Q1 2024 Mitek Systems Inc Earnings Call

Participants

Todd Kehrli; IR; MKR Investor Relations, Inc.

Scipio Carnecchia; President, Chief Executive Officer, Director; Mitek Systems Inc

David Lyle; Chief Financial Officer, Senior Vice President, Principal Accounting Officer, Principal Financial Officer; Mitek Systems Inc

Jake Roberge; Analyst; William Blair & Company LLC

Mike Grondahl; Analyst; Northland Securities Inc

Allen Klee; Analyst; Maxim Group LLC

Chad Bennett; Analyst; Craig-Hallum Capital Group LLC

Scott Buck; Analyst; H.C. Wainwright & Co LLC

Presentation

Operator

Hello, and welcome to Mitek's fiscal 2024 first-quarter earnings conference call. (Operator Instrucitons) As a reminder, this conference is being recorded. I would now like to hand the call to Todd Kehrli of MKR Investor Relations. Todd, please go ahead.

Todd Kehrli

Thank you, operator. Good afternoon, and welcome to Mitek's fiscal 2024 first-quarter earnings conference call. With me on today's call are Mitek's CEO, Max Carnecchia; and CFO, Dave Lyle. Before I turn the call over to Max and Dave, I'd like to cover a few quick items.
Today, Mitek issued a press release announcing its financial results for its fiscal 2024 first quarter, as well as preliminary results for its fiscal second quarter ended March 31, 2024. 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 want to remind everyone that on today's call, management will discuss certain factors 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, April 15, 2024, 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 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.
With that said, I'll now turn the call over to Mitek's CEO, Max Carnecchia.

