Mitek Systems Inc (MITK) Q3 2022 Earnings Call Transcript

Good day, and welcome to Mitek's Third Quarter 2022 Earnings conference call. All participants will be in a listen-only mode. Please note that this event is being recorded. I would now like to turn the conference over to Todd Kehrli of MKR Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Mitek's Third Quarter Fiscal 2022 Earnings Conference Call. With me on today's call are Mitek's CEO, Max Carnecchia; and CFO, Frank Teruel. Before I turn the call over to Max and Frank, I would like to cover a few quick items. This afternoon, Mitek issued a press release announcing its third quarter fiscal 2022 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 want 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 the Company’s 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 and 10-Q for a complete description of these risks. Our statements on this call are made as of today, July 28, 2022, 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 two for the periods reported in the release. With that said, I will now turn the call over to Mitek’s CEO, Max.

Thanks, Todd. Good afternoon, everyone, and thank you for joining us today. I am pleased to announce that we achieved record revenue for the quarter, with a 24% year-over-year growth. Congratulations to all Mitek teams for their exceptional efforts, and thank you for your continued dedication to our mission and our customers worldwide. Before Frank delves into the financial details, I want to highlight the significant market opportunity we are addressing. As more consumers conduct business online than ever before, identity verification has become crucial for ensuring safe digital access. In 2021, identity fraud and scams impacted 42 million consumers and cost companies an astonishing $52 billion. Although that's a significant figure, the number of internet users is rapidly increasing, reaching billions, and the prevalence and cost of identity fraud are expected to rise. Mitek's identity solutions have been designed to tackle these challenges by equipping organizations with the necessary insights, technology, and solutions to confirm whether the individual accessing their digital account is verified, authenticated, or genuinely present. As digital usage expands, organizations can prevent identity fraud and protect consumer information by verifying identities prior to transactions or service access, all while adhering to growing regulatory pressures. Two notable use cases driven by increased regulation are the right-to-work and right-to-rent laws in the UK, both of which mandate identity verification. The right-to-work law allows workers the freedom to choose whether or not to join a union; it also makes union dues optional for employees. Effective identity verification is essential to prevent fraud in this context, enabling unions, employers, and governments to maintain control. The right-to-rent policy, introduced under the Immigration Act of 2014 in the UK, restricts undocumented residents from accessing rented accommodations by requiring adult documents to verify their legal status in the UK before granting tenancy. This quarter, HooYu received government certification as a digital identity provider to offer ID verification services for right-to-work, right-to-rent, and criminal records checks, becoming one of only two identity service providers in the UK to achieve this highly sought-after government trust mark. Alongside these regulatory developments, our customers are diversifying their use of identity verification and leveraging the automation and scalability of Mitek's Mobile Verify as they creatively attract new consumers. This quarter, one of our large banking clients launched a series of televised promotions as part of a nationwide advertising campaign, leading to an overwhelmingly positive response and millions of identities being verified through our solution. We're proud to support their identity needs during this significant surge in consumer onboarding. Additionally, a gaming client introduced a new feature allowing users to make microtransactions within the game for specific enhancements, resulting in over one million age verifications in the first week, all powered by