Mitek Systems Inc (MITK) 2016 Q1 法說會逐字稿

Good day, and welcome to the Mitek fiscal 2016 first-quarter financial results conference call. At this time, I'd like to turn the conference over to Mr. Todd Kehrli of MKR Group. Please go ahead, Sir.

Thank you, operator. Good morning and welcome to Mitek's fiscal 2016 first-quarter earnings conference call. With me on today's call are Mitek's President and CEO, Jim DeBello; and CFO, Russ Clark.

Before I turn the call over to Jim and Russ, I'd like to cover a few quick items. This morning, Mitek issued a press release announcing its fiscal 2016 first-quarter financial results. That release is available on the Company's website at www.miteksystems.com. This call is being broadcast live over the Internet for all interested parties, and the webcast will be archived on the Investor Relations page of the Company's website.

I'd like to remind everyone that on today's call, management will discuss certain factors that are likely to influence the business going forward. Any factors discussed today that are not historical facts -- specifically comments regarding our long-term prospects and market opportunities -- should be considered forward-looking statements. These forward-looking statements may include comments about our plans and expectations of future performance.

Forward-looking statements are subject to a number of risks and uncertainties which could cause actual results to differ materially. We encourage all of our listeners to review our SEC filings, including our most recent 10-K, for a complete description of these risks. Our statements on this call are made as of today, January 28, 2016, and the Company undertakes no obligation to revise or update publicly any of the forward-looking statements contained herein, whether as a result of new information, future events, changes in expectations or otherwise.

Additionally, throughout this call, we will be discussing certain non-GAAP financial measures. Today's earnings release and the related current report on Form 8-K describe the difference between our non-GAAP and GAAP reporting, and present the reconciliation between the two for the periods reported in this release.

I'll now turn the call over to Mitek's CEO, Jim DeBello.

Well, thanks, Todd, and good morning, everyone. I'm happy to report strong financial results for the first quarter, which included 37% revenue growth year-over-year and our seventh consecutive quarter of non-GAAP profitability. I'm equally pleased to report on the significant progress we've made in our new ID capture and verification business over the past 90 days.

We've added several new customers for our ID verification solutions across many different verticals during the first quarter, including four new Fortune 500 companies, while significantly increasing our bookings and backlog for this new part of our business. As you may recall, we set a goal on last quarter's call to sign 10 Fortune 500 companies in fiscal 2016 to use our new ID capture and verification solutions. And we're well on our way to achieving that goal.

We're off to a terrific start to fiscal 2016, and look forward to building on our success throughout the remainder of the year. Now let me review our first-quarter accomplishments in more detail. Our solid financial results were driven by increased revenue contribution from both of our new ID capture and verification product offerings, as well as continued growth of our industry-leading mobile check deposit product.

Let me first start with a review of our new ID products. As the pioneer behind mobile capture and the industry leader, we have a first-mover advantage in helping companies transform their business to more successfully capture the increase of commerce moving through the mobile channel.

Enterprises need our products to effectively address the shift to mobile commerce that is now being driven by millennials who are demanding a mobile self-service experience. And we're leveraging our mobile capture expertise and building off of our success in financial services to expand the scope of our business globally to address the multibillion-dollar identity capture and verification market. Our new ID products exponentially expand our addressable market, and will enable us to drive higher ASP's while also increasing our mix of recurring revenue through the cloud.

Mobile Fill, our mobile identity capture solution, directly addresses the mobile customer acquisition pain-point by allowing the mobile customer to use their camera as a keyboard, creating a great user experience. Using Mobile Fill, which includes our touch-free auto capture experience, MiSnap, a consumer can quickly prefill any form with personal data by snapping a photo of their driver's license or other form of ID, eliminating the hurdles they currently experience while trying to type. By providing a superior user experience that's easy and efficient, Mobile Fill significantly reduces customer abandonment and improves completion rates through their mobile channel.

Despite spending billions of dollars each year advertising to build their funnel of sales opportunities, many of our enterprise customers say they are unable to achieve acceptable conversion rates on the rapidly growing number of inquiries coming through the mobile channel. They are unable to process these potential customers in a timely, easy and efficient manner.

