Mitek Systems, Inc.

Good afternoon and welcome to the MiTEX Fiscal 2023 Third Quarter Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal Conference Specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note that this event is being recorded. I would now like to turn the conference over to Todd Curley of NPR, Investor Relations. Please go ahead.

Thank you, operator. Good afternoon and welcome to MITEC's fiscal 2023 third quarter earnings conference call. With me on today's call are MITEC's CEO, Max Carnecchia, and interim CFO, Fwad Ahmad. Before I turn the call over to Max and Fwad, I'd like to cover a few quick items. Today, MyTech issued a press release announcing its fiscal results for its third quarter and first nine months of fiscal 2023. That release is available on the company's website at mytechsystems.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, October 26, 2023, 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'll be discussing certain non-GAAP financial measures. Today's earnings release and the related current report on Form 8K 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'll now turn the call over to MyTech CEO, Max Karnakia. Max?

Thanks, Todd, and good afternoon, everyone. Thank you for joining us today. We're very excited to be talking with you today, having filed our fiscal 2023 third quarter 10Q earlier today. With this filing, we are now current with our SEC filings. Before delving into the fiscal 2023 third quarter results, it's important to acknowledge the remarkable efforts and collaboration of our MiTech teams who have worked closely with BDO to upgrade our internal processes and bring our filings current. We extend our sincere appreciation to all members of MiTech Nation and our valued shareholders for their patience and support throughout this crucial process that was aimed at improving our business operations and instilling additional rigor. Now let me talk about fiscal 2023 third quarter results. It was another record revenue quarter for MyTech. We recorded third quarter revenue of $43.1 million, representing 10% growth year over year. We also delivered non-GAAP net income of $9.5 million and cash flow from operations of $16.6 million during the quarter. Our third quarter results put us on track to meet our full fiscal year revenue guidance of 18% growth year-over-year and 30 to 31% non-GAAP operating margins for the full fiscal year. We expect our deposits revenue to grow over 20% year-over-year for the full fiscal year, while our identity revenue is on track to grow at least 18% year-over-year. Also, over the trailing 12 months into June 30th, 2023, MyTech's net revenue retention, NRR rate, was over 120%, which underscores the value our solutions deliver in the growing markets we serve. So let's dive a bit deeper into our two lines of business, starting with deposits. The two major products in the deposits line of business are Mobile Deposit and Check Fraud Defender, both of which continue to yield strong revenue growth. Our deposits revenue increased 13% year over year in Q3, with mobile check deposit reaching an incredible 925 million transactions during the first nine months of fiscal 2023. Mobile deposit continues to gain traction as financial institutions encourage their users to adopt it as the preferred and safest way to deposit checks. It's convenient and easy to use. and consumers receive an immediate electronic confirmation after making a mobile check deposit. This month, Bankrate, a financial services company that provides consumers with information and tools to help them make informed financial decisions, did a feature on the seven tips for using mobile check deposit. We are delighted to see the interest in mobile deposit continue to grow. Additionally, our Check Fraud Defender product continues to show positive momentum as bank losses associated with check fraud skyrocket. Check Fraud Defender is a secure cloud-based consortium that strengthens a financial institution's existing fraud prevention by using proprietary image analysis to extract data from stolen checks, account screens, and identification documents sold in criminal channels to provide alerts of potentially compromised accounts. This relevant data is shared with participating banks, making it a powerful offering. One example of the rise of check fraud is a new check fraud defender customer who was experiencing three times the anticipated check fraud losses per year compared to the estimates by the American Bankers Association, with