Scipio Carnecchia

Thanks, Todd. Welcome, everyone, to our fiscal year '24 Q1 earnings conference call. As always, we appreciate that you joined us today, and thank you for your continued support and trust.
In my time today, I'll make some brief comments about my tax results and update you on the business priorities. I'll then turn the call over to Dave Lyle, our CFO, to review the first-quarter financial results and provide our outlook.
As previously discussed, in the first quarter of last year, we had a large one-time multi-year mobile deposit reorder. That's pulled forward three years of revenue into that quarter, creating a very difficult year-over-year comparison. It's important to note that this quarter's results are not representative of a business trend, in fact, to the contrary.
With our fiscal 2024 guidance, we expect our deposit product revenue to grow 10% to 12% year over year on a normalized basis. And our identity product revenue to grow 10% to 12% year over year on an organic basis. We anticipate that much of this growth will occur in the second half of the fiscal year, with the growth continuing in fiscal 2025. Our conviction in Mitek's significant market opportunity continues to grow, as we leverage our collective AI-powered data solutions to answer an accelerating fraud management needs in markets and geographies we serve.
Evidence of this can be seen in three factors. Number one, the accelerated need for identity verification as fraud and cyber crimes grow in sophistication and continue to plague banks and enterprises of all sizes size. Number two, the rapidly growing misuse of deep face and voice cloning poses a significant threat to personal and financial security. As a result, our award winning biometric authentication technology is seeing rapidly increasing demand.
And number three, the momentum we are seeing with Check Fraud Defender product offering is exceeding our expectations and highlights the rise in fraud across the board as a critical problem to solve these factors, reinforce our purpose and strengthen our market opportunity. As a reminder, our purpose is to empower regulated businesses to say yes, to more good customers, more deposits and more transactions with increased intelligence and customer safety. We focus on regulated businesses because the consequences are highest to those businesses and our core competencies, best suits those needs. Our mission informs our business decisions. And over the past decade, we've steadfastly steadfastly develop solutions to fulfill this objective.
With that said, let me briefly take you through our product evolution so you can better understand why we win. First, we leveraged computer vision to develop the advanced image processing capabilities that underpin all our solutions today. Let's call that MiTAC 1.0, which began in 2008 and remains the undisputed leader in mobile capture and deposit technology with over 90 patents and 99 of the top 100 banks in the U.S. using our solutions in my 2.0, we began about seven eight years ago. We applied machine learning and AI to automate identity verification, mainly by providing document verification, anticipating the need for more advanced identity attributes. We then integrated the unparalleled technology and biometrics from ID R&D acquisition in 2021 to prove why this and support identity authentication. Net, we added our low-code orchestration platform from W. acquisition in 2022, yielding a solution today ready to tackle omnichannel identity fraud across the organization today, harnessing the latest advancements in JNI, coupled with the expansive capabilities of our orchestration platform, Wyo-Tech 3.0 is poised to be the leading authority in identity verification, authentication and fraud management. By demonstrating our industry leadership. We are winning new channels within the bank and helping drive new benefits and efficiency gains for our banking customers. Most recently by reducing check draws.
Banks are getting crushed by check fraud, which has reached an all-time high and rivals credit card fraud in the United States.
In 2023, financial institutions reported unprecedented financial losses due to soaring check, brought one institution reported 135 million in losses, while total losses in the Americas were over 20 billion. According to Nastech's global financial crime report.
We launched Check Fraud Defender two years ago to help banks address this growing problem.
Our solution offers banks to secure cloud-hosted consortium that strengthens their existing fraud prevention and helps them significantly reduce financial losses.