One large enterprise has told us that 40% of their new potential customers now come through the mobile channel, but they are experiencing unacceptable customer conversion rates due to the abandonment of their existing mobile onboarding process. Our Mobile Fill solution provides a significant value proposition by increasing their new customer conversion rates.

As I mentioned earlier, we've added several new customers, including four new Fortune 500 companies. These included a top-five bank for a new account opening; a top-five carrier for auto insurance quotation; a top-five pharmacy and healthcare company for mobile account openings; and a top-five private-label credit card issuer for new account openings.

Even more significant than the number of new deals signed is the fact that many of these were outside of our stronghold of financial services. During the quarter, we signed our first online gaming company, our first retailer, our first crypto currency company, and our first customer on the Forbes Fortune 10 list. All of these new deals were for our Mobile Fill solution, highlighting the importance that's being placed on improving the new customer acquisition experience through the rapidly growing mobile channel.

These new logos underscore the value that our new mobile identity solutions bring to businesses that are looking to optimize the mobile channel for customer acquisition by reducing friction. And we've made tremendous progress in the first quarter with Mobile Fill, and look forward to getting these new customers online and generating revenue soon.

The opportunity, however, doesn't stop there. We believe that many of these new Mobile Fill customers will soon evolve into Mobile Verify customers too, allowing us to cross-sell. So now let's talk a little bit about Mobile Verify.

The second major pain-point that businesses face, as they seek to meet current growing customer demand in the mobile self-service channel, is the inability to accurately verify the identity of mobile customers. This is particularly important in highly-regulated markets due to know-your-customer and anti-money laundering requirements, otherwise known as KYC and AML.

Our second ID product, Mobile Verify, addresses this challenge. Mobile Verify, which we announced at the end of last year, enables banks and other businesses to improve their KYC process using mobile images for ID document authentication. Mobile Verify instantly verifies the authenticity of an underlying identity document with computer vision algorithms.

The authenticity of that ID can be verified entirely through a mobile device, eliminating the need for a new customer to appear in person to prove their identity. It's been proven that when a new customer prospect are asked to leave the mobile channel and physically present their identity, abandonment can be as high as 90%.

Today, we have one of the largest global payment processing companies using our product to provide ID verification, and we're expanding with them every day. This customer is using Mobile Verify to verify the identity of its customers worldwide, enabling them to transact safely, securely and efficiently. With Mobile Verify, this customer has seen their time to verify a customer go from days to minutes, significantly improving the efficiency of their compliance process while improving customer satisfaction.

With Mobile Verify, we believe we have the leading mobile ID document verification solution in the world. And our goal is to further extend our capabilities to also offer our customers a multifactor ID verification solution in combination with our ID document verification offering.

Through the acquisition of IDchecker last year, we obtained facial comparison capabilities, which we have implemented at a large European bank. Our facial comparison offering matches a photo of an ID with a selfie taken by the mobile user, thereby adding a second factor of mobile verification. We're focused on further developing our facial comparison offering in fiscal 2016, as well as providing additional multifactor ID verification capabilities, either through acquisition or partnership, to help us further capitalize on the multibillion-dollar ID verification market.

With our innovative new ID products, we believe we have a substantial opportunity ahead. We're focused on targeted verticals that are seeking to improve new customer acquisition and ID verification via the mobile channel. And we are well on our way to reaching our goal of signing 10 Fortune 500 customers this fiscal year that we can then use as reference accounts to further expand within these key verticals.

This is a very large and growing market. And we believe we have the right solutions to address the pain-points that these companies are encountering as they try to offer a mobile self-service environment.

Now let me review our mobile deposit products where we continue to dominate this growing market. Mitek's mobile deposit was the mobile users' first exposure to mobile capture. The popularity of mobile deposit, with its high-quality, fast and easy user experience, continues to drive user adoption today with more than 60 million consumers using our mobile deposit solution.

