Earnings Call Transcript - MITK Q4 2025

Operator, Operator

Good afternoon, everyone, and welcome to the Mitek Reports Fiscal 2025 Fourth Quarter and Full Year Financial Results. This call is being recorded on Thursday, December 11, 2025. I would now like to turn the conference over to Ryan Flanagan with ICR. Thank you. Please proceed.

Ryan Flanagan, ICR

Thank you, operator. Good afternoon, and thank you for joining us today to discuss Mitek's Fiscal Fourth Quarter and Full Year Fiscal 2025 financial results. Joining me today are Chief Executive Officer, Ed West; and Chief Financial Officer, Dave Lyle. Please note that today's call will include forward-looking statements, and because these statements are based on the company's current intent, expectations and projections, they are not guarantees of future performance, and a variety of factors could cause actual results to differ materially. A description of these risks and uncertainties can be found in our 10-K filing dated December 11, 2025, and our other SEC filings. These forward-looking statements include, but are not limited to, our expectations around consumer demand for our products and services, expansion of our Check Fraud Defender or CFD, data consortium, the ongoing stability of our check verification business, our growth and investment plans, expected improvements in gross profits and unit economics, improvement to operating leverage and scale, expected free cash flow conversion rate and our FY '26 financial outlook and guidance. Except as required by law, we do not undertake any obligation to update these forward-looking statements. This call will also include references to non-GAAP adjusted results. Please reference this afternoon's press release and our Investor Relations website for further information regarding forward-looking statements and reconciliations of GAAP to non-GAAP financial measures. With that, I'd like to turn the call over to Ed. Ed?