their check fraud growing 220% in 2022. As this customer looked for a solution to address the significantly growing problem, a key requirement was the need for it to also have a case management solution. Check Fraud Defender is integrated with MyTech's MyVIP to provide this functionality and deliver other feature-rich elements and was a significant contributing factor to winning this multi-year, multi-million dollar Check Fraud Defender opportunity. Now, turning our focus to the identity line of business. In the era of ongoing digital transformation, organizations are constantly striving to deliver seamless and secure online experiences for their customers. Identity verification has emerged as a crucial component of every customer interaction and digital journey. It plays a pivotal role in the success rate of customer onboarding, as well as detecting and preventing attempted impersonation fraud and enabling organizations to meet the rapidly changing regulatory environment. MyTech has strategically positioned itself to meet these growing demands and prides itself on the comprehensive state of its solution. which adds value to countless digital use cases, including new customer onboarding, re-verification, and authentication for returning customers, and high-risk payments and credential resets, just to name a few. MyTech's verified identity platform, MyVIP, is a fully integrated identity platform that leverages our intellectual property in biometrics, image capture, computer vision, and data intelligence, and presents it to the customer via a low-code implementation platform. In addition, we added MyPath to its capabilities. MyPath is the industry's first multimodal biometric solution for continuous identity authentication. MyPath combines voice and face recognition using sophisticated liveness detection technology to defend against digital and deep fake attacks in real time. With the onslaught of machine-driven fraud attacks, Voice and face biometrics used together with built-in liveness checks are becoming the strongest and most effortless means to authenticate someone's identity online. Combining the two biometrics is a significant security improvement beyond face recognition-only systems many use today. Authenticating digital identities with MyPass also reduces the risks associated with on-device stored biometrics. which can easily be compromised, shared between people, or overwritten with a simple passcode. Experts estimate that more than 80% of hacking breaches involve use of stolen passwords or credentials, fraud that can cost large companies millions of dollars a year. By moving to a more secure passwordless approach to digital account authentication, companies can both increase customer loyalty and reduce the risk of identity theft and account takeover attacks. In Gartner's most recent market guide for user authentication, it states that user authentication is a cornerstone of digital identity and identity-first security, citing that leaders should seek tool sets to minimize account takeover risks and optimize employee and customer user experience as a part of a cohesive cybersecurity strategy that reflects human-centric design. I'm happy to say that our identity technology, including ID Face, which is the world's first single image passive facial liveness detection capability, was highlighted in this Gartner report. ID Live Face is the only single image solution independently tested to be both ISO 3107-3 compliant and unbiased. It provides facial liveness detection to confirm that a biometric selfie includes the face, of a real live person and not that of a machine generated image. Today, ID Live Face is used to process millions of monthly transactions for customers worldwide. Another of our biometric products highlighted in the Gartner report was ID Voice Verified, which is used to perform biometric speaker verification to detect and prevent online fraud enabled by speech synthesis, voice clones, and recorded replay. ID Voice Verified fights biometric spoofing with advanced voice liveness detection, confirming the voice presented for identification purposes is that of a live present person. For large multinational banks to global marketplaces, our customers use our identity verification solutions to enable effortless and safe experiences for new and returning consumers. During the third quarter, we increased our identity revenue 6% year over year, despite the difficult macro environment. And in addition to our direct sales efforts that are