While consumers love the convenience and ease of use, financial institutions recognize the substantially lower transaction costs associated with processing checks through the mobile channel. As such, mobile deposit has been broadly adopted by the top banks in the world, including the top 10 US retail banks. And it continues to grow among both consumers and the financial institutions that serve them. With another 300 financial institutions added this quarter, we now have approximately 4,800 financial institutions in the country licensing our technology.

Yesterday, we announced a significant alliance with Harland Clarke, the number one check printing company in the world, to further improve security of our mobile deposit solution for consumers and financial institutions. Personal checks printed by Harland Clarke now carry new photo safe deposit features that can only be recognized by the advanced computer vision software embedded in Mitek's mobile deposit solution. Our alliance with Harland Clarke further strengthens our dominant market leadership in mobile deposit, and we believe will also help us gain further traction in both the consumer and commercial mobile deposit targets.

While adoption and usage of mobile deposit continues to grow rapidly, it still represents significantly less than 5% of the approximately 19 billion checks deposited in the US each year, representing a significant opportunity for growth for many years to come. This speaks to the growth opportunity that exists for Mitek, as we drive more consumer mobile deposit transactions either through new users or through an increase in the frequency of usage.

Financial institutions today continue to spend significant marketing dollars to drive their customers to use mobile check deposit. And Mitek continues to benefit from this push to the lower-cost mobile channels.

Both the consumer side of the market -- which makes up one-quarter of the checks deposited annually -- and the commercial side -- which makes up the remaining three-quarters of the checks deposited annually -- remain significant growth opportunities for Mitek.

On the consumer side in multiple mobile deposit, a growth driver that will generate an increased number of transactions will be increased deposit limits set by financial institutions. Many of our bank customers today set low-dollar amounts on checks that can be deposited via mobile for their own risk mitigation. Sometimes these low-deposit limits make it impossible for a consumer to deposit a check through their mobile device.

Today, we are seeing increasing numbers of financial institutions proactively address this issue by creating advanced KYC engines so they can raise deposit limits and eliminate hold times for customers where appropriate. Many of our customers are implementing this type of systems in hopes of driving further adoption of mobile deposit. And one of our customers told us they were able to almost double eligibility across their customer base, and reduce holds on deposited funds down to same-day availability, while increasing the deposit limit per check to $30,000 for individuals and up to $36,000 for small business checks.

They reported, as a result of their efforts, their mobile deposit adoption and usage increased dramatically, and became a key driver of both customer acquisition and retention, as well as providing a significant cost savings for the financial institutions. They told us that they were able to increase their number of mobile deposits by 365% in one year and increase the number of accounts using mobile deposit by 500% in 18 months.

Many of our customers are implementing similar best practices, just like this, to accelerate adoption of mobile deposit and drive significant cost savings. We see these types of programs as a big growth driver for mobile deposit.

We also believe that our partnership with Harland Clarke, and the new photo safe deposit feature it provides, will further mitigate risk on the part of the financial institution and may result in higher deposit limits, which will, in turn, drive increased adoption of mobile deposit and increased number of transactions.

As I noted earlier, three-fourths of the 19 billion checks deposited annually are deposited by business. Just like the retail side of the banks, the Commercial and Treasury divisions recognize the substantially lower transaction costs associated with processing checks through the mobile channel.

And they are highly motivated to drive more mobile deposit transactions as an alternative to branch or ATM deposits. In addition, businesses themselves are seeking to lower their costs with mobile tools that enable them to quickly access their funds and process payments without a trip to the bank, extra hardware, or the interchange fees associated with credit card payments.

Last quarter, we announced mobile multi-check capture, a powerful new capability that enables businesses to make batch deposits with a mobile device. It also includes advanced risk management and business intelligence features, including endorsement detection. Mobile multi-check capture is aimed squarely at addressing the untapped commercial mobile deposit market.

To underscore the value proposition in commercial mobile deposit, let me quickly highlight one of our first commercial customer case studies. This customer is one of the largest independent food distributors in the United States. It generates over 7 million invoices annually and receives more than 3 million payments each year.