Mobile Verify, which also generated substantial additional revenue for the customer. Another instance this quarter involved a large tech company that utilized our solution to verify the identities of all attendees at its global developers' conference, showcasing the remote access use case as a growing opportunity for identity verification solutions. These examples illustrate the ongoing and expanding need for digital identity verification. As transactions increasingly take place online, our solutions are more critical than ever and must be inclusive. This quarter, ID R&D, our biometric subsidiary operating in over 70 countries worldwide, announced the results of the first-ever independent evaluation of a facial liveness detection product for demographic bias, conducted by Pixie Labs, an accredited biometric testing lab. The results confirmed that ID R&D's ID live face product demonstrates fairness across target demographic groups, including gender, age, and race. Liveness detection is essential for preventing spoofing attacks, and biometrics play a crucial role in digital identity verification and authentication. A bias in liveness detection can lead to inaccurate results for certain demographic groups, which in turn can create barriers to access for digital banking and other services. The findings from this report will guide ID R&D's continued development of machine learning products aimed at supporting responsible AI and reaffirm Mitek's commitment to providing inclusive digital access for all. Mitek also expanded its Identity Solutions this quarter with the launch of the Mitek Verified Identity Platform, MiVIP. Designed for faster and more secure digital access, MiVIP provides companies with comprehensive control over the entire customer identity journey, thus saving them time and resources. This new platform combines our best technologies, the recent acquisition of HooYu, and our commitment to empowering customers to manage their consumers' experiences. A single platform that efficiently orchestrates a KYC (know-your-customer) journey is essential for managing identities, minimizing friction for good customers, and identifying potential risks for digital commerce. With HooYu KYC technology at its core, along with ID R&D biometrics and Mobile Verify verification integrated, we believe MiVIP represents the most comprehensive end-to-end identity platform currently available. Its low-code and no-code capabilities allow us to offer this platform to businesses of all sizes, enabling them to manage KYC processes without needing extensive developer resources. This broadens our market reach, encompasses more vertical segments and geographies, and introduces more use cases for our existing customers and partners. MiVIP also provides organizations with a holistic view of consumers for better decision-making throughout their journey, optimizing workflows and enhancing customer experiences. We recognize that business needs vary by region and vertical segment, and consumer experience is paramount. To address these needs, we provide flexible identity data signals. MiVIP also offers orchestration capabilities, enabling clients to utilize the most relevant data signals for their operations and adapt to changes easily. Identity has evolved from merely facilitating digital commerce to being a vital component of an organization's technology framework, as errors can lead to significant financial losses from identity fraud or penalties. This issue is becoming increasingly complex, but MiVIP offers a complete end-to-end platform that empowers organizations to combat these challenges. We are excited about MiVIP and how it broadens our offerings, expands our addressable market, and positions us for accelerated growth. The earlier examples of expanded use cases highlight the growing reliance on digital identity verification as a vital step in ensuring safe digital experiences for customers. Our mission at Mitek is to deliver trust and convenience for every digital transaction, and we look forward to updating you on our progress in the future. Now, I will pass the call over to Frank to provide a more detailed discussion of the third quarter financial results. After Frank's remarks, we will open the floor to questions.

