Mitek Systems, Inc.

Good day, and welcome to the MyTek Systems Second Quarter Fiscal 2021 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Todd Kehrli, MKR Group. Please go ahead, sir.

Thank you, operator. Good afternoon, and welcome to MyTek's Second Quarter Fiscal 2021 Earnings Conference Call. With me on today's call are MyTek CEO, Max Karnecchia, and CFO, Jeff Davison. Before I turn the call over to Max and Jeff, I'd like to cover a few quick items. This afternoon, Mytek issued a press release announcing its second quarter fiscal 2021 financial results. That release is available on the company's website at myteksystems.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 FCC filings, including our most recent Form 10-K and 10-Q for a complete description of these risks. Our statements on this call are made as of today, April 29, 2021, and the company undertakes no obligation to revise or update publicly any of the forward-looking statements contained herein. Thanks, Todd.

Good afternoon, everyone. Thank you for joining us today. I hope you and your families are staying healthy and safe. First, I want to commend the MyTech team for their continued hard work. Because of your dedication and determination, MyTech delivered record second quarter revenue with exceptional performance across both lines of business. For the second consecutive quarter, our identity verification revenue grew more than 45% Thank you for joining us. up 34% year-over-year and cash from operations of $7.3 million. We remain energized by the rising momentum in the identity verification market with digital identity solutions rapidly emerging as the nexus to building trust and doing business online. More and more of our existing customers are expanding identity verification well beyond the initial onboarding use case and this quarter, We added numerous new customers outside of the financial services as we helped organizations in telecommunications, marketplaces, and technology establish an appropriate identity verification solution. Identity verification has never been more relevant. Rapid advances in artificial intelligence are enabling novel forms of fraud and increased scale and frequency of data breaches. all of which is adding heightened pressure on organizations to protect customers' data and access. As I recently wrote for the Forbes Business Council, being able to secure users' data has become a business imperative. To prosper long-term, companies that rapidly transitioned to online commerce now must demonstrate to customers that they can be trusted to protect their data online. Organizations no longer have the luxury to simply verify access at the point of onboarding. Instead, they need to continuously authenticate and know exactly who their customers are across channels and throughout the customer lifecycle. According to Javelin's annual identity fraud study, $56 billion was lost in combined identity fraud and identity fraud scams in the United States in 2020. 39 million American consumers were impacted with a loss per fraud incident of $1,350. Most alarming was that more than half of the consumers victimized by identity fraud experienced total account takeover loss across multiple accounts. These numbers are staggering and validate the significant new investment being made in identity verification as an integral function to fight fraud online. The growing usage of digital channels for commerce presents the perfect opportunity for criminals to commit fraud. So we need to come together as an ecosystem and deliver stronger forms of authentication. Javelin recommends, and I quote, biometric and behavior analytics should be used from beginning to end across digital platforms to help continuously authenticate transactions. Well-authenticated identity verification using both passive and active biometrics is primed to solve this problem. Identity verification is rapidly becoming an integral element of most organizations' technology stack, and we believe the next decade of fraud prevention will be defined by an organization's approach to the lifecycle of continuous identity and access management capabilities. Mytek is the only enterprise class provider in the identity category, and our standards of service remain unchallenged. Our approach is to provide advanced, linked and layered identity signals from initial onboarding with documents, devices, and biometrics to authentication, reverification, and continuous identity fraud detection. Our customers globally represent hundreds of the world's best-known brands and banks, and our proven track record of success continues to grow as we expand our reach into this fast-growing market. MyTek's ambition is to be an indispensable partner in fighting identity fraud for the markets and geographies we target and the momentum we are experiencing is evident. Looking forward, our pipeline of potential new customers is strong. Our existing customers are expanding their use of MobileVerify across multiple use cases and our channel partnerships are gaining traction. As the industry-leading solution for identity verification, we are committed to maintaining product superiority and expanding our reach into this large and growing market. We are committed to innovation and delivering products that are simple and intuitive to use while protecting organizations from the growing threat of fraud. Turning to our deposits business, mobile banking usage continues to increase every quarter. This quarter, JPMorgan Chase reported 9% increase in mobile banking users to 41.9 million customers, and Wells Fargo reported active mobile banking customers increased 8% to 26.7 million. Along with this increase in mobile banking adoption, mobile check deposit was rated the most valuable mobile banking app feature in 2020, according to a recent Forbes survey. Similarly, 70% of consumers surveyed by Cornerstone Advisors in 2020 said depositing a check was one of the most important mobile banking features, and 85% intend to continue depositing checks using their mobile devices in 2021. As a result of this increase in customer adoption, our highly profitable deposits business continued to grow during the quarter, with its revenue increase increasing 18% year over year. Surprisingly, 42% of consumers surveyed used mobile deposit for the very first time in 2020, indicating the sizable opportunity for growth and continued adoption. And the 7,500 financial institutions that use our mobile check deposit solution are pushing for mainstream consumer acceptance, as it represents a significant cost savings for them. So don't be surprised when you see a TV ad featuring Samuel L. Jackson, Charles Barkley, and Magic Johnson telling you that using mobile deposit is a magical experience. It is. And we look forward to continuing adoption of our deposits product as more and more consumers discover its ease and convenience. In closing, our strong results show the central role that our products play in this digital economy. The acceleration in demand for our identity verification solutions is ongoing. and our record revenue demonstrates how we are strengthening our market position in 2021 and beyond. Now I'll turn the call over to Jeff to discuss the financial results in more detail. And following Jeff's remarks, we'll open the call up to questions. Jeff, please go ahead.