One of our CSP customers reported saving over $16 million in less than six months derived from both reductions in fraud, check losses and reductions in operational expenses of dealing with this exploding problem. This significant cost savings benefit is driving substantial pipeline growth for this new product offering at the end of fiscal 2023, we had a handful of C. customer and we exited the March ending quarter with over 20 by the end of fiscal 2024, which ends in September. We're targeting to have over 50 CSP customers contracted to participate in the consumption. Even with this rapid customer adoption, we're just scratching the surface as we target our nearly 8,000. My tech banking customers starting to begin to contribute to this pipeline or our channel partners. The channel has been a trusted blueprint for selling mobile deposit, and we're thrilled with the initial momentum we're seeing with the channel and check product center. As I noted on our last call, CST represent the noteworthy growth opportunity for Mitek. We estimate CFT has the potential to contribute 200 billion in annual revenue within the next five to seven years. Cft is also leading the way into adjacent opportunities from high-tech to help banks with new AI driven fraud and identity manager. By leveraging our unique access to rare and privileged customer data and transactional intelligence, we can deliver additional differentiated value to our customers and drive increased shareholder value.
Regarding the identity line of business. We continue to execute our strategic priorities. While it is early and we have more to do, we are starting to see improved growth and increased market share for our identity orchestration platform, which we believe will drive higher returns over time.
Market tailwinds continue to fuel the identity opportunity in 2023, fraud scams and bank fraud schemes, total 485 billion in losses globally according to the global financial crime report from that also in 2023, consumers reported losses exceeding $10 billion to fraud, a 14% increase from the previous year. Digital Identity verification is no longer a back-office concern, but a frontline in the fight against fraud. There has never been a greater need for banks and technology providers to innovate together. Natwest is a great example of one such partnership and why our customers select my tech verified identity platform might be IT to take these gentlemen's take on these channels like all major banks, NatWest faces rising threats from brokering and impersonation, but also the need to instill customer consumer confidence in their fraud defenses. Leveraging my VIP. NatWest can configure different identity verification services to suit different customer and business needs, as well as adjust for changing risk environment as mandatory likeness detection becomes increasingly critical in digital identity processing. Natwest has enjoyed leveraging the platform to apply new biometric signals against growing use case as The Wall Street Journal reported this month. The picture coming for the financial sector. Companies using photos or videos to verify customers. Identities are preparing for bad actors, gaining the system with generative AI surge in the state related fraud underscores the need for vigilance and robust detection mechanisms. Visualizes detection technology stands at the forefront of combating this challenge, offering a sophisticated way to distinguish Genuine human presence from fraudulent and deep fake accounts, i.e. Live based plus is designed to detect injection attacks and prevent deep. They've brought in a passive way, thus dramatically improving the overall customer experience.
Most of today's Spatial Wireless Technologies are active, requiring users to Blinkx turn their heads or move their phones back and forth. These systems are frustrating to the customer and can be tricked by fraudsters using computer-generated images, masks or videos, biotech's award-winning IER. and D. team teams have worked relentlessly to ensure our customers don't have to sacrifice usability for secured, highlighted phase plus combines groundbreaking presentation attack detection with a unique approach to injection attack detection to prevent the base and other fraudulent digital content. Instead of just focusing on the content of digital base like the image itself shut down the channel used to delivery such as a virtual camera customers and partners who have made the switch from from active to passive facial likeness report a significant reduction in abandoned, lower cost, passed false rejections of real users and highly accurate presentation attacks.
Correct.
Our IT R&D team's ongoing innovation continues to be at the center of our identity verification solutions and our rapid integration of GNI solutions continues to yield outstanding products, leveraging the significant opportunities within burgeoning sectors influenced by AI and identity and fraud trends. Mitek has strategically positioned to expand its revenue and profitability. Biotech remains at the technological forefront, providing advanced machine learning and AI solutions, enabling businesses to effectively counter fraud while improving trust and convenience in digital transactions through our leading orchestration platform.
Lastly, I'm thrilled that with the filing of our 10 Q today, we are now current and back on track to file our quarterly and annual filings in the normal fashion. Since it's been a long and difficult process with significantly improved financial controls and reporting in place, we are confident in our ability to maintain our filings going forward.
I will now turn the call over to Dave to discuss financial results in more detail. Following Dave's remarks, we will open the call for questions. Say, please go ahead.

