Peter Salkowski – Managing Director-The Blueshirt Group James B. DeBello – President and Chief Executive Officer Russell C. Clark – Chief Financial Officer and Secretary.

Alper Tuken – William Blair & Company.

Good day and welcome to the Mitek Fiscal Fourth Quarter and Full Year 2014 Earnings Results Conference. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Peter Salkowski, Mitek Investor Relations. Please go ahead, sir..

Thank you, Elizabeth. Good afternoon everyone and thank you for joining us. With me on today’s call are Mitek’s CEO Jim DeBello and CFO, Russ Clark. Before I turn the call over to Jim and Russ, I’d like to cover a few quick things. This afternoon, Mitek issued a press release announcing its fourth quarter of fiscal 2014 financial results.

That release is available on the company's website at www.miteksystems.com. This call is being broadcast live over the Internet for all of the interested parties, and the webcast will be archived on the Investor Relations page of the company's website.

On today's call, we 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 our 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 for a more complete description of these risks.

Our statements on this call are made as of today, November 6, 2014, 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, for any reason.

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.

Now I’ll turn the call over to Mitek’s CEO Jim DeBello.

Jim?.

Well thanks Peter, and hello everyone. We ended fiscal 2014 with our best revenue quarter ever, resulting in the full fiscal year becoming our highest revenue year ever. We now have 3026 financial institutions signed and 2521 deploying Mitek’s breakthrough and patented Mobile Deposit solution that will be used by over 33 million consumers.

All top 10 U.S. retail banks and nearly all of the top 50 banks are Mitek Mobile Deposit customers. Within this exciting market, we see three key drivers to growth.

First, expanding the number of banks offering Mobile Deposit; second, growing the number of consumers using Mobile Deposit, and lastly increasing the number of transactions by those consumers. With Mitek’s Mobile Deposit deployed by all of the top banks in the U.S.

and 100% customer retention, we already accomplished the first growth driver making Mitek the clear industry leader. Our attention is now focused on growing the number of consumers using Mobile Deposit within these institutions and increasing their frequency of use.

We are working to ignite the second and third growth drivers by adding risk management capabilities enabling banks to increase deposit limits and by adding features like MiSnap to enhance the consumer experience. Mitek’s global deposit provides a great platform for growth. Having a trusted brand with all of the top U.S.

banks is a natural springboard allowing Mitek to offer new products, such as mobile imaging for identity capture, used for account opening and enrollment.

Turning now to our fourth quarter and full year results, I’m very delighted to report that Mitek achieved record fourth quarter revenue of $5.5 million, an increase of 26% year-over-year, marking another solid quarter of revenue performance.

In addition, the fourth quarter results represented the second sequential quarter in which Mitek achieved non-GAAP profitability, and the first quarter in sometime that we’ve achieved GAAP net income. Our fourth quarter performance brings a strong close to fiscal 2014, a year in which we grew revenue nearly 30% to $19.2 million.

Our flagship Mobile Deposit solution along with new partnerships and expansion of our mobile imaging platform fueled our topline growth. And in addition, to record quarterly revenue results, the fourth quarter marked the end of litigation between Mitek and USAA.

In the resulting settlement, Mitek did not make any payments to the plaintiff, and maintained the high integrity of our company. Our patent portfolio of 20 issued patents, and 23 patents pending remains valid, powerful and enforceable today, we are very pleased to have this distraction behind us.

Moving forward, we are starting fiscal 2015 with great additions to our Board of Directors and our Advisory Board. This week Jim Hale was elected to Mitek’s Board of Directors.

Jim is a financial technology industry weapon who brings financial expertise, and corporate development experience as well as a keen eye for opportunities in the payments and technology industries.

He recently served as Chairman of Official Payments Holdings during its acquisition by ACI and currently he serves on the Board of Bank of Marine and Loyal3, a platform which offers publicly traded stock directly to consumers. I’m also thrilled to announce that Victor Nichols joined Mitek’s Advisory Board.

Victor brings deep experience in the consumer identity market, having recently served as CEO of North America and President of Global Consumer Services at Experian.

As we look to build on our strengths in the financial services industry and expand our product portfolio into other industry verticals, Jim and Victor’s expertise will be extremely valuable to Mitek and that’s why we are excited to have them join us. Turning now to our products.

