Mitek Systems Inc (MITK) 2017 Q3 法說會逐字稿

Good day and welcome to the Mitek Third Quarter Fiscal 2017 Financial Results Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Todd Kehrli, MKR Group. Please go ahead, sir.

Thank you, operator. Good afternoon, and welcome to Mitek's Third Quarter Fiscal 2017 Earnings Conference Call. With me on today's call are Mitek's Chairman and CEO, Jim DeBello; and CFO, Jeff Davison.

Before I turn the call over to Jim and Jeff, I'd like to cover a few quick items. This afternoon Mitek issued a press release announcing its third quarter financial results. That release is available on the company's website at 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 particularly 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, July 27, 2017, 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 differences between our non-GAAP and GAAP reporting and present the reconciliation between the 2 for the periods reported in the release.

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

Thanks, Todd, and good afternoon, everyone. Thanks for joining us. Before I begin, I'd like to first welcome Jeff Davison on the call today. As we announced just last month, Jeff joined Mitek as our CFO and brings extensive SaaS expertise along with more than 25 years of experience in the financial operations and management of technology companies. Jeff played a key role as the CFO of RightNow Technologies, a very successful SaaS CRM company that was ultimately acquired by Oracle for $1.8 billion. He was also instrumental in executing RightNow's acquisition activities and completed 4 acquisitions during his time with the company. I'm extremely pleased to have him on board and know he'll be a tremendous asset to our leadership team as we continue to evolve into a leading provider of SaaS identity verification solutions.

With that said, I am happy to report today that Mitek achieved record revenue again this quarter, up 30% year-over-year, driven by continued solid growth from our identity verification solutions and industry-leading Mobile Check Deposit products.

Our growing and profitable recurring revenue business in Mobile Deposit has created a superb launching pad to capture the explosive growth in global digital identity verification. During the quarter, our SaaS revenue grew 61% year-over-year.

In the third quarter, we saw significant increases in transaction volumes from our existing identity customer base and added several new customers for our identity products. Transaction volumes from direct customers in several market segments grew substantially during the quarter, including customers in payments and credit and digital companies that share travel and accommodation assets. These companies are using our identity solutions to identify customers who cannot be identified by traditional means. And also, to comply with demanding KYC and AML regulations. Our identity solutions are playing a key role globally in the digital and market mobile transformation of banks, lenders, credit card issuers and payment processors.

Mitek's identity verification as a service platform is transforming the multibillion dollar market for identity. An important distinction is that Mitek verifies identities, not just ID documents. Our solution does this by combining 3 elements: first, scan and verify the authenticity of an ID; second, combine it with a facial comparison from a selfie; and lastly, compare an address from an image of a proof of residence document. We see our capability as unique, which is the basis of our confidence.

Secondly, we are a platform provider for digital identity verification. Our platform can provide a wide variety of verification modalities today and in the future. Our Mitek labs technology horizon is impressive, particularly, with advances in deep learning. And thirdly, we are a cloud-first company. The cloud changes everything. It allows us to benefit from a continuous learning loop from processing millions of identity documents producing accuracy rates better than traditional human inspection. Recently, market research published by Hyperion highlights the increasingly stringent anti-money laundering regulations in the EU, and the associated market opportunity that it creates for our identity verification products. You can download this report on our website.

The world isn't getting any safer, and we benefit from secular trends driving our business including the selfie habit and mobile self-service.

Mitek's identity verification platform enables a wide range of mobile commerce services. This means going well beyond the banking vertical into adjacent markets, namely digital lending, travel, shared economy and many, many more. Build it once in the cloud and sell it to many is what we say. And as the digital transformation of the global economy accelerates, enterprises need our identity solution to validate identities and create trust to enable all sorts of mobile commerce services.

Mitek's Mobile Verify enables our customers to instantly verify the authenticity of an identity using the latest artificial intelligence and machine learning techniques. With Mobile Verify, the customer is able to prove their identity digitally without having to appear in person. This also helps organizations cost-effectively mitigate the risk of fraud. To highlight one success example, a large online consumer finance organization is using Mitek's Mobile Verify to add over 1,000 more customers per day by streamlining their onboarding process.

Prior to using our solution, a significant percentage of all applicants could not be verified. Many of these applicants are young or they are immigrants with thin credit files. These applicants were placed into a pending queue awaiting an identity verification process that required an in-person identity check or even faxing an ID document. Imagine that, a fax of your ID. Not very secure. As a result, a majority of these people never completed the identity verification process, which meant the organization was losing most of these applicants and losing revenue.

