Good day, and welcome to the Mitek Systems Third Quarter Fiscal 2019 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Todd Kehrli, MKR Group. Please go ahead, sir..

Thank you, operator. Good afternoon, and welcome to Mitek's Third Quarter Fiscal 2019 Earnings Conference Call. With me on today's call are Mitek's CEO, Max Carnecchia; 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, Mitek issued a press release announcing its third quarter fiscal 2019 financial results. That release is available on the company's website at miteksystems.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'd like to remind everyone, 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 risk factors.

Our statements on this call are made as of today, July 25, 2019, and the company undertakes no opposition 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 8-K describe the differences between our non-GAAP and GAAP reporting and present a reconciliation between the two for the periods reported in the release.

With that said, I'll now turn the call over to Mitek's CEO, Max..

another top 10 bank in the USA, the largest credit card provider in the Netherlands, a leading online home selling service, a new generation stock exchange for direct trading and securities, a large Latin American Apple reseller, and the list goes on.

Our continuing customer acquisition underscores the increasing need for identity verification and it's vital use case, which is to enable businesses to onboard more good customers faster, a value proposition that Mitek centers around.

One of our new customers is BrightStar, a multinational company, providing supply chain, buyback, trade-in and financial solutions to the largest consumer electronics resellers worldwide. BrightStar has partnered with us to deliver a retail micro- lending solution, targeted at the under-banked in Latin America.

Mitek solution will be integrated into this Apple resellers solution on their in-store iPads. They will use the solution to verify customer's identity at the point-of-purchase when consumers request credit with their Apple equipment purchase.

ABN AMRO is a great example of how our customers are expanding their usage of Mobile Verify across the enterprise to securely onboard customers while meeting stringent Know Your Customer, KYC, regulations. EU KYC financial sanctions are set to sore in the coming months and years.

According to a study we released this quarter with partner Consult Hyperion, a typical European bank serving 10 million customers could save up to EUR 10 million annually and avoid growing fines by implementing solutions to improve the KYC processes. We are proud to partner with European banks, such as ABN AMRO, to help them in this regard.

The increase in new customers as well as the increased usage of our existing customers, is further evidence of the success of Mobile Verify and its ability to facilitate secure and complaint onboarding of new customers in the digital world. In closing, we are very pleased with our Q3 results.

We achieved record quarterly revenue, driven by meaningful top line growth in both our product families and delivered strong bottom line results. As we move through the remainder of the year, we continue to sharpen our strategy and make operational improvements to further fine-tune our execution.

Now I'll turn the call over to Jeff to discuss the financial results in more detail. Following Jeff's remarks, we'll open up the call up for questions. Jeff, please go ahead..

Thanks, Max, and thank you, everyone, for joining us this afternoon. Let's start with the Q3 revenue and operating results. For the third quarter of fiscal 2019, Mitek generated record revenue of $21.9 million, a 36% increase year-over-year. Software and hardware revenue of $11.9 million was up 14% year-over-year.

The increase in software and hardware revenue was due primarily to the addition of A2iA and the growth of Mobile Deposit revenue. We delivered strong software and hardware gross margins at 93% for the quarter.

Services and other revenue, which includes transactional SaaS revenue, maintenance and consulting services, was $10 million for the quarter, an increase of 77% over revenue of $5.7 million in Q3 last year.

This increase is primarily due to strong growth in transactional SaaS revenue, which increased 71% year-over-year to $5.3 million and the addition of maintenance revenue from A2iA. Gross margin on services and other revenue was 77% for the quarter, up from 71% in Q3 last year. Combined gross margin for the quarter was 86% compared to 83% last year.

Total GAAP operating expenses, including cost of revenue, were $24.8 million compared to $19 million in Q3 last year.

The year-over-year increase in GAAP operating expense reflects the addition of operating costs associated with our acquisition of A2iA, costs associated with the restructuring of A2iA, which I'll discuss in more detail later in the call, as well as our continued investments to grow our identity business.

Sales and marketing expense for the quarter were $6.9 million compared to $5.7 million a year ago. R&D expenses were $4.7 million compared to $4.2 million last year. And our G&A expenses were $5.1 million compared to $3.2 million a year ago. GAAP net loss for the quarter was $100,000 or $0.00 per diluted share.

Our diluted share count was 41.2 million shares compared to 36.2 million shares a year ago. As a reminder, our earnings release includes a reconciliation between GAAP and non-GAAP net income.