Mobile Deposit and identity are focus areas for Mitek, and here are some of the top trends to capitalize on in 2015. First, as I mentioned there are three key drivers to revenue growth for Mobile Deposit, more banks, more consumers, and more deposits. At Mitek, we largely executed on establishing our Mobile Deposit products as the go-to technology.

We believe a next stage of growth will be driven by consumers and their usage patterns. On a high level, the growing popularity and convenience of the smartphone will continue to have a positive effect on the number of consumers using Mobile Deposit. Smartphones are becoming more and more ubiquitous.

IDC expects that in 2014, worldwide smartphone sales will grow over 23% from 2013. And Gartner expects that nine out of 10 phones to be smartphones by 2018. I remind you all of these phones will be equipped with cameras that are frequently used. Even more fitting for younger generations, commerce is moving from words to pictures.

During the quarter, Mitek was featured in USA Today, Forbes and Time Magazine discussing our Millennial Study. Our surveys revealed millennials’ obsession with their smartphones and apps, just imagine 87% of millennials say their smartphone never leaves their side. This obsession has carried over to the smartphone camera. It’s all good news for us.

Well, this first surface in the form of the selfie when given the chance, millennials use their camera to bank, to enroll and to shop, nearly 90% of millennials have or say they would deposit money by snapping a photograph. Still though, there are many consumers who have yet to try Mobile Deposit.

In our September study, the American Bankers Association reported that only one in eight U.S. adults have deposited a check using a mobile device. Of the 13% of consumers who have used Mobile Deposit, 80% report using it regularly.

This study shows us that the opportunity for Mobile Deposit remains enormous and also affirms the stickiness of our solutions, once you’ve used it, you are hooked. As we diligently work with the industry to expand usage to be over 210 Americans who have not yet used Mobile Deposit, we believe we’re early in the growth stage of an enormous market.

To grow the number of Mobile Deposit users and their frequency of use, we’re providing risk management and data analytics tools to financial institutions. These tools will allow financial institutions to increase deposit limits based on how well they know their customer and we refer to these as smart limits.

Almost recent Mobile Deposit feature that we just announced uses our algorithms to read and comeback duplicate deposits, another way for reducing risk for the financial institutions. And we also dedicate a lot of effort towards creating the best consumer experience.

As an example, MiSnap allows the user to take a picture without touching the shutter by simply hovering the smartphone over the check which activates the camera automatically. Mitek’s MiSnap improves the user experience by removing key strokes and camera shake resulting in more transactions and as a result more transaction revenue to us.

To-date, 15 leading financial institutions have deployed Mitek MiSnap for Mobile Deposit including U.S. Bank, ING Direct, Canada, now known as Tangerine, and Morgan Stanley. Additional major banks are in the integration process and MiSnap is also available through our channel partners.

We expect the majority of Mobile Deposit users to be using MiSnap in the future. In addition to our success with Mobile Deposits, we’re working to position our Mobile Photo Account Opening solution as the best way to simplify tedious account opening processes and to improve new customer acquisition.

With the mobile identity and authentication market at around $5 billion worldwide, we know the opportunity to offer account opening within this market is quite large. This quarter, we signed the top 30 financial institutions for mobile account opening, making account opening, the third solution this particular enterprise has licensed from us.

We’ve also announced the partnership with a distributor and OEM partner, MeridianLink, a solutions provider to several 1,000 financial services organization and through this partnership, MeridianLink will add Mitek’s Mobile Photo Account Opening to their iPad apps, enabling access to financial institutions across the country.

I’ll take a recent example, Alabama Credit Union employees used our solution to greet and enroll new students at the University of Alabama’s Freshman Orientation. The MeridianLink partnership follows on the yields of Mitek’s mobile account opening pilot with U.S. Bank in the Minnesota Twins. As the first pilot of its kind in the country, U.S.

Bank reps were stationed around target field and using our account opening solution approached fans to enroll for a new credit card. U.S. Bank in twinned organization saw strong results. The number of applications accepted improved by 50% with a snap of the picture kept fans’ attention on the gain in a way from filling out paperwork.

We’ve also expanded our presence in the insurance vertical. During the quarter, we announced that another top 5 insurance company added Mitek’s Mobile Photo Payments to their mobile app. Through the app, users view their bill and pay it using MiSnap and take a picture of a check or credit card.