Thanks Max, and thank you to my team for all of your significant contributions this past quarter. Bridging from Max's remarks, the consumers raised the digital channels has meant that fraud attacks continue to accelerate and the increasing complexity cost companies billions in fraud losses and significant operating costs. As discussed, the torrid pace of these attacks has been especially difficult for organizations that lack the internal technical resources, infrastructure, and the expertise to respond at the speed of fraud and as such, has created urgency for orchestration enabled solutions like our Mitek Verified Identity Platform or MiVIP. During the third quarter, we fully integrated the orchestration technology from our HooYu acquisition and we launched MiVIP. We also continue to integrate our go-to-market teams and are already building a sales pipeline for our new orchestration platform here in the U.S. As Max mentioned, during the quarter we saw several new use cases for our digital identity verification solution such as the regulatory requirements for the U.K. around, as Max stated, right-to-work and right-to-rent initiatives; verification for this new interactive gaming customer for in-game purchases; and also excitingly attendee verification for important events—all of which bolster our view that digital identity verification is an essential ongoing step throughout a customer's digital commerce journey. To that end, we are excited about the launch this quarter of our end-to-end identity platform MiVIP, which significantly expands our addressable market and will position us to accelerate our identity revenue growth. With that preamble, let's unpack the Q3 revenue and operating results in more detail. Mitek generated third quarter results of $39.3 million, a 24% increase year-over-year. Software and hardware revenue was $19.8 million, up 17% year-over-year. The increase in software and hardware revenue is primarily due to the growing contribution of ID R&D continued mobile deposit reorders as well as Check Fraud Defender revenue. One item to point out is that ID R&D had another very strong quarter, as I mentioned contributed to the growth in our overall software and hardware line. While this revenue is transactional in nature and as part of our identity business, because it's offered on-premise ASC 606 requires that we put that revenue into the software line. Services and other revenue which includes transactional SaaS revenue, maintenance, and consulting services was $19.5 million for the quarter, up 32% year-over-year. Our transactional SaaS revenue increased 45% year-over-year to $14.7 million. Driving this growth in transactional SaaS revenue was increased Mobile Verify volumes as well as the addition of HooYu SaaS revenue. An important highlight here to note is that even without the addition of HooYu SaaS revenue, our transactional SaaS revenue would have increased solidly both sequentially and year-over-year. As we move forward, ID R&D, which is an on-prem solution, continues to grow we will start to move away from providing transactional SaaS revenue numbers on a quarterly basis and will instead break out deposits and identity revenue to provide a more holistic picture of each business. For Q3 2022, our deposit revenue increased 5% year-over-year to $21.9 million, driven by global deposit reorders and a nice contribution from our new Check Fraud Defender product offering. Identity revenue increased 58% year-over-year to $17.4 million, driven by the expanded use cases we mentioned earlier as well as the addition of HooYu SaaS revenue and the very strong contribution from ID R&D. We delivered strong software and hardware gross margins of 97% for the quarter. Gross margin on services and other revenue was 79% for the quarter, and our total gross margin for the quarter was 88% compared to 89% in Q3 last year. Total GAAP operating expenses, including cost of revenue, were $38.1 million compared to $26.3 million in Q3 of last year. This increase is due to the investment to grow our identity business and the additional costs associated with the acquisition of ID R&D and HooYu. Sales and marketing expenses for the quarter were $11.2 million, compared to $8.1 million a year ago. R&D expenses were $9.4 million compared to $6.9 million a year ago, and our G&A expenses were $6.7 million compared to $5.6 million a year ago. GAAP net loss for the quarter was $0.9 million or $0.02 per diluted share, reflective of the investment made to accelerate the growth of our HooYu business and the restructuring costs associated with realizing the acquisition synergies. Our diluted share count was 45.1 million shares compared to 45.2 million shares a year ago. Now, 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, litigation expenses, amortization of debt discount and issuance costs, restructuring costs, and the related tax impact of all these items. Non-GAAP net income for Q3 was $10.2 million or $0.23 per diluted share, a decrease of 4% year-over-year. Our non-GAAP adjustments included $4.5 million of amortization and acquisition-related costs, $3.6 million of stock comp expense, $2 million in cash tax, $1.8 million of restructuring costs, another $1.8 million amortization of debt discount and issuance costs, and $438,000 litigation expenses for the quarter. This was all offset by the income tax effect of pretax adjustments of $3 million. Looking ahead, we expect sales from our new MiVIP platform will help us accelerate our identity revenue growth in fiscal 2023. While we are extremely excited about the opportunity with our new MiVIP as well as our growth initiatives, we are cautiously optimistic about our ability to deliver similar revenue as we've had in the third quarter again in the fourth quarter. As we have mentioned, our identity revenue is transactional and varies quarter-to-quarter based on consumer activity such as the expanded use cases mentioned earlier. While it's exciting to see the expanded use cases for our digital identification solutions, it is possible that our fourth quarter identity revenue could be at or even down sequentially despite being up year-over-year. Now, on the topic of profitability, we made the necessary investments in the third quarter to integrate our technology and our go-to-market teams as quickly as possible to magnify the opportunity of the new platform for our business. We believe this is an investment worth making given the high revenue growth and expanded addressable market and we expect the new orchestration platform will bring to Mitek. As I mentioned earlier, our quarterly results reflect a $1.8 million restructuring charge, a result of the cost synergies we were able to gain from the integration of HooYu into our organization, as well as the realignment of our expenses as we continue to move towards profitability in our identity business. We believe our identity business will reach profitability in the second half of fiscal 2024. Lastly, we're excited to welcome our new auditors, BDO, who have come onboard earlier this month and we look forward to working with them on a go-forward basis. Welcome, BDO. In closing, we are pleased with our third quarter results and we're extremely excited about the launch of MiVIP and the opportunity it creates for Mitek to accelerate our growth. We're also very pleased by the expanded use cases for our identity verification solution and the solid performance of our other growth initiatives including ID R&D, Check Fraud Defender, and of course, our mobile check deposit business. Mitek's position as a global leader in digital identity and digital fraud prevention is strengthening day-by-day as we work to make digital access faster and more secure than ever.