We believe non-GAAP net income provides a useful measure of the company's operating results by excluding acquisition related costs and expenses, stock comp expense, IP litigation costs, costs related to the strategic process and costs associated with the restructuring of A2iA. Non-GAAP net income was $4.8 million or $0.12 per diluted share.

In Q3, our non-GAAP adjustments include $2.3 million of stock comp expense, $1.8 million of acquisition-related costs and expenses, $500,000 of litigation and strategic process costs and $3.2 million in charges related to the restructuring of A2iA.

At the end of June, we recorded a onetime charge related to a restructuring of our business at A2iA, the company we acquired in May of 2018. At the time of the acquisition, we shared with you that we had identified approximately $2 million in potential cost synergies that we could realize within the first 2 years post acquisition.

Those items were related to executive management changes and the reduction of royalty costs for a technology used in our mobile check deposit products. We are well on our way to realizing these savings. In addition, we shared that we would be looking to identify additional cost savings.

One year in and I can say we're very pleased with many aspects of the combination. The core business of A2iA, check processing has performed well in our first year together.

However, we have evaluated the non-checks product performance, which includes DocumentReader, FieldReader and TextReader products, and have decided to discontinue the sale of these product lines.

The market for these products is small with little growth opportunity and the deployments tend to be costly, non-repetitive engagements but are not core to our Mitek strategy, nor that they contribute to Mitek's profitability.

This decision was made with much consideration of our company, customers and employees and how we can best focus our resources going forward. As a result, we are reducing approximately 25 position in our Paris operations.

The restructuring charge includes the costs related to this decision, including severance pay and benefits, related taxes and other charges incurred in working through the restructuring. The activities related to the restructuring will occur over the next few months.

We anticipate the elimination of these product lines will have a negative impact on our revenue for comparison purposes. Historically, these products contributed approximately 15% of A2iA's revenue. The reduction of 25 employees, on the other hand, represents about $2.5 million of annual expense.

We expect to invest these funds in our business and to help improve our profitability. Turning to the balance sheet. We generated $1.3 million in cash flow from operations during the quarter, bringing our total cash and investments to $28 million at the end of the third quarter.

Our accounts receivable balance of $14.6 million represents a DSO of 55 days. Now moving to guidance for the remainder of fiscal 2019.

Based on the revenue dissynergies mentioned earlier, we are updating our previously provided full year total revenue guidance for our fiscal year ending September 30, 2019, to be between $84 million and $85 million, which would represent growth of approximately 32% to 34% year-over-year.

We continue to expect our non-GAAP operating margins in fiscal 2019 to be between 18% to 20%. For Q4 of fiscal 2019, we expect total revenue to be between $24.5 million and $25.5 million, representing growth of approximately 17% to 21% year-over-year.

We expect total expenses, including cost of revenue for Q4 and excluding our non-GAAP adjustments, to be between $17 million and $17.5 million. For the quarter, we expect acquisition related costs and expenses to be between $1.8 million and $2 million and stock comp expense to be approximately $2.5 million.

Operator, that concludes our prepared remarks. Please open the line for questions.

[Operator Instructions] We'll hear first from Bhavan Suri from William Blair..

Can you hear me okay?.

I am clear..

Yes, we can..

Great, great. I am calling from a receiver or something. There's a little lag. So I appreciate the patience there. I wanted to touch first I think on your comments around the platform consolidation, that sort of rationalizing [indiscernible].

Could you guys just give a little color sort of on which side of the business that was, obviously you acquired stuff at the Mobile Deposit when you talked about A2iA. But which pieces you think are strategic and you are keeping and a little color and what doesn't make sense, especially the ID verification cycles.

And the Mobile Deposit side, the reduction of some of the hardware businesses and the one-off onetime customer engagements makes sense but not to understand a little more color what's being rationalized and where the focus is headed?.

Sure, Bhuvan. This is Max. Let me take on. So in the course of last 3 or 4 years, Mitek has done 2 significant acquisitions on the identity side of the business.

About 4 years ago, we acquired a company called IDchecker out of Amsterdam and then more recently, about 2 years ago, we acquired a company called ICAR out of Barcelona as well as having some of it's own identity legacy on prem systems, things we're doing in mobile field, some of the early efforts in identity when Identity was superformative.

I think, we've -- the company has in the past talked about those acquisitions in some of those systems as legacy systems.