Javelin Research shows that Americans already make $36 billion in annual bill payment on their mobile devices. Forrester predicts this number will reach $90 billion in 2017. Mitek now works with three of the top 5 insurance companies allowing us to capitalize on their need to serve their mobile consumers.

Finally, in the fourth quarter, we enhanced our mobile imaging platform with some new capabilities. As with the top 5 insurer, I just mentioned Mitek’s MiSnap now captures a credit card or debit card in addition to checks.

Consistent with our strategy to expand consumer usage of Mitek Solutions, we also added features to help institutions approach a wider range of customers such as multi-language features and voice-enabled components for visually impaired customers.

We’ve also added the capability to capture information from a state issued ID card to apply for a credit card or open an account or even get a quote to originate a loan. Overall, I’m very pleased with our progress including our record fourth quarter and 30% year-over-year revenue growth and achieving profitability for the second half of fiscal 2014.

I’m also very pleased to be working closely with our new Board and advisory board members and to be entering the new fiscal year without the overhang of the USAA patent litigation suit. For fiscal 2015, we will continue to invest in opportunities, the strength and the growth of mobile deposit, MiSnap and our identity capture solutions.

We’re confident we can make the right investments, while continuing to improve the profitability of the business.

And smartphone usage continues to grow at a torrid pace with consumer habits becoming increasingly mobile and based on camera usage, we are focused on bringing the most innovative and user-friendly mobile imaging solutions to market positioning Mitek well for the future growth.

And with that, I’ll turn the call over now to Russ Clark, our CFO for a more detailed review of our quarterly results.

Russ?.

Thanks, Jim and thank you to every one joining us on today’s call. As a reminder all financial figures I cite today will be on a GAAP basis unless I specifically call out a number as non-GAAP. Our earnings release includes a reconciliation between the two measures.

We believe that excluding non-cash stock compensation and IP litigation expenses from non-GAAP earnings provides the useful measure of the company’s operating results. Also any quarters or years that I discuss will be based on our fiscal year-end of September 30.

During Q4, we saw our top-line growth sequentially and year-over-year to a record $5.5 million resulting in non-GAAP net income of $1.9 million. Total Q4 revenue increased 26% year-over-year from total revenue of $4.4 million in the year-ago period.

Q4 software revenue of $3.8 million included 10 Mobile Deposit reorders and increased 17%, compared to year earlier software revenue of $3.3 million. Mobile Deposit reorders continue to drive the lion’s share of our license revenue growth.

Our installed base of Mobile Deposit providers has continued to grow reaching over 2500 financial institutions live at year-end. Although the scrolling user base has provided us increasing visibility in the quarterly revenue and allowed us to report consistent and improving quarterly revenue results.

It’s important to note that the predictability of our quarterly revenue is still highly dependent on the closing of Mobile Deposit reorders and new orders. We are continuing to address this issue by offering more predictable, multiyear subscription pricing models for our Mobile Photo Bill Pay, payments, account opening and identity products.

Q4 maintenance and PS revenue of $1.7 million increased 53% over last year’s Q4 maintenance and PS revenue of $1.1 million.

We’ve seen nice year-over-year and sequential growth in this line item and had a particularly strong PS quarter, generating nearly $400,000 of revenue primarily related to MiSnap implementation assistance to our Mobile Deposit base. Total Q4 operating expenses were $5.6 million, compared to $5.9 million in the year ago period.

The year-over-year decrease was primarily driven by lower selling and marketing and R&D expenses. These lower expenses were partially offset by higher year-over-year G&A expenses resulting from IP litigation costs for the suits that we settled in Q4.

Non-cash stock compensation expense during Q4 was $777,000 compared to $746,000 in the year ago period. R&D expenses were $1.3 million in Q4, down from $1.8 million in the year ago period, primarily as a result of lower personnel costs and outside contractor expenses.

Our Q4, G&A expenses were $2.6 million compared to $2.0 million in the year ago period. The year-over-year increase in G&A was primarily driven by IP litigation cost, which totaled $1.1 million during Q4. GAAP net income in Q4 was $2050 or breakeven per share compared to a net loss of $1.5 million or $0.05 per share in the year ago period.