Problem solved with Mitek. It's this type of fast and accurate identity verification process that we believe is the key to protecting businesses, reducing their cost and unlocking revenue through the digital channel. To gain the same business benefits as this online consumer finance organization, several new banks signed Mobile Verify agreements this past quarter and many existing customers expanded their relationship with Mitek.

In addition to growth from our direct sales efforts, we're building a robust channel of distribution to scale our business. We've already seen new identity customer wins and volume generated from our new partnership with Experian, which we announced just last quarter. Experian is a global information services group with nearly 20,000 employees and operations in 40 countries and they are an important partner for Mitek as we look to expand our leadership position in the large and growing identity market. By reselling and integrating, our identity authentication technologies with partners like Experian, we believe we can augment our direct sales efforts and accelerate the expansion of our identity solutions in financial services and beyond.

This quarter, we also signed partnership agreements with Trulioo in Vancouver British Columbia, a provider of instant electronic identity and address verification for 4 billion people in over 60 countries. And we also signed a deal with Signicat out of Norway, one of the leading providers of electronic identity and signature solutions in Europe.

We continue to build out our channel and partnership network for identity and believe it will be a significant growth driver for Mitek in the years to come.

Industry reports forecast that the global market for consumer identity and access management services will exceed $10 billion in 2017. Identity verification represents over 1/3 of this market and is growing at a double-digit rate. The reports highlight that banking and financial services represent the largest industry vertical consistent with our customer incumbency as well as our direct and channel sales strategies.

In addition, we're seeing demand and adoption from other vertical markets who share the same need for a trusted and verified customer relationship such as those companies in the travel and sharing economy.

Delivering the best user experience and coverage with speed and accuracy has made Mitek the global market leader in identity verification. We've been perfecting the use of artificial intelligence to develop algorithms for image recognition and analysis for many, many years. Altogether, we hold now 33 patents that all relate to capturing and processing documents with an additional 18 patents pending.

As part of our ongoing commitment to innovation, today our scientists and engineers are focused on a subset of AI called machine learning and deep learning, which enables computers to learn without being explicitly programmed. Our cloud platform is continuously learning from the millions of ID documents it processes. It also means that we can easily add new document types from across the globe to provide our global customers unparalleled and accurate digital identity verification capability. We're also working hard to expand our platform's capabilities.

Earlier this month, we announced the release of a groundbreaking update to our Mobile Docs solution that allows a consumer to quickly and easily scan and send high-resolution document images from anywhere for a loan or any other document intensive process.

Global organizations in the financial services industry require volumes of documentation to verify a user's identity, income and residence for processes such as mortgage lending. Our new Mobile Docs solution, which is fully integrated with our Mobile Verify solution, now provides what we believe is an industry-leading end-to-end digital process for capturing these trailing documents and verifying identity. We see this expansion of our identity verification offering as a competitive advantage for Mitek as well as an upsell opportunity as we look to further penetrate the financial services market.

In addition to our growth and innovation in identity, we continue to dominate the Mobile Check Deposit market with now over 5,800 financial institutions and over 80 million consumers using our mobile capture technology. Mitek pioneered Mobile Deposit and we're committed to ongoing innovation. During the last quarter, we introduced the newest release of our patented Mobile Deposit solution with new capabilities and enhancements that improve the performance and usability of Mobile Deposit for both banks and consumers. The latest generation is the 23rd new release since Mitek invented Mobile Deposit 10 years ago.

While consumers love the convenience and ease of use of Mobile Deposit, which has made it a driver of high customer loyalty, financial institutions love it even more because it's 1/10 the cost of processing a check inside a branch.

With this substantial cost savings, financial institutions continue to spend marketing dollars to drive their customers to use Mobile Check Deposit, and Mitek continues to benefit from this push to the lower cost mobile channel. One recent example of this is a large bank who mailed over 0.5 million checks valued at $1 each to a portion of their customers asking them to try Mobile Deposit. Among those checks were a few $1,000 prizes, sort of a Willy Wonka golden ticket approach, that generated a 26% response in increased usage. Naturally, all of these activities benefit Mitek, the key drivers to Mobile Deposit's continued growth is consumer penetration and frequency of use.