We will now begin the question-and-answer session. Our first question will come from Jake Roberge with William Blair. Please go ahead.

Hey guys. Thanks for taking my questions and congrats on a great quarter. It sounds like business was actually really strong. But I think everyone knows what's out there. And I was just wondering if you could actually touch a little bit on what you're seeing in the macro environment and specifically what you're seeing with customer buying behaviors. Have you seen any deals get pushed out whether it be mobile deposit or ID verification, or have you seen any customers decrease in usage volumes as a result of the macro environment? I know that there are likely puts and takes, but I would love to just get some color on how the macro has impacted your business?

Yes. Thanks for the question, Jake. And I appreciate the positive comments. Obviously, there's a lot of uncertainty out there. You can't read a news story or listen to radio without coming across it. The SaaS transactional nature of our identity business, as we used some examples in the prepared remarks, fluctuates with not just the cadence of an individual business, but also the economic environment that their end consumers are working within. The direct answer to your question is, so far we have not seen that impact individual customers or individual use cases or individual geographies, period, full stop. Related thought, it's illogical that it wouldn't start to show up, right? So if we think about the increase in interest rates and we've got a lot of financial services customers, we've got a lot of FinTechs. If you're doing mortgage origination, if you're doing HELOCs, you're doing refinancing, as those interest rates go up, the number of new loan originations is likely to go down. And that may not be a huge part of our business, but that would be an example that I would anticipate to start to see some headwinds in transaction volumes for use cases like that. But the direct answer to your question is, so far, no.

Yes, that's great. And like I said, the numbers would show that, but just I had to ask. And then, just a second question. So you mentioned in your prepared remarks that the MiVIP platform has opened up new use cases with both customers and partners. So, on that partner front, now that you may actually be more competitive with some of your old orchestration partners like HooYu, have you seen any changes to those relationships, or are those kind of status quo, and you're actually seeing some expansion opportunities with other partners because of the added functionality?

Yes. I think we've had some smaller partners that have felt that they view it as competitive and threatening. But our larger partners and prospective larger partners in that area of information service providers view it very much as an opportunity. You've got the best-in-class offering and solution, matched with a public company with great standing, a rock-solid balance sheet, and all of the transparency that comes with being that public company. And we just look like a great partner of choice with an enterprise-class offering.

Great. And then just if I could sneak one more in. Could you talk a little bit more about how the initial customer reception has been for MiVIP? I know it's early, but have you seen any changes to the typical customer profile that your platform can target as well as have you seen any increase in velocity in terms of what you're filling up the pipeline with as a result of adding that functionality?

Yes, that's a nested set of questions. Just as a reminder for those who may not recall or aren't as close to it, the MiVIP is basically the HooYu platform, which had been up until our acquisition of HooYu, exclusively offered and delivered in the UK. It is that platform rebranded, relabeled, and then hosted here in the United States and then throughout Europe for GDPR purposes, integrated along with our best-in-class biometrics of face and voice from ID R&D, and then our world-class document identity verification solution, Mobile Verify. So, that's basically what MiVIP is. And we announced that — we launched that at the end of June and it is now available here in the United States. We've been demonstrating it to interested prospects. We've been engaging in sales cycles. And I would say at this point, we've probably had three dozen serious engagements to be able to kind of test the hypothesis. And it's been going well up to and including doing demonstrations and now starting to do some lightweight proof of concepts. The direct answer to your question as far as it does allow us to get to businesses that maybe are more agile, more nimble than the world's largest banks right? These born digital-native businesses that are moving very, very rapidly don't have huge development teams, but do have identity compliance requirements whether those are anti-money laundering, know your customer or just straight up something like age verification. So, we're — just early days, but we're quite encouraged from what we've seen. Those examples I just used there, Jake, were here in North America, but we have likewise on the continent in Europe had similar engagement and similar kind of traction initial traction.

Great. Thanks for taking my questions and congrats again on the quarter.

Thanks, Jake.

Our next question will come from Mike Grondahl with Northland Securities. Please go ahead.

Hey guys, thank you. First question is just kind of on the revenue outperformance. Was that primarily HooYu? Was it more legacy mobile ID? Where would you kind of put performance?

Yes. Hey Mike, it's Frank. Great to hear from you. Really, as I said in my prepared remarks, it's been a very interesting quarter. Our Mobile Verify product in some of the use cases Max discussed had a fantastic volume quarter and performed well. So, I would say it's a combination of both the contribution from HooYu, but also these new use cases—the developer conference, the in-game kind of purchasing opportunity—those are all big Mobile Verify opportunities for us. So, we had the benefit of some pretty good Mobile Verify performance as well as the HooYu performance.