David Lyle

Thanks, Max. I'll begin by taking you through the fiscal Q1 2024 financial results and then comment on our outlook. Looking first at distant Q1 revenue top line revenue for the fiscal quarter declined 19% year over year to 36.9 million, due primarily to a large multiyear mobile check deposit reorder with one customer where MiTAC recognized additional license revenue in fiscal fiscal Q1 2023 relating to future years of approximately 7 million and which deducted approximately $2.7 million by fiscal Q1 2024. Adjusting for that entry top line revenue would have grown by 3% year over year. Software and hardware revenue declined 39% to $16 million in fiscal Q1 2024, primarily due to the multi-year contract just discussed. Services and other revenue grew 8% to $20.9 million in fiscal Q1 2024. This increase was primarily due to strong growth in SaaS revenue as well as increased maintenance revenue associated with deposits, product software sales.
Shifting to revenue for our two major product categories, deposits and identity.
Let's start with deposits. Deposits revenue declined 30% year over year in fiscal Q1 2024 to 21.1 million for reasons just described. Adjusting for that multiyear contract deposits, revenue would have grown about 4% year over year. Quarter's revenue is often impacted by timing rewards. Please note that 67% of deposits revenue within MiTAC software and hardware revenue and 33% was in services and other revenue identity revenue for the fiscal first fiscal quarter and 3% year over year to $15.8 million, driven by our SaaS products, revenue growth from our newer identity authentication products, including IBIP. myPath and IBRD. biometrics, which grew faster than the market was somewhat offset by the sunsetting of our legacy iconic hardware and software products as well as some pressure from commoditization in the document verification market, approximately 12% of identity revenue within high-tech software and hardware revenue and the 88% within services and other revenue for the first fiscal quarter of fiscal year 25.
Work moving on to gross margin.
Total gross margin for fiscal Q1 2024 was 85%, down from 89% in fiscal Q1 2023 due to a product mix shift which included less revenue in fiscal Q1 2024 from a strong gross margin in deposits product, we continue to deliver strong software and hardware gross margins of close to 100% for fiscal Q1 2024, while on services and other revenue, our gross margin was 74%.
Gaap operating expense for fiscal Q1 2024 with 38.3 million compared to $32.3 million a year ago. Non-gaap operating expense for fiscal Q1 2024 was $25.8 million compared to $22.2 million last year and favorable when compared to prior quarter fiscal Q4 2023 year-over-year increase in non-GAAP operating expense was primarily related to fees associated with our delayed filings, including audit accounting and legal support, and to a lesser extent, the addition of resources to our corporate services team to accommodate our scaling business excluded from our non-GAAP operating expense was 12.5 million of non-recurring items, of which $7.3 million were noncash accounting items and 5.2 million were cash noncash items were comprised of amortization of purchased intangibles and stock-based compensation expense. Cash items were comprised of nonrecurring fees from delayed filings, legal and other expenses. Please see our earnings release for a more detailed reconciliation. Our non-GAAP operating income was 5.6 million in fiscal Q1 2024 or a 15% non-GAAP operating margin. Excluded from non-GAAP operating income was $12.5 million and expenses have scrubbed, as described above and as detailed in our GAAP to non-GAAP reconciliation, including included in today's earnings release, GAAP net loss for fiscal Q1 2024 was $5.8 million or a loss of $0.13 per basic share versus net income of four 4.7 million were $0.1 per diluted share in the prior fiscal year.
Non-gaap net income for fiscal Q1 2024 was 6.3 million, or $0.14 per diluted share versus $14.3 million or $0.31 per diluted share in the prior fiscal year. Our diluted share count for the year was $46.3 million compared to 45.6 shares a year ago.
Turning to our balance sheet, our cash and investments declined sequentially $11 million from 134.9 million in fiscal Q4 23 to 123.9 million at the end of fiscal Q1 2024, primarily because fiscal Q1, we paid out 7.8 million in cash for 2023 taxes and also say 4.6 million for the cash portion of the final earn-out on the IVR and the acquisition.
Moving on to guidance, we are reiterating our fiscal year 2021 revenue guidance range of 180 to $185 million.
Looking more closely at fiscal Q2, we are providing a preliminary revenue range of 46 to 47 million, almost 9 million sequentially higher than fiscal Q1 2024 at the midpoint of the range, driven by a return to a more typical quarter from our deposits product revenue. From a quarterly trending perspective, we continue to expect top line revenue to grow year over year and sequentially Q3 and with Q4 expected to be in the range of Q3 revenue. Q2 energy is the deal timing may influence these expectations. We continue to expect our identity business to be standalone profitability on a fully burdened basis in the fourth fiscal quarter.
With regard to taxes, we expect to be a taxpayer in fiscal 2024 with a tax rate of 25% plus or minus range of GAAP pretax net income. In addition, we are reiterating our full year fiscal 2024 non-GAAP operating margin guidance range of 30% to 31% before I conclude, I would like to touch on where we are with our SEC filings with our 10 K filing done in March and the filing of our 10 Q today, we are now current on our filings and are already working diligently on our fiscal second quarter 10 Q for the period ended March 31st, 2024, and are targeting to file in a timely manner.
Operator, that concludes our prepared remarks. Please open the line for questions.

Question and Answer Session

Operator

(Operator Instructions) Jake Roberge, William Blair.

Jake Roberge

Hey, thanks for taking the question and appreciate the color on the one-time contract that was pulled forward last year. But even excluding that, the full year guide assumes a fairly large back-half ramps. So could you just walk us through the building blocks that give you confidence in that guide, whether it be new products like Check Fraud, Defender, ramping more meaningfully and easier comps just given the large contracts and end-of-life products would just be helpful to unpack what's exactly driving that strong back half ramp and the guide for A.J.
Recall unless the holidays give you the building blocks.