Adoption and usage of Mobile Check Deposit continues to grow and there's substantial room for more growth. We believe one driver of growth will be the willingness on the part of financial institutions to remove the barriers to using Mobile Deposit. One notable example of this is U.S. Bank. They recently announced they are eliminating their $0.50 service fee on each Mobile Check Deposit. Regents Bank did the same. As financial service organizations and banks remove these hurdles such as service fees and low deposit limits, we believe it will drive further adoption and usage of Mobile Deposit while ultimately delivering increased cost savings for our customers.

We've got a terrific, substantial customer base of financial institutions that trust Mitek. Our success in Mobile Deposit and the continued growth of this market has laid the foundation for Mitek to establish itself as the leading provider of mobile identity verification solutions. And we remain focused on successfully executing our growth plan for both these markets. In addition to great products and a high growth market opportunity, we announced earlier this week the appointment of Rene Hendrikse as VP and Managing Director of Europe. Rene joins Mitek to accelerate our growth in Europe and bring our market leading mobile identity verification solutions to new vertical markets. With Rene's expertise and proven track record with SaaS companies in the European markets, he's a perfect choice to further expand Mitek's position in the European identity verification market.

Also today, we filed an 8-K appointing Kalle Marsal to Chief Operating Officer. Kalle now has global responsibility for revenue and marketing for our identity solutions. He has over 20 years of experience in general management and corporate development and joined Mitek nearly a year ago as Chief Marketing Officer. Prior to joining us, he served as a Vice President at Hewlett-Packard including management functions for both domestic and international operations and he was instrumental in building a cloud services business inside HP. Kalle holds 2 engineering degrees and his MBA from Stanford.

With our terrific management team, including Jeff's addition, competitive advantages and technical superiority, our customer incumbency and market momentum and solid, solid balance sheet, we believe we're well positioned for continued growth this year and beyond.

Now with that, I'll turn the call over to Jeff to discuss the financial results in more detail. Thanks, Jeff.

Thanks, Jim, and thanks, everybody for joining us. Before we get started on the numbers, I'd thought I'd just say how happy I am to join the Mitek team. Before meeting Mitek, I had used the Mitek Mobile Deposit, and I was impressed with how cool and easy-to-use it was. Also, I've raised kids through this entire shift to the mobile world and have seen how they do everything on their phone, which I do too now. But so when I looked at Mitek and I looked at their identity verification market and the SaaS element that they've got, it was a very appealing opportunity to me. So I'm excited to be here, and I really look forward to working with the Mitek team.

So with that, let's get into the numbers for Q3. Mitek generated Q3 revenue of $11.8 million, a 30% increase year-over-year. Q3 revenue included $2.4 million of ID SaaS revenue, a 61% increase year-over-year. And SaaS transactional volumes increased more than 50% sequentially. We achieved GAAP net income in Q3 of $0.6 million, or $0.002 per diluted share, and non-GAAP net income of $2.9 million or $0.08 per diluted share, representing our 13th consecutive quarter of non-GAAP net income. Onetime charges related to our CFO transition impacted GAAP and non-GAAP net income by $0.8 million and $0.5 million respectively. Excluding these charges, GAAP and non-GAAP earnings per share would've been $0.04 and $0.10, up 90% and 35% respectively.

Q3 software revenue of $7.5 million was up 30% compared to revenue of $5.8 million last year. We maintained strong software gross margins at 95% for the third quarter. Q3 services revenue of $4.3 million increased 30% over last year's revenue of $3.3 million. The increase in services revenue is due, primarily, to growth in transactional SaaS revenues for our mobile ID products, which increased 61% year-over-year and 36% sequentially to $2.4 million. Our ID business continues to see high demand for SaaS versus on-premise, with 90% of ID bookings year-to-date in the SaaS column.

As was mentioned last quarter, the majority of our SaaS revenue to date is pay-as-you-go and is based on transactional volumes processed and billed each month, and therefore, is subject to fluctuations depending on volumes in any given period. However, as the mobile ID verification market continues to evolve, we are seeing a higher mix of contracts with transactional minimums. So we expect the mix of SaaS revenue with minimum commitments to increase over time. This trend is very positive for the long-term foundation of our ID business because it's further builds the recurring SaaS revenue base.

All that said, we are very pleased to see continued year-over-year and sequential SaaS volume increases.

