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Mitek Systems (MITK)
F4Q12 Earnings Conference Call
November 7, 2012, 5:00 pm ET
Julie Cunningham – VP of IR
James Debellow – CEO
Russ Clark - CFO
(Patrick) – William Blair & Company
Adam Letson – Piper Jaffray
Tom McCrohan – Janney
Joel Achramowicz – Merriman Capital
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Thank you, (Chanelle). Good afternoon and thanks, everyone, for joining us. With me on the call today is Mitek CEO, James Debellow and Russ Clark, our CFO. The agenda for today's call includes comments from Jim followed by a discussion of the financial results from Russ.
Before we begin, I'd like to make some brief introductory comments. This afternoon, Mitek issued a news release announcing its fourth quarter and full fiscal 2012 financial results which is available on our website at www.miteksystems.com.
Additional, this call is being broadcast live over the internet to all interest parties and the audio of this call will be available on the investor relations page of our website and archived there for 30 days.
During the call, we will discuss some factors that are likely to influence our 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 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 for a more complete description of these risks. We will also discuss non-GAAP financial measures during the call. We believe that these measures are useful to evaluate the company's performance.
Reconciliations to the most directly comparable GAAP financial measures are included in the earnings release on our website. And with that, I'll turn the call over to Jim Debello.
Well, thanks, Julie, and good afternoon, everyone. Today we announced our fourth quarter and fiscal year 2012 results. Total revenue for the fourth quarter of fiscal 2012 was $1.2 million compared to total revenue of $3 million in the fourth quarter of fiscal 2011.
Total revenue for fiscal 2012 was $9.1 million compared to total revenue of $10.3 million in fiscal 2011. I can tell you that no one here at Mitek thinks that our year-over-year financial performance is acceptable, especially me.
I believe that this revenue gap was largely timing related from both a market and product perspective. I am happy to announce, however, that earlier this month, Mitek signed its first contract directly with a top 10 bank for mobile photo bill pay.
And separately, last month, Walmart announced its Blue Bird prepaid card from American Express, the ability to snap a photo of a check, to deposit funds on a prepaid card, was noted in a first paragraph in the New York Times article announcing this product and this is enabled by Mitek Mobile Imaging technology.
This is one of 20 such prepaid projects in which we are involved nationally. Our technology is touching more and more consumers across all socioeconomic segments.
I'd like to take a step back for a moment and discuss our historical revenue model. We're successfully becoming a multiproduct company. However, the majority of our revenues are still derived from our mobile deposit product.
Our revenue model for mobile deposit has enabled us to invest in developing and patenting this technology. And as many of you know, we sell blocks of mobile deposit transactions and recognize revenue and collect cash up front.
As those transactions are absorbed over time, we expect to receive reorders of more transaction blocks. However, the lumpy nature of mobile deposit revenues has become increasingly challenging for us and for our shareholders and the volatility is unacceptable.
Therefore, we thought a lot about this and are moving forward with a different revenue model that is recognized more ratably for our new products and we expect will be more predictable over time.
As we introduce our new mobile imaging products like Mobile Photo Bill Pay, we expect that most of these direct contracts with large, enterprise customers, banks and other corporations, will be structured differently in which we receive a smaller upfront license fee and are paid per transaction over time.
As a result, we expect that the reportable revenue from these future contracts will grow more slowly but irreversibly as consumer adoption and usage grows.
There are multiple trends supporting our confidence, including the growth of penetration for smart phones, tablets and mobile banking. But more importantly, the delight with which customers and their consumers are using mobile deposits, which really is a spring board for our new products is overwhelming.
Just recently, Chase was awarded the highest mobile banking score in the keynote report and is the second such consecutive win for Chase. The report noted "smart phone check deposit is becoming readily available and on its way to becoming pervasive. The one obvious holdup is mobile payments which is still largely absent from mobile banking."
And naturally, Mitek is addressing this gap with the launch of Mobile Photo Bill Pay. Let's circle back for a moment now and review the latest mobile deposit figures that is currently driving the market.