Edward West, CEO

Thank you, Ryan. Good afternoon, everyone, and thank you for joining us today. For those less familiar with Mitek, we provide the identity verification, authentication and fraud decisioning infrastructure that high assurance institutions rely on to onboard customers, authenticate users and protect what's real across digital interactions. We closed fiscal '25 with a strong fourth quarter, coming in ahead of our expectations, driven by broad-based demand across our portfolio of business. As we reflect upon fiscal '25, one constant stands out. The fraud landscape is changing at an extraordinary pace as generative AI is accelerating both the volume and sophistication of fraud and identity-based attacks. AI is lowering the cost of creating deep fakes and synthetic identities for fraudsters. The Deloitte Center for Financial Services estimates that AI-enabled fraud in the United States could reach $40 billion by 2027, and recent industry research shows that a majority of financial institutions now view synthetic identity fraud as their most urgent emerging threat. In recent conversations with several of our largest banking partners, we have heard the same message. AI-enabled fraud attempts have risen sharply over the past year and institutions are turning to Mitek with a clear mandate to help protect their customers and their business as these attacks scale. Before returning to key takeaways, I want to highlight a brief operational update. To deliver on our commitment to improve transparency and provide a simpler view for our investors that matches how customers buy and how we are operating, we're updating our external reporting beginning this quarter. We are now disaggregating our revenues between fraud and identity and check verification. Customers are increasingly asking us to address fraud holistically, not as an isolated identity or payments problem. This has led to tighter integration across our identity, biometrics, authentication and fraud capabilities. Those solutions are included in the fraud and identity portfolio. Check verification includes the heritage mobile deposit and check intelligence solutions. With synthetic fraud accelerating, financial institutions are clear about what they need, fewer point solutions and a core partner who can help secure digital interactions across the entire customer journey. I would now like to discuss a few key takeaways for you as we exit fiscal '25. First, fraud and identity now accounts for over half of our total business. Growing more than 15% year-over-year, it is now firmly established as our growth engine for revenue and SaaS expansion. Second, SaaS revenue growth accelerated to 21% in fiscal '25, a meaningful acceleration from mid-single digits in fiscal '24, while the mix of SaaS increased to 43% of total revenue. These trends contribute to an improvement in the quality and predictability of our revenue. And third, we strengthened the company's foundation in fiscal '25 operationally, commercially and technically, setting a stronger base for fiscal '26. Adjusted EBITDA margins were 30%, and we improved execution across go-to-market and customer delivery. We are now reinvesting in R&D, go-to-market expansion and advanced decisioning to create a more unified and insight-rich customer journey. At the start of the year, we said fiscal '25 would focus on the fundamentals, fixing the foundation and restoring operational discipline required for scalable, profitable growth. Our results this year show that we've done exactly that. We simplified how we run the company, consolidating go-to-market and the product and R&D groups are now under unified leadership. As a result, non-GAAP operating expenses declined 2%, while revenue grew nearly 5%, driving improved efficiency and an 11% increase in revenue per employee. Our identity portfolio was again a major driver of performance. Over the past year, we consistently highlighted that increasing automation and cost efficiencies, combined with continued revenue growth was a key factor to reaching a profitability fulcrum point on a fully burdened basis. With automation now at approximately 90% and identity revenue at roughly $77 million, an increase of 12% year-over-year, that profitability fulcrum point has now been achieved. At the same time, we're seeing a clear shift towards higher assurance identity journeys that require more verification steps. And despite that added complexity, our high level of automation is enabling scale while continuing to expand margins. We see this playing out in both North America and EMEA. In North America, several of our largest financial institutions expanded with us across multiple business units and moved identity earlier in the onboarding flow, combining identity verification with fraud checks in a single stack. In EMEA, banks in the U.K. and Europe are adding new use cases and adopting authentication products such as MiPass, while digital ID initiatives in markets like Spain and Italy are beginning to drive higher verification and authentication volumes. SaaS revenue mix rose to 43% of total revenues, keeping us firmly on track toward the goal we laid out for SaaS to approach half of total revenue. We are also seeing strong leverage in our platform model with gross profit per journey materially higher than that of a single signal workflow. Check Fraud Defender continues to gain traction. ACV grew 50% year-over-year, while data sets configured in the consortium expanded to over 1/4 of all U.S. checking accounts, and that figure is approaching 50% when including FIs in pilot phase. We believe the expansion in data set coverage of checking accounts in the U.S. is quite unique and is a leading indicator of the value for consortium members because accuracy and value scale with consortium breadth. Check Fraud Defender ACV for the year came in below our initial goal, primarily due to the timing of large enterprise deployments. Several large FIs moved through multistage validation and procurement cycles more slowly than anticipated, shifting the decisions into fiscal '26, but not changing the underlying demand. Our expanding footprint is already driving tangible customer outcomes. At our October sales kickoff, multiple large FIs shared that Mitek is preventing millions of dollars of fraud. This feedback underscores the differentiated value of our consortium and the strength of the model as we