Mitek Systems Inc (MITK) 2008 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Mitek Systems Inc. fourth quarter and fiscal year 2008 financial results conference call. At this time, all participants are in a listen-only mode. (Operator Instructions). As a reminder, this conference is being recorded today, Tuesday, January 13, 2009.

Today, management will discuss the results for its fiscal fourth quarter and year end of September 30, 2008. By now, you should have received a copy of the press release. If you have not received it, please call 858-503-7810, extension 327.

With us from management is President and CEO James DeBello. Mr. DeBello will provide a review of the fourth quarter and the year end, and then open the call to your questions.

I'd like to remind you that, with the exception of historical matters, the matters discussed in this conference call are forward-looking statements that involve risks and uncertainties under the Safe Harbor statement provisions of the U.S. Private Securities Litigation Reform Act and are detailed in the Company's public filings with the SEC on Forms 10-KSB and 10-QSB.

Forward-looking statements include, but are not limited to, statements relating to the development and the pace of sales of the Company's products; expected trends and growth in the Company's available cash flow and liquidity; anticipated penetration in new and existing markets for the Company's products, and the size of such markets; anticipated acceptance of the Company's products by existing and new customers; the ability of the Company to achieve or sustain any growth in scale and revenue; and the increase in sales representatives and other personnel. The Company (technical difficulty) could differ from such forward-looking statements. There can be no assurance that the Company will achieve the results set forth.

With that, I would now like to turn the call over to James DeBello.

Thank you, everyone, for joining me today for our quarterly conference call. We filed our fourth quarter and fiscal year 2008 results this morning, and I hope you've had a chance to review them.

I continue to be very enthusiastic about our prospects and am committed to our growth. Earlier this year, Bank Technology News listed Mitek as one of the top 10 technology companies to watch in the banking industry. In addition to our core recognition products, we think our application that enables check deposits (technical difficulty) from a cellphone has great potential for success and builds on our long history of providing innovative recognition products to the payments industry.

There are over 700 million cellphones shipped annually worldwide. Our mobile imaging and document capture technology has the potential to take Mitek into much larger markets than we currently serve.

We have had several accomplishments during this year, about which I'm very proud. We developed and launched ImageNet Mobile Deposit, the first mobile banking software that allows banks to accept paper check deposits and bill payments via camera-equipped mobile phones. We also announced versions for the iPhone and BlackBerry smart phones.

We launched ImageNet Photo and Video, a pattern recognition technology, that instantly reads, extracts, and analyzes data from digital images and photos. We were awarded our fourth and fifth patents for unique encoding technology to prevent signature theft. And we shipped the first remote deposit and remittance toolkit, which automatically identifies and dynamically extracts data from checks or any other related document.

We also had several customer wins and partnership announcements. We're the new technology partner with the APS Technology Group, a leading supplier of vision-based OCR and automation systems for marine container terminals. We signed an agreement with AnyDoc Software, an award-winning developer of document and data capture technology, to integrate our ImageNet Payment check engine platform to AnyDoc's Infiniworx solution for automated remittance, check, and check 21 processing. And we signed our first OEM agreement for Mitek's ImageNet Mobile Deposit application, with J&B Software.

Excitingly, our announcement of ImageNet Mobile Deposit has resulted in a large number of sales leads from large banks and integrators that we are currently actively pursuing. We are currently in several product trials with major financial institutions and system integrators.

We think this application is ideally suited for the mobile worker, mobile professional, and 28 million small businesses in America that are currently underserved by today's enterprise applications. By utilizing our software, businesses improve their productivity and get faster funds availability.

Now, as you know, we are weathering a difficult economic storm. There have been unprecedented bank consolidations and enterprise software sales are suffering. Despite the nature of the market, our annual sales decreased by only 8% during the fiscal year. But we are experiencing continuing softening of the market, as evidenced by our fourth quarter revenues. This, combined with every other economic indicator, foreshadows continuing softness in fiscal 2009.

These market conditions are affecting us and all of our competitors, and has put extra strain on our cash reserves to operate our business. As a result, we have moved quickly to implement a plan to decrease our operating expenses by reducing our workforce in light of the economic contraction of the financial services market into which we primarily sell our products. The reduction includes general and administrative, sales and marketing, and some technical staff.

We will continue to explore opportunities to further reduce our expenses without harming the ongoing operations of the Company.

I want to emphasize that the Company has diligently maintained key resources to adequately pursue new sales opportunities and support our ongoing operations. Such reductions will not impair our ability to develop our ImageNet Mobile Deposit application and other mobile capture products, and to provide technical support to our current and prospective customers.

In addition, we have retained the services of an investment bank to assist the Company in exploring other strategic options to exploit the opportunities in mobile document capture that we believe lay ahead of us.

Throughout this, we continue to enhance the performance of our proprietary recognition technology and are committed to our future. The nexus of the mobile phone and Internet has become the cultural phenomenon of our lifetime. Coupled with high-speed 3G wireless data networks, banks can now sell new mobile services to a new market segment -- the mobile worker and 28 million small- to medium-sized businesses.

I am pleased that we have been able to continue developing important technologies that address the large market for mobile applications. All the while, we have managed our expenses and have taken steps to reduce our cash burn to weather this economic storm.

As I mentioned at the top of my remarks, this is an exciting but challenging time for Mitek. We have a powerful technology and a tremendous market opportunity for growth. Most importantly, we have the commitment of our professional staff to get the job done. We think the prospects for our ImageNet suite and Mobile Deposit are very encouraging. I appreciate your continued support and hope you share my excitement about the future.

And at this time, I am happy to take any questions from the field. Operator?

(Operator Instructions). [Craig Asher].

What burn rate do you expect you'll have in the next two quarters?

Our expected burn rate will be reduced from what you saw reported in the Q4, as we have reduced our operating expenses to match our revenue anticipated. So we feel we have adequate resources to sustain ourselves and our ongoing operations. We're very excited about our current trials with key customers and we're very excited about our continuing development in mobile capture applications.

Can I ask another question?

Yes.

How many employees do you have now?

We reported our current employee base in our 10-K. It is reduced from there, but we don't think it damages our ability to move forward. We have maintained adequate resources and the core technical team to complete our mission. And that is to create innovative mobile capture technologies and products. And that really is the nexus of what we're talking about with regard to this massive market opportunity in the mobile capture field.

So we are delighted that we have this opportunity and we're marrying not only our 15 years of history of creating unique proprietary technology in the area of image analytics, but now we're blending that with advances in the mobile telecom space, specifically taking advantage of advancements in handsets, the optics on the camera phones, and the speed of 3G wireless networks and future networks.

Are there any paying customers for the Mobile Deposit application?

Currently, we are in trials for the Mobile Deposit application with major institutions. This includes major banks as well as major integrators. So we're very excited about (technical difficulty) the results have been good. We have not yet received revenue from these products, but it looks promising.

Does anyone else want to ask a question? Operator?

(Operator Instructions). There are no further questions at this time. Mr. DeBello, you may continue.

Very good. I want to thank everyone, again, for joining me this morning. We remain encouraged about our prospects, despite the fact that economic storm is upon us. We're taking rapid steps to adjust our expense line, but we will continue moving ahead and we're excited about the future. Thank you very much.

This concludes today's conference call. You may now disconnect.