They were looking for a way to consolidate and streamline their payments processing to increase efficiency and lower their costs. By enabling this customer to deposit checks mobilely at the point of presentment with Mitek's mobile deposit solution, we provided them with faster access to funds, and eliminated expensive and tedious manual processing associated with matching and posting payments. And as a result of adopting mobile deposit, this commercial customer reduced its overall payment processing costs by 29%.

Commercial mobile check deposit is an untapped market. Businesses are just beginning to turn to mobile deposit to process payments, building the habits we created in the consumer market. And we believe it represents a substantial opportunity to drive further growth for Mitek this fiscal year and well beyond.

In conclusion, we had a strong first-quarter, giving us a great start to fiscal 2016. Our new ID products exponentially expand our addressable market, and will enable us to drive higher ASP's while also increasing our mix of recurring revenue through the cloud. We saw increased revenue contribution from both of our new ID capture and verification products, and continued growth in our industry-leading mobile check deposit product.

We will continue to expand into the multibillion-dollar ID capture and verification market with our new ID products, Mobile Fill and Mobile Verify, while we will see continued growth in mobile deposit, driven by increasing usage by the retail banking and commercial markets. We are energized by these significant growth opportunities, and look forward to updating you on our progress in the coming months.

Now, with that, I'll turn the call over to Russ to discuss the quarter in more detail. Russ?

Thanks, Jim. I'd like to start by thanking everyone joining us a little earlier than usual on today's call, especially those of you here on the West Coast. Q1 was another strong quarter for Mitek, and I am pleased to provide some additional details on our results.

Let's start with revenue and operating results. In Q1, Mitek generated total revenue of $7.4 million, a 37% increase year-over-year. As Jim mentioned, we also achieved non-GAAP net income in Q1 of $1.3 million or $0.04 per diluted share, representing our seventh consecutive quarter of non-GAAP net income.

Q1 software revenue of $4.7 million included 11 mobile deposit reorders and is up 26% compared to revenue of $3.7 million in the year-ago quarter. Mobile deposit fueled most of this growth. However, Mobile Fill for US driver's licenses also made a meaningful contribution to Q1 software revenue.

In addition, we maintained strong software gross margins at 92% for the quarter. Q1 services revenue of $2.7 million increased 63% over last year's Q1 revenue of $1.6 million, due primarily to the addition of transactional SaaS revenues for our Mobile Verify product. Q1 services gross margins were 79%.

Total Q1 operating expenses were $7.7 million compared to $5.3 million in the year-ago quarter. Q1 selling and marketing expenses were $2.5 million compared to $1.4 million in the year-ago quarter, while R&D expenses were $1.7 million in Q1 compared to $1.2 million a year ago. Our Q1 G&A expenses were $2.1 million compared to $2.2 million in the year-ago period.

The year-over-year increases in OpEx reflect our continuing investments in growth, including the acquisition of IDchecker at the end of Q3 of fiscal 2015. As a reminder, our earnings releases include a reconciliation between GAAP and non-GAAP net income. We believe that non-GAAP net income provides a useful measure of the Company's operating results by excluding the following items: acquisition-related costs and expenses; stock compensation expense; and litigation costs related to protecting our intellectual property.

In Q1, we incurred $543,000 in acquisition-related costs and expenses. Stock compensation expense during Q1 was $989,000 compared to $814,000 in the year-ago quarter. IP litigation expenses totaled $113,000 in Q1 versus $501,000 in Q1 of last year.

GAAP net loss in Q1 was $322,000, or $0.01 per share compared to GAAP net income of $146,000 or breakeven per share in the year-ago quarter. Non-GAAP net income in Q1 was $1.3 million, or $0.04 per diluted share, compared to non-GAAP net income of $1.5 million, or $0.05 per diluted share for Q1 of 2015. Our diluted share count for Q1 was 32.1 million shares. As of December 31, 2015, our headcount was around 87 employees.

Turning to the balance sheet, during the quarter, we generated $1 million of operating cash flows, raising our total cash and investments to $26.7 million at the end of Q1. Our Q1 accounts receivable balance of $4.2 million represented a DSO of 53 days.