Me as the new guy, coming in and having 3 decades worth of experience, operating businesses and understanding what it takes to not just do a deal and do an acquisition but actually properly integrate it, the people, the processes and then the products, just putting a much sharper edge and maybe an accelerated effort to try to get all the wood behind the Mobile Verify, right? So the Mobile Verify is the go forward, has been flagship identity product.

Some of these other things have been kind of bumping along and now we're just getting clear eyed about how we get as many of those customers as appropriate over to Mobile Verify and for the systems that should be shut down, sunset, end-of-lifed, doing that with a very cogent plan that's just going to help us really not just get focused but eliminate a lot of distractions in the business..

Got it. And then I wanted to touch on bank that you raided a little bit just now, but that had been a focus for the company again, predating your time and even predating just time. But I guess if you go back, unbanked in the U.S. and ties to sort of payday guys or cards for just like sort of just the payment cards was a focus.

Do you think that continues to be a focus for you guys or is that sort of one of things that maybe doesn't make as much sense? I was just intrigued given you sort of mentioned a little bit about outside the U.S. It seems like a big opportunity. U.S.

is a market opportunity in the mobile check deposit space, but I was wondering what your thoughts were there and then I had a quick follow-up..

Yes.

So I'll try to keep this short but the concept of unbanked or even under-banked in the United States, unbanked outside of the United States in developing economies, really kind of comes back to how do you determine who is on the other side of the mobile device or who's on the other side of that computer when you don't have a face-to-face physical relationship.

And when you do that in the United States, there are a lot of factors, there is a lot of signals to determine the identity and, in many instances, the creditworthiness of the individual on the other side of that device, right? They have a credit file, they're very large Experian, Equifax, TransUnion, there is all kind of new disruptors coming up to provide information around that.

When you get into economies where maybe they aren't as developed, that under-banked -- you don't have the benefit of credit files to be able to determine not just creditworthiness but be able to determine identity to validate and verify identity.

So we definitely think it's an opportunity for us because in those environments, the number one predictor, the most high assurance factor for determining somebody's identity is going to be their government issued identity card, passport, residence permit, drivers license..

Got you. Got you. Got you. So let's touch up on the Mobile Verify business for a second. Growth obviously, really solid there so that was awesome. I guess as I look at it, I have two question on this one.

What's driving the growth? So some color on whether it's the new logos and you mentioned a fair number? Or is it the use cases with the existing customers? How do you break out that growth rate between the 2 sort of -- between expansions which we thought about net dollar retention rates or something like that or [indiscernible] Or net new logos? What's really driving that growth today? And then I'd love to sort of understand in that business that cross sell -- you talked about banks now -- another top 10 bank doing Mobile Verify.

That's obviously done on check deposits but where is that cross sell?.

Sure. So, again, let me try to take that on.

I don't think we are going to provide numbers here but both of those vectors expanding within their our existing businesses -- existing customers as well as bringing on new Mobile Verify identity customers, that's how this business is growing and that's how it'll continue to grow and bringing more focus and better execution and repeatability to that.

That's what we're doing every day, getting better at those things. Just to put a little color.

When we sell a new customer and sign a contract, if that happens on let's call it Day 1, we've reported in the past that this idea of time to life -- how quickly can get that implemented, integrated, get our SDK on their mobile app, how quickly can we get our API integrated and -- in their stack, their application stack.

And we've taken that time-to-live in half. If you looked at those statistics, how long it took us to get a new customer from contract to live, last year, it was over 200 days. In the most recent quarter that we're talking about here, it was sub-100 days. I think It was 96 to be precise. So that number will bounce around a little bit.

Different industries, banks take longer because there a lot more compliance and regulatory requirements.

The marketplace and e-commerce companies can go live more quickly, they have a tendency to be a little bit more agile and adaptable and kind of bringing that all the way back, it really is a combination of both knocking down those new guys, getting them live and then once they're live, our customers success teams, which are just outstanding, showering them with love and a very customer intimate model that takes them from the initial implementation on through to higher and higher adoption whether that's more geographies, whether that's -- we'll come back to you -- the point of your question around the banks and the cross sell but really making sure that they are hitting their business issues that they are achieving that success metrics and the success goals that they have.

I think we do a real good job with that and it's a competitive distinction for us. So the last part of that is the banking example.

