company's core offerings include mobile check deposit and deposit automation tools for financial institutions, as well as identity verification and authentication services for banks, fintechs, insurers and government agencies.

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