Now moving to guidance for fiscal 2016, we are reiterating our previous guidance of annual revenue between $31 million and $33 million for our fiscal-year ending September 30, 2016. Our guidance is based on continued growth in mobile deposit, as well as increasing contribution from our Mobile Fill and Mobile Verify ID products.

We are also reiterating our expectation of non-GAAP profit margins of at least 20% for the full 2016 fiscal year. We expect Q2 OpEx, excluding acquisition-related costs and expenses, stock compensation expense, and litigation costs, to be between $6.25 million and $6.75 million.

As we have previously stated, this guidance reflects our increased investment in sales and marketing to drive adoption of our new ID products, as well as our continuing efforts to add more top talent to our world-class software engineering, science, and computer vision teams. We expect Q2 acquisition-related costs and expenses to be between $500,000 and $600,000; Q2 stock compensation expense to be between $1.0 million and $1.1 million; and Q2 litigation cost to be between $200,000 and $300,000.

That concludes our prepared remarks. Operator, please open the line for questions.

(Operator Instructions) Bhavan Suri, William Blair.

Congrats on a good set of numbers. I'll apologize beforehand; as usual, I'm on a plane, so pardon the background noise. But nice job there. Just to dive into the numbers, first of all, and then sort of the trajectory -- and obviously, it was a nice mobile reorder quarter, but you obviously had the other products fill in nicely.

As I look at a longer-term roadmap -- and again, you've given guidance, as we look out three or four years, and you look at the split between check deposit versus the Mobile Fill and the IDchecker products, how should we think about what the split of the overall revenue could look like, say, three or four years down the road?

Sure, Bhavan. Three, four years out, if we look at size of markets and growth rates, we expect that revenues generated by our ID products could equal those generated by our mobile deposit business. So, not to downplay what we're doing in mobile deposit, that business continues to grow nicely. But again, when we look at market sizes for ID and pipelines, we think the two could be equally as large three or four years from now.

Okay. And then a quick one for Jim, too. When you look at some of the newer functionalities like the decryption type stuff that you are adding to the identification products, some sense, Jim, of how hard that is to do? Sort of man-hours or development time or patents, would be helpful just to understand can someone else goes out there and replicate the technology? So, yes, if I throw enough money and have the right talent, enough time, but some sense as sort of how differentiated -- what the mode is around some of these new features too, would be great.

Sure, Bhavan. And quickly to answer your question prior to the door closing on your airplane, the idea behind what we're doing is to drive a consumer experience that's unparalleled. So our effort really is to use the camera to replace typing and to replace mistakes, and to improve completion rates on the Mobile Fill product, and ultimately identify and verify the authenticity of the document, and the identity of the individual behind that document.

So as we see our products, the science is intended to be very simple to use, but it's very difficult to build. These are advanced computer vision algorithms, machine learning and deep learning, as three fundamental areas in the area of the research and development that we're investing in, that makes that user experience so pleasant.

The second thing we're doing is building a consumer habit. If you think about what we've accomplished with mobile deposit as a beachhead, 60 million people and more are using our technology seamlessly, easily, to do a transaction daily. And as a result of that, this habit is being formed -- and we think it will also extend to other uses of mobile capture.

And therefore, we think laterally moving an identity using the capture-ability on the phone and with the tablet is going to be much easier. And the sales cycles ultimately will be compressed. We have seen increasing traction with our enterprise adoption of our Mobile Fill and verify products. This is very, very good news. And the pipeline is deepening.

So we think we're in the right place at the right time, but it will take continued investment in the core science, which is very complicated. And our time-to-market advantage, complemented with our IP, I think gives us strong defensible barriers.

That's helpful, Jim. And then turning to the -- obviously enterprise adoption, which is great. Do you think -- you remember, a couple of years ago, you decided to verticalize a little bit and have people sell right into the insurance guys, and things like that? But do you now it's a vertical approach? Or do you think you can use a broader-based sort of horizontal sales force to grow that enterprise business? How should we think about how you are driving the investments in sales? And what are the typical hires there?