As I mentioned excluding non-cash stock compensation and IP litigation costs, Mitek reported non-GAAP net income of $1.9 million or $0.06 per share for the quarter. This compared to a non-GAAP net loss of $51,000 or breakeven per share for Q4 2013. Our EPS share count for Q4 was $30.5 million basic and $31.0 million diluted shares.

We expect total Q1 2015 OpEx to be between $5.25 million and $5.75 million excluding litigation expenses. Although OpEx decreased sequentially from Q3 to Q4 of 2014, we expect the trend to return to a more normal historical level during Q1 of 2015 due primarily to the timing of outside contractor expenses and marketing program spend.

With respect to defending our IP rights, we settled a major suit near the end of fiscal 2014. However, we live in a world plagued by patent trolls and unfortunately Mitek is currently defending itself in suits filed by one such troll.

Given the early stages of the process, I’m not able to provide many details other than to say that we believe that these claims are without merit and we will aggressively defend our IP. As a result, we expect that related litigation expenses could be as much as $500,000 during Q1 of 2015.

No schedule and trial date has yet been set by the courts in this matter. Now looking on our results for the full year, revenue for 2014 totaled $19.2 million comprised of $13.3 million in software licenses and $5.8 million in maintenance and PS.

Our near 30% year-over-year revenue growth was fueled primarily by Mobile Deposit with an increasing mix of reorders. We also topped $1 million of PS revenue for the year related primarily to MiSnap engagements.

Total operating expenses for 2014 were $24.6 million compared to $22.1 million in 2013, as we invested in growth and defended our IP during 2014. We maintain strong year-over-year gross margins of 89% and spent $3.7 million on IP litigation in 2014, which compares the spending of $2.4 million in 2013.

GAAP net loss for 2014 was $5.3 million or $0.17 per share compared to a net loss of $7.3 million or $0.26 per share in 2013. This is based on $30.5 million shares in 2014 versus $27.5 million shares in the year ago period.

Excluding IP litigation expenses and stock compensation, non-GAAP net income for fiscal 2014 was also $1.9 million or $0.06 per share compared to a non-GAAP net loss of $2.1 million or $0.08 per share in the year ago period. Stock compensation for 2014 was $3.4 million compared to $2.8 million in 2013.

As of September 30, 2014, our headcount was around 50 employees. And turning to the balance sheet, as of September 30, 2014 cash, cash equivalents and investments totaled $26.1 million compared to $29 million at the end of 2013. This represents a net cash burn including litigation spending of around $700,000 per quarter for 2014.

Our accounts receivable balance of $3 million represented a DSO of 49 days for Q4, which is consistent with Q3. That concludes our prepared remarks. Operator, please open the line for questions..

Thank you. (Operator Instructions) And we do have question from Bhavan Suri from William Blair..

Hi, guys, can you hear me?.

Hi, guys, can you hear me?.

Yes, Bhavan, hello..

Hi, this is actually Alper Tuken in for Bhavan here..

Hi, this is actually Alper Tuken in for Bhavan here..

Hello, Alper. .

Congrats on the quarter.

So I see that Mobile Deposit was -- well got you guys over on your top-line revenue for software and I was wondering how the cross-sell opportunities from your Mobile Deposit customers are progressing, I know you said you signed a top five insurance company, but I was just wondering just how the general cross-sell environment is with your Mobile Deposit customers..

Congrats on the quarter.

So I see that Mobile Deposit was -- well got you guys over on your top-line revenue for software and I was wondering how the cross-sell opportunities from your Mobile Deposit customers are progressing, I know you said you signed a top five insurance company, but I was just wondering just how the general cross-sell environment is with your Mobile Deposit customers..

Well Alper, I think as we’ve discussed previously it’s good, we are using our presence in all of those banks that we’ve discussed here and are working with our channel partners, with our account opening and identity products and payments and Bill Pay products as well.

So many of the wins that we discussed on the call here in those areas are really based on a foundation that was created by our successful Mobile Deposit and our customer base is satisfaction with those products..

We have several customers, Alper, and this is Jim responding, that have multiple solutions licensed from Mitek either directly or indirectly to our partners and we expect that many of our distributors would pick up our additional new products as we continue to grow, very positive..

And when you said the average number of products per customer is trending upward?.