focused on selling our solution to key market verticals, such as financial services, insurance, telco, healthcare, and marketplaces, we have made solid progress in building our indirect business through global partnerships with Experian, DocuSign, Clear, and most recently, Equifax. Our market-leading offerings are not only attracting new customers and partners, but are also garnering additional industry analyst recognition and product validation. A couple of months ago, MyTech was acknowledged by both Javelin and Liminal, leading analysts covering the identity category. We at MyTech are proud of the positive impact we are making in the fight against digital identity fraud, and we remain dedicated to advancing our technologies and delivering even greater value to our customers. Looking ahead for the deposits business, the timing of reorders can vary from quarter to quarter. And we saw a significant portion of our reorders occur in the first nine months of fiscal 2023. As a result, we expect deposit revenue to be down in the fourth quarter of fiscal 2023. Having said that, we ask our investors to look at the deposits business on a full year basis. And as I said earlier, for the full fiscal year 2023, we expect our deposits business to grow in excess of 20% year over year. Moving on to identity, as we have said in the past, we expect to see our identity business continue to grow even in a difficult macroeconomic environment. However, the growth rates will vary depending on the timing of identity transactions. In the first half of fiscal 2023, we had several customers initiate new customer campaigns, which drove significant volumes of identity transactions for MyTech. These volumes are going to vary depending on our customer's actions and may cause our identity revenue to fluctuate quarter to quarter. Having said that, we expect to see mid-teens organic revenue growth in identity in Q4. We encourage our investors to look at our identity revenue growth on a full year basis. As I stated before, we expect our identity business to grow at least 18% year over year for the full fiscal year 2023. And we remain well positioned to increase this growth rate and capitalize on our new business pipeline and the significant market opportunity ahead once conditions improve. We also continue to drive towards profitability for identity business, which we expect to occur by the end of fiscal 2024. During the quarter, we continue to generate solid cash flow and strengthen our balance sheet. And with our market leading product portfolio in place, we do not need to do additional acquisitions to further penetrate the significant market opportunities we address. Instead, we are focused on using our cash flow to drive shareholder value in other ways, and we routinely assess all capital allocation alternatives, including opportunistic share repurchase programs. At this time, we are in a blackout period as we prepare our year-end financials for our recently completed fiscal year and are thus limited in the actions we can take until we are outside of our blackout period. Moving on to guidance. We are reiterating our full year fiscal 2023 guidance, which calls for revenue growth of approximately 18% year over year at the midpoint of the range and for a non-GAAP operating margin in a range of 30 to 31% for the full fiscal year. This puts us very close to being a rule of 50s company even in this difficult macro environment. Before I turn the call over to Fuad, I also wanted to announce that Scott Carter will be stepping down from his executive role effective December 1st, 2023, but will remain as our chairman of the board. As you may recall, we brought Scott on as the executive chair back in January of 2023 to provide additional day-to-day support to the senior management team as we worked on refining our organic growth plan and to provide additional oversight and assistance as we focused on getting our FCC filings current. In connection with his resignation in the executive role, Scott wanted it to be noted that the role was no longer necessary based on the company's being current on all its required filings, as well as the substantial progress made around the refinement of the company's organic growth strategy. We want to thank Scott for his help over the last 10 months Thank you, Scott, for all the hard work. And with that, I'll turn the call over to Fouad to discuss the financial results in more detail. Following Fouad's remarks, we'll open the call up for questions. Fouad, please go ahead.