scale into full production. All of these efforts made fiscal '25 translated into higher margins and stronger free cash flow, which Dave will cover in more detail. With a more unified foundation in place, we are entering fiscal '26 from a position of strength and with a clear mandate from our customers. They want us to unify even more of what we do and help them grow safely. While fiscal '25 was about strengthening the foundation, fiscal '26 is about moving into our next phase, unify and grow. unifying our identity, authentication and fraud capabilities into a cohesive insights-driven platform and scaling it across our customer base. When we help institutions open more accounts digitally, move more transactions through safer channels and keep bad actors out, we then deepen our role in their core customer journeys and grow our SaaS revenue. To guide this next phase, we have organized fiscal '26 around four key pillars that we want to share with you. Our first pillar is to fortify our check verification franchise, the durable platform, including mobile deposit and check intelligence that established our long-standing relationship with many of North America's largest financial institutions and has earned us a reputation as a market leader through scale and accuracy. This franchise remains one of the strongest assets in our business, providing the reliability and trust that our customers expect. Despite periodic fluctuations from license renewal timing, check verification has remained remarkably stable over the last several years. That stability reflects the scale and mission-critical nature of a portfolio that supports approximately 1.2 billion mobile check deposit transactions every year with high margins and high levels of reliability. Our second pillar is to unify our fraud and identity capabilities and expand that portfolio. Fiscal '26 is about showing up as one Mitek across that full journey, increasing our fraud and identity SaaS footprint by enabling customers to grow digital adoption and transaction volume without corresponding increases in fraud losses or manual costs. Fraud and identity now represents just over half of our business and remains our fastest-growing portfolio. The continued shift towards SaaS, high automation and multisignal journeys is improving margins across the broader portfolio. In fiscal '26, we plan to grow the fraud and identity portfolio through deeper signal-rich identity journeys, broaden engagement with customers across additional lines of business and geographies, expand the Check Fraud Defender consortium and continue to drive commercial expansion across our customer and geographic base and growing network of channel partners. Customers are increasingly deploying multisignal workflows that combine documents, biometrics, liveness, behavioral analytics and third-party data, which materially improves their economics by reducing fraud losses, lowering manual review and improving conversion. At the same time, as more institutions contribute data to the CFD consortium, detection accuracy improves and loss rates decline, strengthening the value of the network for every participant, including Mitek. Our third pillar for fiscal '26 is to invest in the areas that we believe we have a clear advantage and where we can lead. As I mentioned earlier, our customers do not just want us to deliver signals, they want a partner who can lead them through this shift by returning data-driven insights for a simple risk-adjusted decision they can act on in real time. This is why our fiscal '26 investments are focused on AI-supported insights and decisioning, biometrics, data and intelligence and targeted go-to-market and delivery capacity. Given our history and expertise, we have a strong basis of differentiation with financial institutions and high assurance use cases. This is where incremental investment dollars will have the greatest impact. You'll see this focus reflected in our financials. We expanded adjusted EBITDA margin to 30% in fiscal '25, and we are deliberately reinvesting to fund these initiatives in fiscal '26 while still delivering attractive margins. We expect improvements in gross profit dollars and unit economics as richer decisioning increases value per workflow. You'll see more of our OpEx shift towards R&D and go-to-market as we fund these higher ROI initiatives. Fiscal '25 proved we can grow margin through operating leverage and scale. Fiscal '26 is about investing behind the capabilities where we can lead and evolving our solution set, all with the goal to accelerate growth. Our fourth pillar is maximizing value through disciplined capital allocation. To lead in the areas where we hold an advantage, every dollar of capital must be deployed deliberately to earn a high return, either reinvested into the capabilities that strengthen our long-term leadership and growth or return to shareholders. We will measure our impact via improving revenue quality and growth, margin durability and strengthened free cash flow conversion, all with a clear capital allocation framework to ensure that we maintain a strong balance sheet while balancing investments with returning capital to shareholders. Our Unify and Grow framework reflects where the market is moving and how our customers are asking us to partner with them. By unifying our capabilities and reinvesting in the technology, data and decisioning layers where we have a structural advantage, we are positioning Mitek for durable recurring high-quality organic growth. We expect to expand our SaaS base, increase fraud and identity revenue, and extend the reach and value of our consortium. Now before I turn it over to Dave, I also want to recognize our nearly 600 teammates around the world and our trusted partners. Fiscal '25 was a year of meaningful change across the entire company, operationally, commercially and technically. And the team delivered with focus, discipline and a deep commitment to our strong purpose-driven mission of protecting our customers and their users. The progress we made this year, including simplifying how we operate, elevating customer support, strengthening the core technology behind our platform and returning to growth reflects the commitment and execution of our people. Their work is the foundation for the results you're hearing today and gives us confidence as we enter fiscal '26. With that, I'll hand it over to Dave.