Got it. And those three use cases that were mentioned, I won't re-mention them. But were those related to the HooYu sales force and Mobile ID legacy sales force? And then kind of related to that, is it a little bit different than I'll say historical customers? Meaning, I don't want to call it a one-off event, but clearly this advertising thing that the bank did and this gaming in-game purchase seem to have more of maybe a one or two quarter big benefit than maybe slow off until an event happens again, and especially a conference. So, do you think this is a big new opportunity for you guys going after a customer profile that might be more, I'll say event-driven or shorter term but a lot of transactions?

Yes. So great question. I'm going to start with the latter, and especially as a granddad who buys their kids games, right? This is a phenomenal market opportunity. I think it represents a great kind of test case for us to look at that new vertical as a great way to expand to other companies that are providing in-app purchases, in-game purchases, new lives enhancements, new features available to characters, and so forth. And same with the event business. I think these are great proof points for whether or not our technology is able to scale to handle the volumes that were significant, and it did while doing that. So I think rather than viewing as one-offs, I think, there are great entries potentially into these markets and create a great learning experience for us to turn that into an ongoing revenue opportunity. As it relates to the sales force, as Max mentioned in his comments, the use cases we mentioned were both the HooYu sales force and the Mitek sales force. Obviously, right-to-work in the UK, the right-to-rent those are UK initiatives that were driven by our HooYu teams. But also the pipeline we're building, as Max mentioned, what we're seeing in the U.S. is a combination of those two workforces cross-pollinating, and kind of learning both products. So, I think we've done a really good job in bringing the go-to-market teams together, fostering that kind of cross-pollination in collaboration. And I think that plus these interesting new opportunities—the events, games, the right-to-work—all of these are interesting new use cases for us that I think have real legs and fruition could be very interesting.

Related to that, the three or four use cases also help with outperformance in the quarter? It seems like a couple of them would have been big enough to drive some real dollars?

Yes. Without a doubt.

Okay. And then just on the MiVIP or call it the new HooYu if you will. Are you—is your sales force like all set to go in your pipeline? Are you—is that—are they on the ground and running hard, or is it still sort of, hey, we're educating these guys and they're slow to get? I'm just trying to understand how quick this pipeline can fill up.

Yes, it's a good question, Mike. So, we're still investing in capacities in sales force and cross-pollination. Some are on the ground; some more will come. So as we mentioned, I think last quarter it's going to be an exercise in getting there and building the right kinds of skill sets necessary to sell both products. So we're not there yet. We're still investing. You know, more to come in the coming quarters. But the good news is we've seen some pretty interesting pipeline growth already, and we're still not at maturity in terms of fleshing out that workforce.

Great. Lastly, I'll just say, it sounded like Mobile Check Deposit and Check Fraud Defender had 5% year-over-year growth. Those points were Check Fraud Defender?

We had a very strong contribution from Check Fraud Defender. What's happening if you're following fraud, Mike, it's so interesting; the fraud vector around checks and the average dollar value of a fraudulent check has kind of really put the spotlight on that industry. So a lot of folks are looking at it. It was a strong contributor, without a doubt. Yes, we don't break it up, but it was a strong contributor.

Got it. Thank you.

Yes. For sure, Mike. Thanks.

Our next question will come from Scott Buck with H.C. Wainwright. Please go ahead.

Hi. Good afternoon, guys. Thanks for taking my question. A bit of a follow-up on Mike's question on MiVIP. Could we get a little bit more color on the go-to-market strategy? I mean have you cast a pretty wide net at this point, or are you targeting certain industries, certain companies within certain industries? What's that look like?

Sure, Scott. Thanks for the call and your question. First, MiVIP will be sold by all Mitek salespeople, including the existing teams for HooYu and Mitek Identity. Regarding the second part of your question about our segmentation and targeting, if I had to summarize, we are primarily focusing on regulated industries, similar to our approach with Mobile Verify. This includes sectors like fintech, financial services, and utilities—essentially anything heavily regulated presents a great opportunity for us. The difference with MiVIP is that it broadens the scope of these segments, allowing us to engage not only with the largest Tier 1 banks that have extensive developer resources but also with faster-growing businesses that might have limited app developer resources. These companies still need to move quickly, find effective solutions, and get accurate results. So far, we’re still in the early stages since we just launched MiVIP at the end of June. I want to thank our team for their hard work in making this a priority. We are currently focusing on training our sales organization to target the right businesses and are in a learning phase, which is somewhat iterative. It will take time to identify our key markets and make necessary adjustments. However, as Frank mentioned, we have started to develop our pipelines in North America and Europe, and we will keep you updated on our progress.