Thank you, Max, and thank you, everyone, for joining us this afternoon. I'll start with our fiscal 2023 Q3 revenue and operating results. For the third quarter of fiscal 23, MyTech generated 43.1 million of revenue, a 10% increase year over year. Software and hardware revenue was 21.4 million, up 10% year over year. The increase in software and hardware revenue is due to the growing growth of our biometrics offerings and mobile deposit reorders. As we have noted previously, our biometric revenue is transactional in nature and is part of our identity business. However, since it's offered on premise, We put that revenue into the software line for accounting purposes. Services and other revenue, which includes transactional SaaS revenue, maintenance, and professional services revenue, was $21.6 million for the quarter, up 10% year-over-year. Our transactional SaaS revenue increased 5% year-over-year to $15.5 million. Deposits revenue for the third quarter increased 13% year-over-year to $24.8 million, driven by mobile deposit reorders. Identity revenue increased 6% year-over-year to $18.3 million, driven by increases in identity staff revenue, as well as growth from our biometric offering. We continue to deliver strong software and hardware gross margins, 98% for the quarter. Gross margin on services and other revenue was 76% for the quarter, and total gross margin for the quarter was 87%, up 200 basis points over last year. Total gap operating expenses, including cost of revenue for the third quarter, were $41.3 million compared to $38.3 million in Q3 of last year. Sales and marketing expenses for the quarter were $10.3 million compared to $11.2 million a year ago. R&D expenses were $7.5 million compared to $8.4 million last year. And our G&A expenses were $11.6 million compared to $6.6 million a year ago. The increase in G&A expenses is mainly the result of increased one-time fees associated with our delayed filing and the addition of resources to our corporate services team to accommodate our scaling business. Gap net loss for the quarter was $0.4 million, or a loss of $0.01 per diluted share. Our diluted share count was $46.5 million compared to 45.2 million shares a year ago. Turning to non-GAAP results, non-GAAP net income for Q3 of fiscal 23 was $9.5 million or $0.20 per diluted share compared to a non-GAAP net income of $10.9 million or $0.24 per share for the same period last year. We believe non-GAAP net income provides a useful measure of companies' operating profitability and cash flow by excluding amortization and acquisition-related costs stock comp expenses, one-time or non-recurring litigation expenses, amortization of debt discount and issuing costs, restructuring costs, and related tax impact of these items. A reconciliation of GAAP to non-GAAP presentation is provided in our press release issued earlier today. Turning to the balance sheet, we generated $16.6 million in cash flow from operations during the third quarter, bringing a total cash flow, cash and investments to 131 million as of June 30, 2023. Now turning to the nine month results. For fiscal 2023, we reported 134.9 million of revenue, a 28% increase year over year. Deposit revenue for the first nine months increased 35% year over year to 83.8 million driven by solid mobile deposit reorders, and signing of a large multi-year contract in the first quarter that locked in favorable pricing for us over four years. Due to the unique terms of this contract, we recognize additional license revenue relating to future periods of approximately $7 million in the first quarter of fiscal 23. Identity revenue for the first nine months increased 19% year-over-year to $51.1 million, driven by addition of revenue and strong growth in our biometrics revenue. Moving on to guidance, as Max noted, we are reiterating our fiscal 2023 guidance. We expect revenue for the fiscal year ending September 30, 2023 to be in the range of $169 to $171 million, an increase of approximately 18% year-over-year from the midpoint of the guidance range. In addition, we expect our full year fiscal 2023 non-GAAP operating margin to be in the range of 30 to 31%. Finally, we are very pleased with our operating results, which included a record third quarter revenue, as well as solid operating margins and a very strong cash flow. We are especially pleased with getting current on our SEC filings. We want to thank everyone who has worked tirelessly over the last several quarters to make this happen. We truly appreciate all your efforts. That concludes our prepared remarks. Operator, please open the line for questions.