And what we're finding with larger banks is that we may start with a single use case where it's a credit card application and we're validating the individual on the other side of that mobile device, but the banks are telling us -- these large financial institutions, both domestically as well as in Europe, that they want to put a layer in their stack that they can rely on for identity verification.

Sometimes we do that with a partner like Experian, sometimes we do that directly with the financial institutions themselves. But in these larger institutions, we are hearing that there are literally dozens of use cases, dozens of business units.

So it truly is a cross sell opportunity for us to go find those other use cases and basically light those up. And you would think of that as expansion kind of horizontal expansion within your installed base. So I'll pause and hopefully I've thoroughly answered the question there..

We'll hear next from Darren Aftahi from Roth Capital Partners..

Just a couple if I may. First, to start at the restructuring, Jeff, I think you quantified the cost side. So first question on that.

On an annualized basis, when does the cost benefit kick in? And then if my memory serves me correct, if you're saying 15% of sort of non-core products or 50% of revenue kind of related to non-core products, is that a similar revenue run rate to that analyzed kind of cost savings, may be lower? And one, when did that kick in? And did that impact the software and hardware line at all in the June quarter?.

Okay. I am going to tear that question apart. So the 15%, that's on the annualized business, which was around $14 million or so give or take when we were -- we bought them. The $2.5 million, yes, that's an annualized savings that we should see.

That isn't going to kick in immediately because there are -- the restructuring accrual itself includes all the costs that you are allowed to put into that but there are some notice period costs that are actually going to flow through Q4. So you're not going to see all of that impact in Q4. So there shouldn't be a lot of hangover of costs in 2020.

So we should be pretty clear by then of that. And those funds should be available for us to invest elsewhere in the business. And then as we really tune our plans for 2020, we'll look at how much of that we're going to take to bottom line, if we are.

What was other piece?.

The other part was basically on the checks versus non-checks effect on revenue..

And that's -- there is probably some minor impact of that. There has been an impact of that in Q4 so it's starting. So both the dissynergies that Max mentioned in his comments, the platform rationalization and the A2iA are both impacting Q4 a bit..

Yes. But we announced that, Darren, kind of a hard stop to the team on the non-checks portion of the A2iA selling in the quarter, in Q3. So there are some behavioral changes there that have to take place, but a lot of those won't necessarily be with the business. So you're going to see that happen pretty quickly..

Okay. And then can I follow up on that? It looks like software line growth wise decelerated quite a bit.

So I'm just -- I understand the Mobile Deposits business can be lumpy, but anything you would call out there?.

Software line. So you've got decline in some of the ID on premise stuff. It's going to be impacting that, as you've seen a little bit of that this year. You've got the timing of the deposits. And then you've got a quarter where we had some A2iA revenue a year ago in that line.

So we're -- next quarter we'll be a fuller comp quarter, I guess, if you look at it that way. There's a little bit in this year's. Otherwise, nothing else really going on there..

Got it. And then just one last one. On the SaaS transactional growth, you obviously called out financial institutions as kind of a bellwether. If you exclude those, and Max, I appreciate your comments on some of the e-com companies are signing and aligning stuff a lot faster than banks.

Any particular sort of use case where you are seeing kind of repeat wins? I know you called out marketplace, the economy but can you be a bit more granular? I'm just kind of curious if you dive a little bit deeper and anything you're seeing in terms of where adoption and ramp? Actually signing the contracts and ramping the use of it are kind of accelerating with some kind of non-financial institutions..

Yes. Just a maybe Kentucky windage, if you took 100% of the SaaS business today -- SaaS transaction business on the identity side, you're going to see probably 2/3 of that falls broadly into -- and it varies from quarter-to-quarter, month-to-month, but about 2/3 of that falls into what you would consider financial services.

And then you'd find about 0.25% of it is -- the marketplace, e-commerce. And I'll come back and use the use case. And then the balance is some stuff that falls around the edges so we do find ourselves doing some transportation every once in a while in insurance company.

This just don't happen to be the -- from our go-to-market perspective, they're not the point of focus in what we're trying to do it from demand generation and kind of account campaigning.

Back to your question, on the marketplace e-commerce side, the overwhelming use case is new customer opening, right? Whether that's -- you want to sign up to be a guest at Airbnb, you want to sign up and actually sell something on Poshmark in that marketplace and those are the -- if you want to go look at a home through Opendoor, those are the examples.