Yes. Our feeling is that we want to dominate the ID space in the financial services vertical as much as we do in mobile deposit. So we have a concentrated effort in financial services among our current banking customers, and also new banking customers globally for that. That is our primary focus.

However, what's happening, and which is interesting, is that we're moving into adjacent markets by being pulled there by customer demand -- enterprise demand. So, the retailer that we mentioned or other types of vertical markets -- even age-restricted commerce like gaming or other types of sale -- are coming to us because of our reputation in the banking market.

So, we're being pulled into lateral vertical markets which are very, very large, and I think very exciting for the Company. So, no longer -- and I anticipate in the future, in a year or two, we're going to have multiple strong verticals, including healthcare, telecom, retail, on top of banking.

And, Bhavan, it's Russ, if I could augment that a little further. Our sales force, in your words, is more horizontal, although, as you would expect, our key sales reps that call on the top insurance companies know everyone in that space, however, using technology to broaden out the footprint as well.

So we're investing more in digital marketing, SEO, and those types of sort of touchless marketing efforts and legion efforts are really helping us expand outside of our core verticals, and helping us get companies in places like online gaming, as Jim mentioned.

Got it. Got it. And then, Russ, actually one for you -- as you look at the deferred line, that obviously grew quite nicely sequentially -- I think, as I recall, 13% -- and then you obviously have the services increase from the transaction business, the SaaS. Is there any transaction business that was booked in the deferred line? Or is that all maintenance on the license line?

Yes, Bhavan, the increase quarter-over-quarter in deferred revenue is primarily related to maintenance renewals. which primarily come from our mobile deposit business. There is some contribution in the deferred revenue line from the SaaS business; it's more modest. So really what you're seeing there is the timing effect.

If you look historically, deferred revenue has typically trended up from the end of Q4 to the end of Q1, just with normal maintenance renewal cycles. And this quarter is consistent with that.

That's helpful. That's it for me, guys. Thanks and great job.

Thanks, Bhavan.

Thanks, Bhavan.

Mark Schappel, Benchmark.

Nice job on the quarter. Jim, starting with you, I was just wondering if you could run through your recent partnership with Harland Clarke again -- some of the details there. Particularly the benefits of the relationship and what you think that will bring.

Yes, that's really interesting -- a good question, Mark, with regard to Harland Clarke. You know they are the largest check printing company in the world. They sell their checks through banks to consumers. And so their initiative really is to create this unique check which has an icon on the front, which triggers our computer vision algorithms to match the image of the front and information from that, with information that is identically printed on the back.

And that's an innovation in the check printing business. And so it's been a challenge because the ink density on the back has to be lighter by regulatory requirement. And then be able to optimize our algorithms to actually read that accurately has been our challenge internally in partnership. So we have been working months on this with Harland Clarke and deep-testing to perfect the technology.

And they have announced it -- they actually, as of January 17, have begun printing all new personal checks with this icon and the information on the back of the check.

Here's the benefit -- when you endorse a check, you need to write your name on the back and it's associated with the front of the check. And when you present it to a teller at a branch, of course, you have a single item; a single check. When you do it mobilely, you are required to photograph the front and the back. And occasionally, there are occasional and inadvertent situations when people make duplicate deposits, or they may, if they are ill-intended, try to use an endorsement on the back of the check for different checks than what was intended.

So to stop this potential risk, and to also prevent accidental duplicate deposits, Harland has invented this new check. And we are able to uniquely, and with our technology -- the only company -- able to read this. And so as a result of that, it's a risk mitigation and security feature that I think will give banks the confidence to begin raising their limits that are constructed by their risk management people.

Raising limits benefits Mitek. And we think, as a result of that, transaction volumes could go up. And therefore, we benefit from that. And Harland, of course, is the first innovate in the area of the check. And they will benefit, we think, through their continued marketing to their customers and beyond.

Great. That's very helpful. And then as a follow-up, in your prepared remarks, Jim, you discussed, I believe, about adding additional multifactor verification capabilities to your ID verification solution. I was just wondering if you'd just run through one or two examples of what maybe some of those additional capabilities could look like?