Great. That's helpful. And second, on the uptick in sales and marketing and in R&D costs, both sequentially and year-over-year, how much of that is tied to the initial launch year of MiVIP versus—is this more of the run rate going forward?

Well, there's certainly some associated with the one-time launch. But remember, you've now got the HooYu organization in those line items and that will be ongoing, right? We held on to all of the HooYu folks.

Okay, great. And then, last one for me. Can you tell us what legacy HooYu revenue was in the quarter?

We're not breaking that out. I will—I think we shared that in the last call; we gave you a sense of what the baseline was the day that we came together in the trailing 12 months. And they continue to grow at their very nice historic growth rate or better.

Okay. Super. Appreciate the time, guys. Thank you.

Thanks, Scott.

Thanks, Scott.

Our next question will come from Allen Klee with Maxim Group. Please, go ahead.

Good afternoon. Can you just say again when you expect the identity segment to reach profitability?

Yes. Hey, Allen, good to hear from you. As we've mentioned in the past and in today's prepared remarks, we're looking for the second half of fiscal 2024 for that identity business to turn the corner.

Yes. So I wanted to follow up on that. So identity did around $17 million this quarter. So we're talking an annual run rate of close to $70 million. And so, I wanted—the market has changed, and just revenue growth with not profitability is not being awarded the same way it may have been a year ago. And I'm trying to figure out if this is a good business or not pretty much. And maybe you can help me understand, why should it take so long to get to profitability? Do you have to do something with the tech to use more technology and to automate it more, or is it purely just scaling up? Because it seems like $70 million is a pretty good run rate. I'm not sure I really understand why this is going to lose money for such a long period of time.

Well, so Allen, great question. Two things. One, and Max mentioned in his remarks, identity is an unsolved problem. This is an arms race, right? Threat vectors change. Fraud vectors change. We adapt. They adapt. And we kind of leapfrog each other. By they I mean the bad guys and then the providers come up with solutions. So there's a lot that goes into properly verifying identity—right—to really understanding who’s behind that transaction is an important consequence. And that's a lot of work. In addition to that, you've got the sustaining efforts we've had and you're carrying along some of the acquisitions we've done and those kinds of things. So, we think certainly profit is important. Running march towards profitability. And that's a driving focus of this management team is growth as well as profitability. We think as you look at what it takes to address this market and get identity right, we're laser-focused on getting to that fiscal 2024 kind of time frame. But it is a very difficult problem. And getting there, getting the right models, getting the right information, getting the right data, and then recognizing that everything we do today will likely change tomorrow because some new threat vector will manifest itself. That makes us a very dynamic and rich market to operate in, but also a complicated market to operate in.

Yeah. So Allen, this is Max. I think first, the direct answer to your question is, this is a very good business. The second is we're focused here on identity, but when you zoom out and just let's recall that Mitek in composite or the entire portfolio is a rule of 50 business—right—getting both the growth and the very nice EBITDA profitability. I think to come to your specific question around the technology, we've got world-leading technology. We've also done what we think are very important and differentiated acquisitions—ID R&D in the biometric space and then obviously the most recent HooYu with the workflow and end-to-end low-code no-code orchestration. We are going to need some quarters to get all of these things kind of sorted out. There are some redundant capabilities across the portfolio that need to be ironed out, and it may take us three or four quarters to make all that happen. On the other side of it though, we think this is not just a very scalable system that's highly differentiated. We think that it's also scalable from a profitability and a leverage perspective.

Okay. Thank you very much.

You bet. Thanks, Allen.

This will conclude our question-and-answer session. I would now like to turn the conference back over for any closing remarks.

Thank you, operator, and thank you everyone for joining us today. We look forward to updating you again next quarter. Our call has concluded. Have a wonderful day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.