Services gross margin improved slightly to 82% for the quarter. Total Q3 operating expenses, including cost of revenue, were $11.3 million compared to $8.4 million last year. Sales and marketing expenses for the quarter were $3.5 million compared to $2.9 million a year ago. R&D expenses were $2.7 million compared to $1.9 million last year and G&A expenses were $3.4 million compared to $2.2 million a year ago. The year-over-year increase in operating expense reflects our continued investments to grow our ID business as well as onetime severance cost, stock comp charges and associated expenses totaling approximately $800,000 resulting from the change in CFO leadership.

As a reminder, our earnings release includes a reconciliation between GAAP and non-GAAP net income. We believe non-GAAP net income provides a useful measure of the company's operating results by excluding acquisition related costs and expenses, stock-comp expense and litigation costs related to protecting our intellectual property. In Q3, we incurred $630,000 of acquisition related costs and expenses compared to $556,000 last year. Stock-comp expense during Q3 was $1.6 million compared to $947,000 a year ago. We had no litigation expenses in Q3 compared to $186,000 in Q3 of last year. GAAP net income for the quarter was $616,000 or $0.02 per diluted share, compared to GAAP net income of $739,000 or $0.02 per diluted share a year ago. Non-GAAP net income in Q3 was $2.9 million or $0.08 per diluted share, compared to non-GAAP net income of $2.4 million or $0.07 per diluted share last year. Our diluted share count was 35.6 million shares compared to 34.5 million shares a year ago.

Turning to the balance sheet. We generated $2.8 million in cash flows from operations during the quarter, bringing our total cash and investments to $42.9 million at the end of Q3. Our accounts receivable balance of $6.4 million represented a DSO of 49 days.

Now moving to guidance for fiscal 2017. We are raising the bottom end of our revenue guidance range by $1 million to be between $44 million and $45 million for our fiscal year ending September 30. This would represent revenue growth between 27% and 30% year-over-year. We continue to expect the revenue mix for 2017 to be between 30% and 35% ID, 60% to 65% Mobile Deposit and around 5% noncore product revenue. Additionally, we are reiterating our non-GAAP profit margin guidance as we continue to expect to generate healthy non-GAAP profit margins of at least 20% for the full fiscal year. We expect Q4 operating expense, excluding acquisition-related costs and stock-comp expenses, to be between $9 million and $9.5 million, reflecting our continuing investment in the ID verification business. We expect acquisition related costs and expenses to be between $500,000 and $700,000 and stock-comp expense to be between $1.4 million and $1.6 million for Q4.

Operator, that concludes our prepared remarks. Please open the line for questions.

(Operator Instructions) And we'll take our first question from Darren Aftahi with Roth Capital Partners.

Congratulations and welcome Jeff. Just a few if I may. First, I think if I heard you right, you said sequentially ID transactions grew 50%. I'm just sort of curious, is that the fastest sequential growth you've seen, kind of, at a broader scale? And two, if it is, kind of what's driving that? Secondarily, with your new upgrade on your Mobile Docs product, what's the overlap between kind of customer concentration within Mobile ID and those also using Mobile Docs? And in terms of booking mix, can you give a breakout international and domestic? I guess lastly, the severance cost with the CFO transition, other than the stock comp, where did that hit the P&L? I assume G&A. But just confirmation of that will be helpful.

This is Jim. I'll jump in on one of them the Mobile Docs question and the allow Jeff to respond to your other 3. With regard to Mobile Docs, there is no overlap in use cases between how it's applied in the banking industry with our group that pursues Mobile Deposit sales. And also separately, how it applies to the lending industry. So let me give you the use cases that might help clarify this. With regard to Mobile Docs in banking, clearly, in terms of the payments using Mobile Deposit, sometimes there are invoices or trailing certifications or documents that are associated with that payment or a check. In that case, using Mobile Docs can capture the invoice and associate that payment, that check with that particular invoice or bill of lading, as an example.

Separately, as we see the application of it in the identity business, it's clearly for people who are providing loans, and particularly those, which are high intensive document requirements such as mortgage, as I mentioned during my remarks. So we see it really as a product that serves 2 masters to a degree in terms of what we intend to use it with -- for. We actually have even given it some different nomenclature in the Mobile Deposit area as associated trailing documents, and in the identity area as Mobile Docs. But fundamentally the same technology. Snap a photo of a document any size, we can crop it, we can remove any kind of noise, which would be shadow or other types of elements that can distort the image. We can correct for that and then give a very crisp image from which you can conduct your business, all through the little camera on a phone. Hope that answers your question.