Sure, Mark. As we think about this, Mark, it is very interesting. Today, we believe the center of the consumer habit is around the physical document. And in that case, it would be your driver's license or perhaps a passport.

So imagine your day checking in through TSA, physically presenting your driver's license, going to Hertz, physically presenting your driver's license -- the same thing at Marriott, perhaps. So, that is the human experience today.

However, as you become more digital, and you conduct mobile commerce -- and mobile commerce to us could be enrolling for a new service, like a quotation for insurance, a new loan, a new mortgage or a new transaction, a deposit -- at times you're going to need to present identity information. We can obviously capture that with regard to the driver's license, but you want to match that to a physical attribute.

So a facial recognition matching is a biometric, but there are other biometrics that are also interesting, including being able to read the eye; being able to read fingerprints. And you can do this through a camera. And you can do that with a selfie camera as well as the front camera on a mobile device. So we think that's one very exciting area of biometrics that will complement what we're doing, and provide a second factor of authentication, particularly for enrollment, when you want to have and tie that document to a physical being.

The third area would be the area of devices. Devices themselves are connected to the network. There are characteristics of usage in the device that are recorded. Just the tilt and usage of the frequency of the device is one factor. The location of the device is another factor and there are many others.

And those can also be used to identify location as it relates to the physical presence of the individual and again, as another factor in the authentication process. And for example, Mark, in your case if you were -- if your phone was being registered in Russia and yet you are based in the US, it would be a red flag. That can be used in the identity through a transaction or through an enrollment.

The third factor, which we think is really new and very interesting, is with regard to deep mining of data; data, particularly in countries that don't have access to financial data or data services. Those would be in the African continent, perhaps in the Indian area, as well as China and other areas, whereby social profiles may be used more appropriately to mine that data as another factor of authentication.

So we're pretty excited about being able to, in concert with partners or perhaps in concert through acquisition, being able to add other capabilities to make our offer a multifactor offer, and to satisfy the demands that new enterprises are seeing.

Great. Thanks. And then one final question -- IDchecker revenue in the quarter. Russ, I don't know if you mentioned that. Was it similar to last quarter?

Mark, I didn't mention that. I did mention that our year-over-year growth in the services line was driven in large part by the addition of IDchecker revenue. It was a strong quarter. Our SaaS revenues for the ID product, which is legacy IDchecker, were very strong.

Okay. Thanks. That's all for me.

Thanks, Mark.

Thanks, Mark.

(Operator Instructions) Mike Grondahl, Northland Securities.

Thanks, guys, for taking my questions. First, a couple on mobile deposit. Any anecdotal information on kind of what's going on with customer penetration trends or customer usage trends? And then maybe how many banks went live during the quarter?

Mike, it's Russ. As Jim mentioned in his remarks, we added another 300 banks who signed for mobile deposit during the quarter. So we're around 4,800 total now. So nice progress -- continued progress there from an end user bank perspective.

If I drill through the banks to the end user consumers, as Jim mentioned, there's some industry research that shows around 60 million people using mobile deposit today. That same research forecasts the number of mobile deposit users to increase to over 80 million by the end of this year. And that trend has continued to grow as well.

And then in terms of lives, I think, Mike, you are familiar with the story for a while. And we've continued to see the gap close between the number of banks signed and the number of banks live. So, out of that 4,800 banks who have signed, around 4,400 of those were live at the end of the quarter.

And I think, as we sort of work down-market through the remaining banks that aren't using mobile deposit today, the implementation times have decreased as well. So some of the majors in the early days could take months, maybe even over 12 months, to get live. But the banks that we're signing up today, many of whom are accessing our technology through a SaaS offering at one of our channel partners, can be hooked up in a manner of weeks or months. So that cycle time has really shortened.

And, Mike, let me add a little bit to that. And for the benefit of those listening, the three key drivers to mobile deposit -- one is bank acquisition -- and Russ has covered that, and we continue to acquire more banks. But fundamentally, the banks we're adding now are late adopters and typically not large.