David Lyle, CFO

Thanks, Ed. As you just heard, we are exiting fiscal 2025 with a clear framework for fiscal 2026. This afternoon, I will focus my commentary on three areas. First, I'll review our fourth quarter results and will discuss revenue using the historical deposits and identity categories. Then I will review our full year performance using the new fraud and identity and check verification reporting structure. Finally, I'll walk through our fiscal 2026 outlook and how it supports the pillars Ed laid out. Starting with fourth quarter results, total Q4 revenue was $44.8 million, up 4% year-over-year, with SaaS revenue growth of 19% being a highlight. Revenue results exceeded the midpoint of our guidance range by roughly $4 million as several large deposit deals closed sooner than forecast due to higher transactional volumes, and we saw stronger-than-expected identity transaction volumes. Identity revenue was $21 million, up 7% year-over-year, driven by 14% SaaS growth from continued transactional volume overages. Deposits revenue was $23.8 million, up 1% year-over-year, driven by growth in CFD SaaS revenue. Q4 non-GAAP gross margin was 84%, down approximately 200 basis points year-over-year due to higher investment in SaaS services delivery. Q4 non-GAAP operating expense was just under $25 million, improving 5% sequentially from Q3 due to lower external services spending and the timing of marketing events. On a year-over-year basis, Q4 non-GAAP operating expense increased by approximately $3 million, but underlying operating expense remained essentially flat after normalizing for a reduction in bonus accruals and a reversal of doubtful accounts the prior year. Adjusted EBITDA was $12.9 million in the quarter or a 28.7% margin. After other income, interest, and tax, non-GAAP net income came in at $11.1 million or $0.24 per diluted share on 47.3 million shares. As Ed mentioned earlier, we have updated our external reporting. Under the new structure, deposits map to check verification, identity maps to fraud and identity, and Check Fraud Defender has moved from deposits to fraud and identity. We are also simplifying our revenue categories. Going forward, the primary change will be the combination of license and maintenance into a single line to better reflect how customers contract and pay for those items. The 10-K provides results in both the prior disaggregated format and the new reporting format, allowing investors to compare historical performance across the two presentations. With that framing, I will now walk through full year 2025 performance. Starting with fraud and identity for fiscal year 2025, fraud and identity revenue was $90 million, up 15% year-over-year, with growth led by our SaaS offerings, primarily driven by continued volume expansion in our core customer base. Customer behavior has become more consistent across regions and customer tiers. Large banks and enterprise customers are converging on the same pattern, shifting identity earlier in the onboarding flow, consolidating fraud and identity workflows, and standardizing on bundled stacks rather than fragmented solutions. Together, fraud and identity is now operating at increased scale and more durable economics, positioning us well for continued growth in fiscal 2026. Turning to check verification, comprised of our Mobile Deposit and Check Intelligence products, this portfolio remains an important cash flow generator for the company. Check verification revenue for fiscal 2025 was $90 million compared to $94 million in fiscal 2024, mainly due to deal timing year-over-year. This year's performance reflects the resilience of a portfolio that has maintained a defined annual revenue range for several years despite overall check volume declines in the U.S. On a consolidated basis, total revenue for fiscal 2025 was about $180 million, split evenly between fraud and identity and check verification. Our 4% consolidated revenue growth breaks down as follows: SaaS grew 21% year-over-year, contributing roughly 8 points of growth, while licensed software and support reduced growth by about 4 points. For the full year, non-GAAP gross margin was about 85%, compared to about 86% in fiscal 2024. The modest decrease is consistent with our transition to a heavier SaaS and services mix. Automation and richer identity fraud journeys are lifting gross profit per journey, offsetting some mix impact and supporting long-term scale. Non-GAAP operating expense for fiscal 2025 was $100.9 million, improving 2% from last year, with an operating expense intensity improvement from 60% to 56% of revenue. Breaking that down, G&A efficiency and lower spending reduced G&A intensity from 20% of revenue to 18%. We streamlined finance and accounting processes, lowering reliance on external advisers. Sales and marketing intensity improved from almost 22% to under 21%, driven by better alignment between marketing and pipeline generation. R&D intensity improved from 18% to 17% as we completed platform consolidation initiatives. Adjusted EBITDA for fiscal 2025 grew by 15% to $54 million, representing a margin of 30%, up from 27% a year ago. Non-GAAP net income for fiscal 2025 was $45 million, remaining roughly flat compared to fiscal 2024. This was largely due to a higher non-GAAP tax rate of 21%, up from 9% in fiscal 2024, driven by higher pretax income across jurisdictions and lower tax deductions. Free cash flow for the year was $54 million, equating to 100% conversion of adjusted EBITDA, compared to just under 65% the previous year. Our capital allocation approach remains consistent and disciplined. We fund high-return business initiatives while maintaining a resilient balance sheet, balanced with returning excess capital to shareholders. We ended the year with about $196 million in cash and investments and approximately $157 million in total debt, resulting in a net cash position of $40 million. This financial position provides flexibility to handle the $155 million convertible debt maturing in early 2026 while preserving liquidity for product development and share repurchases. In fiscal 2025, we repurchased approximately $5 million of shares. Since fiscal year-end through December 10, we have bought back an additional $7.7 million, leaving $13.6 million remaining in the current authorization to execute through May 2026. Now, regarding our fiscal 2026 outlook, we expect revenue of $185 million to $195 million, implying roughly 6% growth at the midpoint. This range reflects stable check verification and accelerating fraud and identity demand. As the first quarter nears completion, Q1 revenue is tracking between $41 million and $44 million. We anticipate fiscal 2026 to be slightly back half-weighted due to a gradual ramp in fraud and identity SaaS. We expect fraud and identity revenue of $101 million to $105 million in fiscal 2026, maintaining the same growth rate we achieved in fiscal 2025. We anticipate modest gross margin pressure in fiscal 2026 due to the mix shift toward SaaS and services while still expecting gross profit dollars to rise. On operating expenses, we plan to increase R&D intensity as we speed up development, funded by G&A leverage and lower sales and marketing intensity. These strategies will help maintain or improve overall operating expense intensity compared to fiscal 2025 even while investing in our product roadmap. We expect fiscal 2026 adjusted EBITDA margins to be in the 27% to 30% range, implying adjusted EBITDA dollars remaining roughly flat year-over-year. We believe that the rising demand for fraud and identity solutions and strong unit economics provide a good balance between profitability and capital deployment into high-return initiatives. We also expect cash taxes to decline significantly in fiscal 2026 due to changes in U.S. tax legislation, particularly concerning capitalized R&D, with a projected non-GAAP tax rate of around 10%. Before we move to Q&A, I want to highlight an important milestone. We have now fully remediated all previously reported material weaknesses in our internal controls, a significant accomplishment reflecting years of investment in processes and systems. We thank our teams, especially our accounting team, for their hard work throughout this process. Our updated investor presentation and the Q4 and full-year financial package are available on our Investor Relations website. With that, operator, we are ready to take questions.