Okay. Darren, this is Jeff. On the sequential growth in the transactions, 50% is a great number for us this quarter. As I look back, we've had good growth, strong growth in previous quarters on smaller numbers. So I would say 50% isn't necessarily the highest, but it's up there amongst the highest and is very strong. So we're pleased with that number. Your question on the mix international versus North America, I would say that the business we've seen has been between 20% and 30% from an outside of North America perspective. As we look forward into 2017, that should near 30% from outside North America and then long term, I would think the business would see business around 40% outside of North America. On your fourth question, the severance cost, yes, that all went into G&A, the severance and the stock comp.

Next we hear from Mike Grondahl with Northland Securities.

Welcome, Jeff, and congratulations. Jim, a question for you. Did you stumble on or come up with any new use cases during the quarter?

Well, Mike, we always do. It's interesting. One of the things that we're seeing, a trend and it's just early right now, but in terms of charitable giving for Mobile Deposit as an example. These charities are collecting thousands and thousands of checks as donations and they want a more efficient way for them to process those checks. And so -- well, we are working very diligently to secure additional charitable organizations. I do believe we made an announcement, American Cancer Society is working with Mitek, and we expect that others will follow. We've had several inquiries. That's on the deposit side.

On the other area, with regard to identity, we're seeing tremendous interest in adjacent vertical markets. And I named travel and shared economy in my prior remarks, not to mention also lending. And there's a fourth one, in education. We have one case study and we hope to be publishing in shortly, of a regional college district in the Western United States, which has seen a material improvement on their application processing and enrollment, reducing it from 2 weeks typically with the paper-driven process they had before to less than 7 minutes using a phone or online with Mobile Verify. Remarkable change. They're extraordinarily happy.

We're not sure how big that particular market is an ID for education, but it shows the power of what that product can do. I mentioned during my remarks what we do, again, for a financial services organization and then I'll just close with one additional one in the shared economy world where we're seeing the need to create trusted relationships as growing. And we do have a toehold in certain key and large accounts there, that's growing nicely. I think that's reflected in some of the numbers Jeff reflected on, but we're seeing use cases expand across the board for both Mobile Deposit and Mobile Verify.

Got it. And you mentioned Trulioo in, I think it was, Vancouver and Signicat in Norway as kind of partners. Can you be a little bit more specific, how are you working with those guys or how are you helping them?

Yes, that's a good question, actually. And it is a true partnership. Trulioo is a unique provider of data services. They are a traditional data bureau, you would put them in that category. But what's nontraditional about them is that they're going to developing world countries who have little or no information about individuals. You may not know this and it's interesting working with them, I've learned this, there's over 200 million births worldwide, babies who are born, who are invisible. There's no documentation, there's nothing about them. Imagine the problem in India or in African continents or in certain parts of the developing world. And they've made a concerted effort to find ways to source information to provide some level of identity verification through data.

But data is not enough. And so we provide the other element, which is identity verification. Our service through the cloud with regard to snapping a photo of a document, it could an ID, a paper or some other mean of formal identity. Combined that makes a very interesting application and solution. So they have actually embedded our technology into theirs and they are offering it to certain customers who are in the payments processing world. One of whom, we think, one of which is we expect to start in production next quarter.

By the way Trulioo is an interesting company, funded partly by American Express. So it's a player. They're very knowledgeable people in this new domain of data for nontraditional countries. We think of Experian here in the U.S. and in the U.K. and in Brazil, it's a very large provider of the data services, they are. These are well-developed markets with well-developed documentation. Lots of other countries out there that don't have that. So to have a global footprint, partnering with people like Trulioo is important for Mitek besides selling directly to major enterprise customers. So that's number one.

Number two is the group in Norway, Signicat, terrific folks. Big presence in the European continent. We're working with them on a large bank in the Benelux area and so far, we've engaged with both partners with customer prospects, it's not something that we're hoping that customers would come, that's part of the deal. We start with the customer, we form a relationship and either we embed our technology or co-sell with them. Hope that helps.

(Operator Instructions) We'll hear from Mark Schappel with Benchmark.

Jim, starting with you. Given that you've upgraded the management team this quarter pretty meaningfully, what can we expect in terms of growth of the sales force over the next few quarters?