And there are other examples where you can be on the other side of the marketplace. Airbnb, you can be the host, or Poshmark, you can be the seller. But the majority of those examples are typically new customers on the buy side..

We'll move next to Mike Grondahl from Northland Security..

In the mobile check prepared comments you talked a little bit about you're targeting some new digital banks.

Could you talk a little bit if you've signed up or won any there and kind of the usage and how that's going?.

Yes, so just to be clear, Mike, are you asking on the deposit side or are you asking on the identity side?.

First on the deposit side. I think that was kind of that along with -- I don't know, you mentioned some new channels you were looking at..

Yes, so the 2 examples we used are the two broad industries that we just referred to, were the Fintech Internet-only world of banks.

And then the second was these the charities and being able to use Mobile Deposit to capture the donations and the charitable giving kind of at the point of giving with the Mobile Deposit, you just basically take a picture of the check and be done.

On the question on the financial services kind of the new internet-based banks, what are some easy examples? EXOS, they used to be the bank of the Internet. Robin Hood, which is a Silicon Valley unicorn.

Varo, Varo Money, all are examples and there are many, many more where these guys are doing very interesting things without having any branches, without having any retail locations, but they still have to take deposits from those customers, right? They're onboarding new customers so there is an identity -- Mobile Identity opportunity for us, and Varo is a great example where they're doing both but they also have to be able to take a check as the initial deposit or when new funds are coming into the account..

Got it.

And are you seeing that accelerate, that channel, the Internet-only bank, Robin Hood, Varos?.

Yes. Fintech is red hot right now. Financial services, there is just a ton of money, whether it's Silicon Valley money, whether it's venture or private equity, the more traditional banks themselves investing in those disruptors. Yes, so we see plenty of that.

And on the charity, I think that's more -- it's not necessarily that it's a growing industry so much as it's a unpenetrated market for us and we've now put some focus on it and whether it's the comb and cancer -- the Breast Cancer Foundation or whether it's the example used with St. Jude Hospital, it's just a great opportunity to stop leakage.

If you've ever kind of run for the cause or biked for a cause, you collect the checks and sometimes they don't all make it. They don't all make it to the destinations so this is a way to prevent that leakage..

Sure.

And is the pricing the same as your bank customer? Is it kind of a per transaction per drip model?.

It is a -- yes, it's the same basic model. The volumes have a tendency to be lower and the per unit charge has a tendency to be significantly higher..

Got it. So you can price for that a little bit, cool. Just shifting gears a little bit over. In that mobile check area, you sell into a lot of resellers.

Can you remind us how your contracts with those resellers are kind of structured the average length? And may be the potential down the road to increase pricing?.

Yes. So first, there's probably less than 10 really meaningful resellers that service financial institutions, everything from the biggest guys that we all bank with and know the names of on through to very small, regional-local credit unions. And those are the fiserv's, NCRs, FIS, I mean I don't think there's any Jack Henry, there's no magic here.

I think we disclosed them in our filings, our SEC filings. And the nature -- I let Jeff talk about the model and such but this is again a transactional based model and it isn't necessarily -- in terms of the contracts or the length and duration of the contracts have the more to do with how fast they can burn down those transactions..

Yes, so this is Jeff, Mike. The Contracts, they can vary between those processers because some of the processors operate differently. For example, some of them buy for their system and then spread it amongst their customers.

So they may have one purchase from us and they spread it to others, come to us and they'll buy specifically for individual customers. Now, when they do that, say for example they come and buy for individual customers that maybe under a master 3-year contract that then has pricing or has pricing per customer.

So now they all vary, they're 1- to 3-year contracts. There is pricing that can vary but -- so the thing is every time that our team is having a conversation, there's going to be opportunity to talk about price. That doesn't guarantee that they can actually impact price in that because it may be a longer-term contract..

Yes, I guess coming back, Mike, to the genesis of your question, we believe there is pricing power there for a number of reasons. First, the only intellectual property in the patents, we do an outstanding job.

Our end customers, not just the banks and financial institutions, our partners and then us as consumers, all acknowledge that, hey, check in a cash used in a mobile device is fun, it's easy and it just works. And trying to replace that in a world where you are being disruptive, right, name a big bank, they are under attack.

We just talked about the Fintechs. This is a solved problem and our ability to kind of tease back through the agreements that Jeff was just referring to and it gave more principled approach to pricing so that we are getting the value and some equity around how these banks and the service providers are paying for this.