Secondly would be consumers who have adopted mobile banking and now are depositing checks. And the third driver would be the frequency of usage. So on that latter part, we think that's a really interesting statistic. And we do try to monitor that. And we continue to see very strong usage growth across the board from large to small banks as it relates to quarter-over-quarter sequential growth, typically in the double-digits. And we've seen that again this quarter.

So, we are just really at the tip of the iceberg. Studies have shown that one out of seven Americans, about 15%, are using mobile deposit today. Gee, imagine if that doubled. And this is a low-cost channel for banks. So they continue to market and promote this. And as millennials become more of age and more centrally-focused on their financial lifestyles, it's going to be mobile. So that's an advantage to us as well.

So we continue to see growth in usage. We continue to see growth in penetration of consumers, and obviously adoption by banks. So, all in all, we're firing on all cylinders. There's upside potential in mobile deposit, which continues to allow us to grow the business while investing in new markets that are global, like identity verification.

Got it. And then moving to Mobile Fill, you sort of announced about 10 customers, give or take a few there. Could you give us an example of maybe one or two of the use cases, how that customer is using Mobile Fill? I mean, is it simply just to populate an application? I think that would be helpful to hear one or two examples.

Yes. Hey, Mike, I'll run through a couple of those. So, the one you are probably most familiar with would be auto insurance quotation. So, we added, during the quarter, our fourth top-five PNC carrier, who is also a Fortune 500 company. And the use case there is typically an auto insurance quote.

So, at the consumer end, the consumer is able to use their smartphone to take a picture of their driver's license, take a picture of their insurance card to get the VIN number, and based on extracting information from those two documents, the carrier can put together an insurance quote and return that right to the mobile device. So insurance quotation is fairly prevalent out there.

One of the other Fortune 500 clients we added during the quarter is a top-five pharmacy and healthcare company. And they are using our technology to extract information to open up your mobile app for their pharmacy on your smartphone. So, the user who wants to initiate an account in the mobile app on their phone will take a picture of their driver's license, our technology will extract the information, and prefill the information that's needed to register the app.

Let me add a third, which I think is fun and interesting. It's a mobile network operator -- a large one -- who has an in-store presence. And you know the Apple trend is to move from behind the kiosk and have a self-service. Well, in this case, it's a retail assistant. So a particular clerk with an iPad will greet a customer -- and this is happening today -- and you will present your license, and they will image it to activate your account, or to pull up information relevant to your current account.

And so it's customer service in a retail environment. And to amplify on that, a large credit card issuer -- who white-labels a credit card -- wants to facilitate a better workflow within store locations. So, when you sign up for your retail loyalty card, instead of providing and typing in each of your symbols from your driver's license at the clerk, a simple image at the point-of-sale could be used to populate the form and activate your credit card.

So we see a variety of instances -- Russ mentioned insurance, healthcare, and I mentioned mobile network operator and credit card issuing. And this is what the opportunity is ahead of us. And we're learning new things every quarter. It's really exciting to see the kind of inquiries we are getting, the needs that people have, which leads us to believe that this product line dramatically extends our markets beyond the fin-tech vertical, fin-services, into a variety of other vertical markets. So I think that momentum will continue.

Yes, Mike, let me add one more on there briefly. So I think all the use cases we went through are more on the Mobile Fill side. I also mentioned that we're broadening out vertical industry footprint with our digital marketing platforms. And Jim mentioned that we recently signed an online gaming company.

So as we move over into Mobile Verify, online gaming companies have requirements to verify ID at certain points when funds are being transferred back and forth. So that really gets us in from the fill application where we are extracting and filling information into the area where we are actually verifying the authenticity of the license.

Very helpful, guys. Those are -- I think those cases are going to grow. That's great. Hey, thank you.

And ladies and gentlemen, that does conclude today's question-and-answer session. I will now turn the call back over to Mr. Todd Kehrli for any additional or closing remarks.

Thank you, operator. And thank you, everyone, for joining us today. This concludes our call and we look forward to updating you next quarter.

Ladies and gentlemen this does conclude today's conference. We thank you for your participation.