Operator, Operator

Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Mike Grondahl from Northland.

Mike Grondahl, Analyst

Dave, if your SaaS business is doing really well, if you had to sort of distill one or two drivers behind that growth, how would you describe those?

Edward West, CEO

We experienced significant growth in our SaaS segment throughout the year, and we're quite optimistic about our year-end results. The primary factor driving this growth is the current market dynamics. Mitek is well-positioned to address the rising challenge of synthetic fraud, which has been propelled by generative AI, leading to an overall increase in fraud incidence. This situation has heightened demand for our services, strengthened by our partnerships and reputation with many of the world’s largest financial institutions. We are witnessing growth in our relationships with these institutions through new products and solutions. Additionally, transaction volumes are increasing, as we enhance our verification processes and fraud checks for new customers. The demand for authentication is also rising as the market continues to expand, giving us confidence in future growth. This outlook reflects the escalating demand we are experiencing.

Mike Grondahl, Analyst

Got it. And then any more details you can share on Check Fraud Defender number of banks or revenue or just kind of progress momentum you're seeing there?

Edward West, CEO

We experienced 50% growth in our overall Annual Contract Value. A particularly encouraging metric is the number of data sets we have compiled and configured within the consortium. Currently, we have access to over 25% of all checking accounts in the U.S., and when we factor in the institutions that are in the pilot phase, that figure approaches nearly 50% of all U.S. checking accounts. This is a significant asset for the consortium and our overall brand. It ties back to the idea that the more signals we can provide customers about potential fraud and insights, the more valuable our brand becomes. The progress we've made, the data sets being developed, and the engagement with some of the largest financial institutions in the country highlight the benefits we're seeing. This progress is linked to the accelerating growth of fraud and synthetic fraud globally.

Operator, Operator

And your next question comes from the line of Jake Roberts from William Blair.

Jake Roberts, Analyst

Great to see the strong results, good quarter there. Ed, when you initially joined, you talked about getting organic growth back above 10%. Obviously, still building some things out on the fraud side. But now that you've been here for over a year, do you feel like you're starting to get more visibility into that path with SaaS really starting to accelerate this year?

Edward West, CEO

Yes, great question, and I appreciate the positive remarks on our results. There has been significant effort from everyone in the company. We've experienced over 21% growth in SaaS, reflecting a rising demand. Our focus is on achieving long-term double-digit growth and organic growth. The encouraging news is that the market is trending in the right direction, and Mitek is well positioned to take advantage of this opportunity. We have established credibility with some of the largest financial institutions globally, which is important given the increasing need for fraud and identity detection. All these factors contribute to our confidence in reaching our long-term growth objectives.

Jake Roberts, Analyst

Okay. That's helpful. And then now that you've done a lot of the heavy lifting on consolidating the platforms and also kind of your go-to-market motion into One Mitek over the past year, what inning do you feel like we're in with those changes on both the go-to-market and product into the One Mitek story? And then how do you feel like the visibility into the business has changed over the past year now that you're not operating several different sales forces and systems?

Edward West, CEO

The situation is clearly improving every day. Last year was focused on strengthening our foundation and integrating our various businesses to work together as a cohesive solution with a strong, purpose-driven mission. We've now transitioned from that phase to a point where we are unifying and growing. We need to focus on that integrated platform approach, enhancing our data, insights, and signals to deliver richer insights to our core customers. We are still in the early stages of this, as we are bringing these elements together. We have significant capability, credibility, and insights, but we are still in the process of building these various structures, including our consortium, to add more value to enterprises. This aspect is still maturing, as discussed. Additionally, we are continuously addressing the evolving challenges of fraud. We have established a disciplined operational approach across the platform, and we are beginning to see the benefits of this effort in terms of value creation for our customers and Mitek overall.