We think there's some leverage in there..

Can I ask just a follow-up.

In the last 6 months or calendar 2019, do you have a couple of examples where you've raised price? Or is that all in the future?.

No. There are definitely examples. I'm being a little careful, Mike. I mean being a public company, the great benefit is that we are very transparent. There is an awful lot of information that our customers and our partners can get on us that gives them comfort that we are a trustworthy organization, that's going to be there.

This is one of those topics were the more you talk about it publicly, it can kind of whipsaw and kind of do a reversal on you. So I just want to be a little judicious in what I share with you..

That's fair. And maybe the last mobile check question. A while ago, you talk about maybe an opportunity kind of check fraud, all the data you kind of get from your customers and what not.

Any progress there?.

Yes. So you're referring to basically -- yes, I think if you broadly think about it, it's kind of a second act product that we can bring back to the 6,400 customers where we've got this very unique, not just the channel but the relationship and the great reputation and trust of these organizations. We are hard at work at that.

I'm not prepared to announce anything today but, yes, that's definitely something that we are continuing on..

[Operator Instructions] We'll hear next from Ilya Grozovsky from National Securities..

Two questions. Number one, when you are winning these deals on the ID side, who, with anybody, are you seeing it out there in a competitive perspective? Or what alternative solutions perhaps is the better question in terms of verifying IDs, are you seeing and winning business from or alternatively, not winning business.

And then also just as a sort of a follow-up to that.

If you look at your trajectory of revenues on the ID side and on the Mobile Deposit side, at what point do you think the majority of your revenues comes from the ID piece relative to the check piece? Like how far in the future is that?.

Sure. Ilya, this is Max. I'll take on the first question and then I'm going to hand it over to Jeff for the second part of your question. Yes, it's a really -- I think it's a thoughtful question too.

If our customers, if we use a bank as an example or financial services organization, they refer to this concept of a trust funnel, right? Somebody comes to them through their mobile device, they don't know who they are and now they're trying to establish some level of identity verification.

The concept of the trust funnel is you start with the most passive, least-friction way of determining, can I trust this? Do I have a level of assurance as to -- is this a bad actor? Is this a fraudster? Is this a fake trying to do something bad to my organization? And there are number of signals that you can use for that, right? The telemetry that comes of the device, the time of day, the geo location of where they are, just kind of some of the behaviors on the phone itself.

And so we fall in that trust funnel much further down. The signal that we use -- these government-issued identity documents paired with the biometric of liveness selfie comparison to the picture on the identity card. That's a relatively high-friction, higher-assurance way of determining identity.

So when you talk about alternative solutions, there are a number of things that you can use. You can use phone numbers and onetime usage, two-factor authentication, things that are maybe a little easier, maybe a less assurant but their fictional levels and the speed in which you can get them are there.

Ultimately though, for the bottom part of the funnel, we've got the absolute best answer. And your time at biometric of who you are to something you have and the government-issued identity document is the gold standard on something that you're going to have.

The competition amongst folks who do similar things to us hasn't changed radically since last time we talked about it. I'm not going to use any names just because I don't want to give them the credit of the air cover but it's still in early days market so there -- depending on what geography you are in, the competition may be slightly different.

Who we compete within England and the U.K. is different than who we necessarily compete with here in the United States versus who we compete within some place like The Netherlands. But we are -- I think it's still a very active market.

There's still a lot of not just competition but I think there's new entrants coming into the market, which just goes to tell you that it's yet to be a solved problem. So maybe that's a little bit on competition and the trust funnel.

With that I'll let Jeff talk about the ID revenue trajectory and how that compares to when it eclipses the deposits business..

Sure. So, we've been tracking -- actually last year, we'd actually been tracking at 40/60, but when we acquired A2iA that kind of falled more to a 30 to 40 -- 30/70, 35/65 ID to deposit revenue. What I'd say is you're probably looking out 18 to 2 years where that actually becomes equal in size.

We do expect it will probably get identity business profitable before than, but I think for the -- for identity to pass over than revenue, it's going to be 18 months to 2 years, would be my thoughts there..

At the time, there are no additional callers in the queue. I'd like to turn the conference back over to your hosts for any additional and closing comments..

Thank you, operator, and thank you, everyone, for joining us today. We look forward to updating you again next quarter. This concludes today's call. Have a wonderful day..

That does conclude today's teleconference. We thank you all for your participation..