And when you said the average number of products per customer is trending upward?.

By definition it is because every quarter we’re adding customers with multiple solutions from Mitek, and I think what’s the customers are responding to is the consumer habit that I had referenced in my remarks, the consumers are comfortable using the camera for not only the selfies that I mentioned but for financial transactions and we expect that to continue into grow and that’s going to spur more adaption of our technology and cross-selling other products..

Thank you. And then if I could ask another follow up, on the expense side, I know you said that with the sales and marketing and R&D spend that those would normalize back to prior levels due to the kind of timing of your marketing spend in some contractors.

How should we kind of view those into 2015? Do you see them going down by a couple hundred basis points, or maintaining kind of average levels at 2014 or so?.

Thank you. And then if I could ask another follow up, on the expense side, I know you said that with the sales and marketing and R&D spend that those would normalize back to prior levels due to the kind of timing of your marketing spend in some contractors.

How should we kind of view those into 2015? Do you see them going down by a couple hundred basis points, or maintaining kind of average levels at 2014 or so?.

Yes, Alper, as you mentioned I’ll point you back to the guidance I provided for total OpEx of five in a quarter to five in three quarters for Q1 and I think you are pretty familiar with our cost structure, with around 50 employees total at the end of the fiscal year in terms of hiring and so forth, we probably are looking for dozen employees or so throughout the course of the fiscal year to add to the staff and the engineering area primarily in a little bit lesser extent than sales and marketing..

All right, thank you guys for taking my questions..

All right, thank you guys for taking my questions..

Sure. .

(Operator Instructions) And our next question will come from Andrew Boyce (ph) with Piper Jaffray..

Hey guys, this is Andrew here stepping in for Mike, first of, thanks for taking my questions.

I guess first of, could you talk a little bit more about that development network, how is that kind of progressing, are you guys seeing some good results from that?.

Hi, well, this is Jim and I appreciate the question. The mobile developer network is a way to expose our imaging platform through an open API to qualify third-party developers, and this is the way we can plus our products into other industries, which we aren’t directly approaching.

There are so many opportunities and that present themselves for mobile imaging in healthcare, in ticketing and other industries that we couldn’t possibly begin to approach with the limited staff that we have today. We are focused on financial services including insurance as verticals and we will continue to do that.

But as a result, we’re seeing a lot more effort with regard to technology adoption in areas such as underserved bank participants.

There is a company that we have been beginning to partner with that provides a Airbnb equivalent for check cashing that allows you to actually receive your cash by a country head who greets you at a shopping mall after you deposit a check on your low cost smartphone and to get it cashed.

We have another one that’s working on providing exchange of seats for supporting events by validating the information from the ticket and the image of the ticket and then providing an easy exchange and they are just getting launched as well.

And we have a third in the real-estate business that’s already beginning to see some traction with regard to being able to deposit earnest money using our technology from realtors who received deposits on new house purchases.

So, we’re seeing a variety of applications in used cases that are tangentially involved in financial services, but primarily also in adjacent markets and we expect that to continue.

We are spending a fair amount of energy in social media to promote that, but not a lot of hard cash with regard to advertising that, so it is by definition what I would consider a Petri dish, an experimental opportunity to use imaging and other applications and we see that to -- beginning to proliferate..

Okay, awesome, thank you very much for all the light, and I guess also in past quarters, you guys have said you were about little over 75% of the top 50 banks, are you above 80% to 85%, now could you give us kind of a number on how many top 50 banks you are in..

Yeah, I think most recent update in that is that we’re in nearly all, so that’s somewhere in the mid-40s of 50 in the list tends to change every quarter that’s depending on which bank bought which one..

Okay, awesome, thank you very much and I congrats on the quarter again and that’s all I had for you..

Great, thank you..

Thank you..

(Operator Instructions) And that does conclude our question-and-answer session for today. I’d like to turn the conference back over to Peter Salkowski for any closing or additional remarks..

Thank you very much. Before closing the earnings call, I’d like to inform everyone that Mitek will be participating in the Susquehanna Payments Forum on November 18 in San Francisco. Thank you for joining us today for Mitek’s fiscal fourth quarter earnings call. We appreciate your interest in the company. Have a good day..

That does conclude our conference for today. Thank you for your participation..