Jake Roberts, Analyst

Very helpful. And then, Dave, if I could just sneak one more in. I know you're still sunsetting some of the legacy hardware assets. Can you help us understand what that headwind will be on revenue growth this year? And will those hardware products be fully sunsetted this year?

David Lyle, CFO

Sure. We actually anticipated a quicker decline in revenue from that hardware product. It has lasted longer than we expected, which is a positive from a revenue standpoint. However, we are now at a level where the revenue is minimal. It will have some impact, but not nearly as significant as it has in the past couple of years.

Edward West, CEO

Next question, operator.

Operator, Operator

And your next question comes from the line of Surinder Thind from Jefferies.

Surinder Thind, Analyst

Ed, can you maybe talk about the level of investment that you're making at this point? Is that kind of a normalized pace? Or are we early in an investment cycle where maybe there's a lot of ideas to pursue given how things are changing? Just any color on that as you think about the year ahead and obviously, the next couple of years?

Edward West, CEO

Sure. I think Dave outlined the investment details for this year. Our disciplined approach to operations has been crucial for driving margin, performance, and business integration. We are confident in our position with customers, market developments, and how we can accelerate growth from these opportunities. Our focus remains on maintaining margins and growing free cash flow. We have outlined our investment levels and will continue to drive performance from that point.

Surinder Thind, Analyst

So, Ed, I would like a clarification on my part. What I was trying to ask is whether we are in a position where you could invest even more at this point, or if you are already pursuing all the ideas you want to, considering the need to balance margins and other factors. That's what I'm trying to understand better in terms of the long term.

Edward West, CEO

Sure. Yes. I would say we want to be prudent and balanced with the business. anybody can say they always can invest more. There are clearly continue to be things, but we just want to be prudent. We want to deliver the results and be a balance in it, just like we've talked about in capital allocation and maintaining that flexibility. But right now, we feel good about where we are, the position and what we have.

David Lyle, CFO

Yes. We think, Surinder, we have the kind of right balance like Ed was talking about. The big focus, as Ed also stated on R&D, more specifically on AI decisioning, biometrics and fraud intelligence. And then on the go-to-market side of the equation, it's time to strike a little harder there and put a little more investment there. Most of the investment is going to be in R&D. And I think this is a good pace to do it looking into 2026.

Surinder Thind, Analyst

Got it. You mentioned Check Fraud Defender and the positive developments happening there. You also pointed out that some of the larger financial institutions are taking their time. Could this situation change as we move forward? Or is this the approach going forward, where the delay from several financial institutions means that while the growth rate might eventually pick up, we're seeing a slow pace right now? I'm just trying to grasp the decision-making dynamics at these large financial institutions and how it impacts the growth rate of the FD.

Edward West, CEO

Yes. I think the more data that you have, the incremental value creation just increases. And so the more value everybody sees that should accelerate over time. And we've continued to build out the business, the insights and the value there. But these are very large institutions. They take their time. They've got built-in processes that they go through. The good news is it's coming along. It's been happening and will continue. We think that, that would accelerate over time. But our focus is getting the data and the insight that then we can share with the customers and create more value for them and Mitek.

Operator, Operator

And your next question comes from the line of George Sutton from Craig-Hallum.

George Sutton, Analyst

Nice results. So when we're talking about synthetic fraud, I wondered if we can get a little more granular in terms of how the discussions with the customers are going. You've been trying to migrate folks from point solutions into the MiVIP platform and the full stack. Is synthetic fraud helping drive those discussions? Or are you seeing new interest from new parties specific around synthetic fraud?

Edward West, CEO

Thank you, George. Synthetic fraud encompasses various types of attacks, such as injection, presentation, template attacks, and deepfakes, which are all on the rise. This has led us to adopt a multi-layered detection approach, making orchestration and our VIP platform essential. By integrating more insights and signals, we can enhance our detection capabilities. Our unique biometric and liveness assets, combined with additional third-party signals, work together in a platform strategy to provide more comprehensive data. As synthetic fraud increases, it supports our detection efforts, but the landscape is evolving rapidly. Fraud methods shift frequently, highlighting the need to remain proactive and maintain strong partnerships. As this trend continues, we expect it to affect other organizations and reveal new use cases for implementing biometric liveness and various fraud detection capabilities in applications that may not have been considered a year ago but are relevant now.