We will now begin the question and answer session. To ask a question, you may press star then one. If you're using a speakerphone, please pick up your hands before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Jake Roberg with William Blair. You may now go ahead.

Hey, thanks for taking the questions, and nice to see you get back on file with the SEC filings. Appreciate the color on NRR. Not many software companies can talk about retention rates north of 120%, so that's pretty impressive. Understand the business is lumpy, so that's what's driving the step down in Q4. But excluding the timing of deals, how should we think about a sustainable net retention rate for both the mobile deposit and ID verification segments over the next year or two?

Sure thing, Jake. Well, thanks. Appreciate the question. You know, this is a new – well, it's not a new KPI to my tech, but it's a new KPI as far as um, you know, key performance indicator that, that we're sharing and, you know, been encouraged to try to provide, uh, some more insights into the performance of, of the different lines of business that we have. Um, you know, it's, it's greater than 120% and it's, uh, over 110% for each one of the, the lines of business. So, you know, it's, uh, it's good and it's good in a lot of different ways. And we certainly aspire to keep it high like that. Um, you know, as far as trying to provide some sort of guidance or expectation, You know, over 110%, you know, I think that's considered, you know, better than market, certainly superior to our competitors, and, you know, that's what we'll continue to strive for.

Great. And then really nice to hear about the large multi-year, multi-million dollar check fraud customer that you signed, and even the synergies between the ID and check business that helped land that customer. Two questions on the check fraud funds. First, how long will it take you to implement that technology for that large of a customer? And then second, are there any data points or proof of concepts you can share for what percent of fraud losses you've been able to save customers that have already signed onto the platform?

Yeah, I guess both those become somewhat specific to the individual institution. You know, from a technical perspective, getting Check Fraud Defender switched on since it's, you know, cloud deployed and, you know, available you know in a secure environment like that you know from a from a my tech perspective it's very very quick obviously we're dealing with you know banks with life a lot of compliance departments a lot the regulated entities and so you know if we look back at the the customers that we've already been through on this you know from the time they sign to the time they're actually processing checks in production it can be you know six months it can be nine months for some of the much larger institutions it can be over a year we're gonna see revenue through the period of that, some of the implementation and just kind of assistance that we're providing for those customers. But I guess to the second part of your question, we now do have enough data with enough financial institutions that are in production are getting the benefit to see that the product market fit is there. The system is working, we are finding fraud, we are reducing operational expenses Our biggest customer, I want to be careful how I say this, but our biggest customer for Check Fraud Defender today is eliminating tens of millions of dollars of hard dollar losses on an annual basis as a result of using Check Fraud Defender. And they've been able to validate that. Now, that is our biggest customer so far, and we can have bigger as we continue to go. They're not fully deployed across all the different lines of business, but they've got a pretty significant share out there. And so it's definitely not just a feather in our cap, but it's really helping with the other banks that are interested getting their heads around how beneficial this can be.

Very helpful. And then if I could just sneak one more in. In the past, you've talked about the conversion of more checks to mobile deposits still being the largest growth driver for that segment. But as you look into next year, do you still think that's the case or could that shift towards check fraud defender given the traction you're seeing there or potentially even just kind of the pricing levers that you have as contracts come up for renewal in 2024?

It'll be interesting to see, you know, how long it takes for check fraud defender to eclipse the growth, the impact on growth from just mobile check adoption on a mobile banking app. I don't know that I want to predict that just yet for some of the things we've already talked about. It's early days for Check for a Defender or the implementation cycle, some of that stuff. But it's very clear that that market is real, and it's not just around defending against checks. What we're seeing now with the integration with MyVIP is that we're taking things from the dark web. We're providing identity attributes. There's a big hypothesis currently is there's a bigger opportunity there to help financial institutions with other forms of reduction of payment fraud, not just the use of checks.

Very helpful. Thanks for taking my questions. You got it, Jake.

Our next question will come from Mike Grondahl with Northland Securities. You may now go ahead.

Hey, guys. Thanks, and congrats on getting your filings all caught up. I just want to make sure I understand the fourth quarter. The implied in your guidance is $36 million of revenue, and that's clearly a step down from the last three quarters. Did I hear right that's primarily because the mobile deposit reorders were kind of pulled forward and there's some lumpiness with some new mobile ID customers? And related to that, was there any promotional activity to call out with mobile ID?

Yeah, I think just the first part of your question, I wouldn't use the term full forward. I would say that, you know, on whatever their normal need is, some of the larger, you know, orders for mobile deposit happened earlier in fiscal 23 than, you know, than later in fiscal 23. But we stand behind, you know, the The deposit business, nothing's changed. I mean, when you zoom out, and this is how we ask our investors to look at it, not look at it a month-to-month or quarter-to-quarter basis, but look at it over the full year, and the deposits business this year is going to grow 20%. Yeah, so, you know, that's the way you got to look at it. As we look into next year, we're not going to necessarily provide guidance, but other than the really tough comp we're going to have in Q1 because of the FY23 Q1 $7 million gap, revenue that Watt was mentioning in his remarks. You know, we continue to see the business, you know, on hold being a solid growth business. And, you know, we're doing everything we can with it. Price increases, more adoption for mobile check deposit or check fraud defender and all the great traction we're getting there. So it's a solid, great business, and we look forward to it being that way for a long time.