Mark, first let me comment. I think we augmented our management team not upgraded. We have a terrific group of people here leading the company at all tiers. You need the top-level folks, you also need folks who are driving the day-to-day activities and getting the products out the door. So I'll just change that comment a little bit to say we augmented. Very happy to have Jeff here. Kalle is a tremendous addition to Mitek with deep experience, and Rene is going to be just terrific for us. Really looking forward to his performance. He's just been with us 3 weeks now. So this is all about sales and bookings. And that's the nature of a cloud business. So we're working very hard to continue to invest in the sales area.

I would say to characterize our future with regard to 2018, that's quickly approaching. Our primary investment will be in sales, continue the investment in the innovation area, and thirdly, customer success. And that may be a new term, Mark, or not for you, I'm not sure but for us, what that means is the ability to -- once we have booked and secured a customer, to keep that customer, right? To keep that customer very happy and to expand that customer. Many of our customers are pay-as-you-go. As we mature this market, we are going to see more and more of those ratable deals for 2, 3 year periods. But as we get started, many of them pay-as-they-go. We need to make sure that our product is performing to their expectations and they're getting all the benefits they expect out of it.

What that should result in is greater volume in transactions, which obviously drive our top line. Secondly, they are great testimonials. With our customer base, and you know some of them that we've announced in the past, these are marquee customers. The list of logos continues to grow here at Mitek. It's unbelievable. I haven't seen a variety of such blue-chip customers in a company at this stage as I have here at Mitek and I'm proud of the team. So we're going continue driving that, not only in the top line with sales and bookings, but clearly in the back-end with regard to really satisfying those customers. So those are 3 areas. Sales, development in terms of innovation, I mentioned deep learning, and the third area of course is customer success.

Great. And point taken on the augmentation here. So next question with respect to Rene's appointment. Is he filling an existing position or is this an entirely new position that you've created?

It's really a position that has emerged in terms of a strong Managing Director for all of Europe. When we purchased IDchecker, they are a great group of people, the cultural fit was tremendous. But now as we have grown with them and in Europe and have others aspirations in different continents, we need a person with strong general management experience, who has done that and has worked in concert with NASDAQ public U.S.-based companies. Rene's Dutch. We were very fortunate to find him in Amsterdam where our headquarters are located. So it was an easy transition for him and for us. But his responsibility goes beyond the Netherlands into the U.K, which we think is a primary geography for us and ultimately onto the mainland. Now we have many opportunities there. We'll be announcing some in the future.

Okay. And then finally here any update on the SAP Areva partnership? I realize it's still early days but I was just wondering if there's any additional comments or feedback on that?

Well, we have been working very closely with them and it's a good question, Mark. And their changing plans have delayed and are putting that project in an area of uncertainty as we move forward. So we are watching it very closely. These are internal decisions to Areva and we are still working closely to understand what their ultimate direction is. Fortunately the infrastructure we put in place to support that deal can support other opportunities like that. So our investment in that area is really a derivation of what we're already doing in Mobile Deposit and we think that investment will pay off long term. Whether or not it's with Areva or not, I can't be for certain.

(Operator Instructions) We'll now hear from Bhavan Suri with William Blair.

This is Alex Vecchi on for Bhavan Suri. Since all the other questions have been asked, this one is for Jeff. I know you haven't been on for very long, but just out of curiosity from the month or so you've been on board sort of what are the strengths of Mitek you've seen and maybe some of the weaknesses as well?

Alex. That's a great question. I've been on board 3 weeks here and it's been a great 3 weeks drinking from the fire hose, which has been terrific. What's really encouraging to me is, it's a great group of people here, there is people interested in really tackling the ID verification market going further into this, building a big SaaS business. That's all exciting to me and while I -- why I joined.

The strengths of the company, this business is definitely -- there is a lot to the payment side of the business the mobile check deposit where the company really has deep roots and owns such a huge portion of the market. But then the willingness and the interest and the desire to really take over verification is a real strength here. I think the company has got technology that's far ahead of other companies. I think the company has got great relationships in the markets that they've been in and so far, this all looks super positive to me and I'm excited I have joined. So I'm looking forward to a great path here.

That will conclude the question-and-answer session. I will now turn the conference over to the company for any additional or closing comments.

Thank you, operator, thank you, everyone, for joining us today. Management might -- Mitek's management rather will be presenting at the 37th Annual Canaccord Genuity Growth Conference in Boston on August 9. If you're planning on attending, please stop by and say hi. We hope to see you there. This concludes our call, and have a great day.

That does conclude today's conference call. Thank you for your participation. You may now disconnect.