George Sutton, Analyst

Got you. So I wondered if we could walk through the pilot process for the banks, these large banks. Obviously, the network effect is starting to occur here. I'm just curious, how are they viewing their pilot process? Are they're obviously looking for incremental value of being part of the consortium versus something they would have identified themselves. Can you just walk through kind of the touch points there?

Edward West, CEO

You just outlined it, being a part of the consortium start seeing the value of, okay, now I'm seeing data, have access to data that I didn't have on my own, for example, where we can talk about the amount of the coverage. A lot of times, we'll go into and meet with an institution, we'll already have insights and data sets on their customers that they didn't give to us, but because we see it in many other financial institutions so frequently that we've been able to build up that profile to then have that conversation. That gets folks attention. Now they start seeing the benefit of being a part of a consortium versus just having an on-premise software solution themselves that is now maybe not seeing all of the signal-rich capabilities about being a part of a broader consortium. So now just going through that just takes time. You walk through, you get the data, you do the test, do the pilot, and it just evolves over time and getting people more broad. You're talking about very large institutions who have done it in certain ways. And the more data they have, they see, now they see the benefits and then participate in the consortium. We have multiple top 10 institutions, some of the largest in the country in working with us. And so we're encouraged about the progress at what we see ahead.

George Sutton, Analyst

Got you. Just one other thing. We're about 80% through the fiscal first quarter, which aligns with the fiscal year-ends of most of your customers. I'm curious if there are any specific things you would highlight that might be a focus for this quarter compared to what you observed in Q3 or any significant changes.

Edward West, CEO

There are no significant differences aside from the ongoing trends that have shaped the guidance we've provided for the year, and Dave discussed both the annual performance and offered additional insights into the current quarter based on our position.

Operator, Operator

And your next question comes from the line of Allen Klee from Maxim Group.

Allen Klee, Analyst

Could you provide some insight on the mobile deposit business? It seems like there might be a decline implied if you look at the numbers. Are you anticipating that this business will experience a secular decline, or do you expect it to stabilize at some point? How do you view this situation?

Edward West, CEO

Well, I'll tell you, let me just turn it over to Dave to walk through in terms of what your point there, Allen, is kind of backing into what that means from a guidance.

David Lyle, CFO

Yes. We view the stability of Mobile Deposit's overall transactional volume historically as solid, consistently exceeding $1.2 billion for years. Our adoption strategies have helped maintain these volumes in a stable position. Recently, however, changes in revenue timing have influenced our results. Notably, a significant channel partner deal in 2023 required us to recognize four years' worth of revenue in one quarter, impacting future revenue projections from that customer. This will result in a renewal in 2027, but the immediate effect has led to noticeable declines over the years. The timing of when larger customers exhaust their transactions and need to renew also plays a critical role in our revenue flow. For instance, at the close of Q4, we experienced some anticipated upsides, which typically occur when customers use up their transactions sooner—this is a positive development. We recognize that while the overall check volume is decreasing, there is stability in our current transaction volumes for now.

Edward West, CEO

Yes. So just kind of long-term takeaway or to summarize that is just separating out the underlying transaction volumes, which is right, has been around $1.2 billion versus the rev rec based on those ongoing purchases of the volumes.

Allen Klee, Analyst

Okay. And then just from a capital structure perspective, is it reasonable to assume that you will pay off the entire amount of the convert when it comes due or that you might use some of your facilities to keep more cash around?

David Lyle, CFO

Yes, we will fully repay the debt when it comes due on February 1, 2026. We have not yet detailed how we will achieve this. We have a $100 million facility, which includes a $75 million term loan and a $25 million revolver to provide us with flexibility. We will determine the method of repayment closer to the due date, which may involve a mix of borrowing and utilizing our existing cash balance.

Edward West, CEO

And as Dave pointed out, we have close to end of the year, roughly $196 million in cash plus those facilities.

Operator, Operator

There are no further questions at this time. I will now hand the call back to Mr. Ed West for any closing remarks.

Edward West, CEO

Great. Well, thank you. Thank you very much for your interest and time. You've got a highly enthusiastic team and company based on the position where we see things evolving in the market and very energized about what's happening. So thank you for your interest, and we look forward to visiting with you all over this next quarter. Have a great day.

Operator, Operator

And this concludes today's call. Thank you for participating. You may all disconnect.