Got it. Then mobile ID, any promotional revenue to call out in the quarter?

Yes. When you say promotional revenue, I think we've talked about this, but just for maybe folks that are dialing in new, you know, the transaction volumes associated with identity verifications and authentications at times are tied to promotions that, let's use a bank as an example, that a bank can be running to be able to get, you know, their competitors, banking clients to switch. And so we did see that in the first half of our fiscal year where, you know, there were some pretty significant promotions there. If I just reflect on the first three quarters, you know, of the year, you know, we've seen some really nice growth, particularly, you know, largely driven in some of the new product areas. So biometrics, the who you, and now IDID and MyPath. So, you know, while there's some challenging, you know, elements to the environment out there. I think this is one we expect, you know, the same way we've talked about, you know, targeting 18% year-over-year growth for identity in FY23 when we think about, you know, next year or maybe even longer term if there isn't a change to the environment. That's a, you know, we expect that to be a mid- to high-teens grower for us on an organic basis.

Got it. On capital allocation, Max, you kind of said, or I think you said, hey, we're in a blackout right now. We really can't do anything incremental. If you weren't in a blackout now, do you think you'd do something, be more aggressive with that $131 million of cash you have, or kind of what thoughts do you have?

Sure. So what we want to make clear is You know, we are really excited about the product portfolio that we have both for the deposits line of business and the identity line of business. And, you know, we've got what we need to be successful in the market and continue to, you know, whether the current situation and then as things change and the environment improves, you know, get back on track. You know, from a capital allocation perspective, that translates into, you know, we're not out there hunting to do acquisitions. And as we've talked about, I think, in the last three calls, which unfortunately have happened over the course of the last 60 days, you know, we've been very heads down making sure that not only do we get on file and get current with our SEC reporting, but also that we're re-fortifying our corporate services team. And Wad talked about some of that in his prepared remarks, you know, so that we can continue to, you know, record, file, and support the operations of our business in a consistent way in our back office and our corporate services. So I'm going to translate that, um, you know, I've got $130 million of cash, um, you know, that we have, we pay 75 basis points of interest on the debt. We've getting now something, you know, four to 5%, um, interest on the cash that we have. Um, we think the stock, you know, it's, it's effectively the end of the day today. And. You know, if we had maybe some more latitude, um, you know, the board here will consider. all of the different alternatives we have to use that, you know, use that capital effectively and efficiently.

Got it. Hey, I'll jump back in queue. Thanks.

Thanks, Mike.

Again, if you have a question, please press star then 1. Our next question will come from Scott Buck with HC Wainwright. You may now go ahead.

Hi, good afternoon, guys. Thanks for taking my questions. Max, can you talk a little bit about the assumptions that get you to break even or positive EBITDA in the identity business by year end 24? Is it simply just, you know, scaling revenue another 20% or so, or is there more to it than that?

Yeah, I think there's more to it than that. You know, I just, so first you get a sense of what we think growth should be, you know, at least under the current circumstances, you know, over the course of the next 18 to 24 months, based on the earlier comments. And then also in the earlier comments made it clear, you know, we're the identity growth that we are seeing is really being leveraged and driven by the new products. And so I think is, you know, when we think about it, Scott, it's, it's getting continued improved productivity from our go to market channels, uh, both direct and indirect as we're becoming more adept and better. at bringing these new products to customers, whether those are in customers or whether that's enabling and supporting partners. So I think that's a big part of it. And there are places where we can be more efficient as a business generally, whether that's go-to-market, whether that's the engineering and product side of things. And so I think it's a combination. It's the growth and then the other things I just talked about as far as getting greater productivity from the activities that take us to the next level.

Great, that's helpful. And then on G&A costs in the quarter, obviously it's been elevated a bit, likely due to the extra auditing, I suppose, or the catch-up. I imagine that carries through fiscal 4Q, but maybe in 24 we start to see that back off a little bit. Is that fair?

Yeah, I'll answer that. Yeah, I think that's generally accurate. I think we had kind of a heightened – cost structure or heavier cost structure in Q3, a little bit into Q4, because as you know, our K wasn't filed until end of July. And then coming into next year, I think we'll see some reduction. I think we'd get back to kind of a more normalized manner. And I think I've said that in the past, but I think we expect that to happen in 2024.

Okay, perfect. And then last one, quick one. Did you guys repurchase any shares during the fiscal third quarter? We did not. Okay, perfect. Appreciate the time, guys. Thanks a lot. You got it, Scott. Thank you.

Our next question will be a follow-up from Mike Grondahl with Northland Securities. You may now go ahead.

Hey, guys, thanks. Max, you had said year-to-date mobile check deposit had 925 million transactions. Do you have a similar apples-to-apples number for the prior year, just so we could see what transactions are growing?

Sure. Now, this is imperfect, but what I recall us doing in FY22, the team celebrated – eclipsing 1 billion checks transacted for the year. And it was the first time that that had happened. So you basically have, you know, let's call it a billion in FY22 and whatever, whatever that number was through the end of Q3, just to kind of give you a sense. Now, obviously that's not going to help you with price increases and the contribution of checks for a defender or any of that stuff. And Where those checks come from, the mix of those checks, depending on which partner or which customer they come from, they're going to be priced at a different level. But just to give you kind of a swag, which is probably the best I'm going to be able to do off the top of my head.

No, that's fair. That's fair. And then, Claude, is there – you mentioned G&A at $11.5 million. over like 6.6 million, and you said there were some one-time fees and some corporate expenses you had. Are you able to back out any one-time fees for us just so we know what kind of a core number is there?

I think when you look at our reconciliation, gap to non-gap, I think we provide that reconciliation because those were gap numbers. I mean, those are gap numbers, as you know. But you can see that reconciliation. I think the big one in Q3 was the non-recurring audit fees, and we backed out $800,000 for that. There were some non-recurring litigation costs, backed out approximately $400,000 there. So you should be able to get that kind of the back out for the non-GAAP piece from those line items.

Got it.

I mean, I think the reconciliation does a good job, and I think you'll be able to see what's in the G&A section.

Cool. And then just two more questions. One, Max, I just want to verify the multi-year, multi-million check fraud defender customer. That was new, I think you said. Any thoughts when that comes online?

Yeah, I tried to give a sense as to how long, it depends on the size of the bank and their compliance and regulatory issues. The technology, you can switch it on in a day, right? It's all cloud deployed. But I think in this instance, it could take us six to nine months to get them to a place where they're transacting in production at scale.

Is that six to nine months from now?

Probably six to nine months from a couple of months ago.

Okay.

Remember, we're talking about Q3 here in October. Fair enough.

Good reminder. Good reminder there. And then lastly, you guys have talked a couple times, and you've pointed it out well. Hey, the midpoint of the guidance, $170 million of revenue, but in one Q, you had that $7 million tied to the contract. Are we fair to sort of say core, maybe deep,

baseline number for 2023 is like 163 million is that how you look at it um well we look at it based on where the revenue comes in right there's no non-gapping of of revenue um you know if we hadn't if if the contract recognition of revenue was different where we would have taken the seven million over the next three years then, yeah, the revenue in FY22 – I'm sorry, FY23 would have been 170 minus 7, which is 163. And then you'd start to see that $7 million or, you know, maybe $7, $7.5 million show up in the next three years in Q1 on the anniversary of the contract. But that's not – that is absolutely not how the revenue is being recognized here.

Right, right. Okay. Okay. Hey, thanks, guys.

You got it, Mike.

This concludes our question and answer session. I would like to turn the conference back over to Todd Curley 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 is now concluded. Thank you for attending today's presentation. You may now disconnect.