Scipio Carnecchia

I think the soft cap comment I would make we've tried to, as we've shared with you guys before, we tried to kind of provide some guidance around the idea that you need to look at these businesses, Nano, month-to-month, week-to-week basis, you've got to look over a longer span of time. And I think that's definitely what's going to come into play here, but I'll let the let the building blocks come from.
Dave?

David Lyle

Yes, I think you were characterizing correct when we had announced on our kind of Heritage business and Mobile Deposit as well as kind of document verification and those kinds of products. And we've got these new products that actually talked about in the last couple of earnings calls on the deposit side, the Check Fraud Defender product, which we are, I think is very promising and it's kind of just now starting to pick up momentum. And so we think that will drive growth in the second half of the fiscal this fiscal year. And then also on the kind of IER. and D. biometrics as well as the high DSP platform including my past, are all opportunities for growth in the second half, all of which are kind of ramping at the same time.

Jake Roberge

Okay. Very helpful. And then yes, great to hear that you had over 20 customers using Check Fraud Defender and exiting that March quarter. Could you just give us a little more detail on those deals and maybe walk through how long those sales cycles took what those customers were using before Check Fraud Defender. And then if you could just give us any insight into just how larger annual contract value could be for some of those bigger deals that you've landed thus far, that would just be helpful in understanding kind of the opportunity with CheckFree.

Scipio Carnecchia

Sure. There's a lot to unpack in there. So if I miss anything, you just remind me which elements I missed the question, Jake. So as a reminder, for folks, we co-created Check Fraud Defender in conjunction with one of the top banks, five banks in the United States, obviously using the intellectual property know-how and kind of all of our frameworks around computer vision and machine learning and have visually inspect the check and use over 20 different elements to pull that check apart, determine whether it's fraudulent or not. And so we have an asset, as I said, we introduced the product about two years ago. And as you'd imagine, with any kind of consortium, especially in a banking environment, that's so highly regulated and Sofoles lawyers and compliance professionals from the first sales cycle, there was a well over 12 months.
And if you kind of laid down the 20 Tom contracted customers we have today, you're almost watching the sales cycles falling to half Life's, right. So to give you a sense of if I had to kind of paint a picture of those 20 participating consortium members, we focus very heavily on the top 100 banks, right? So we've got a healthy dose of the top 100 banks, but we also have out four or five months ago, announced a relationship with a breakup every go back in February, introduce their kind of their first product based on CSC and in the quarter had success in this quarter.
The March-ending quarter past success closing some smaller financial institutions. So now we've got some really big guys and we're focused on that in a very direct way with our direct sellers. And now we're starting to lay up that channel that has been so successful for Mobile Deposit, starting with the starting with the relationship I just mentioned, but to be followed very, very quickly by some of the other traditional channel partners, we've had the core service for banking service providers.
So that hopefully gives you a flavor for it. It's hard to give you an average.

David Lyle

If you think about top 100 banks. Those those contracts are multi hundreds of thousands of dollars a year to low millions of dollars a year. And then some of these ones that we're now seeing in the longer tail through the Accredo relationship?
Yes, they're under $100,000 a year, but there's so many of them. There's just such a big opportunity. There will be 8,000 financial institutions that already know and really enjoy our relationship with Mike.

Jake Roberge

Okay. Very, very, very helpful there. And then if I can just sneak one more in now that your current on the filings, have the 10-Q published working on the 2Q filing. Just curious if you could just give us any updated thoughts around capital allocation, whether it be buybacks or converts, just how you're thinking about kind of capital allocation, whether Max and being at home for a few years now or Dave, now that you're taking a new look at the business, just curious how you to or are thinking about those plans moving forward.

Scipio Carnecchia

Yes, I think we have anything new to announce today.
I will remind you that almost on a monthly basis, certainly no less than quarterly. We're reviewing our capital allocation approach with our board with our senior team and with our outside advisors left, let's get that done, but let's get the Q2 on file and let us get current and see if we've got more to talk about that, Paul.

Jake Roberge

Great. Thanks for taking the questions.

Scipio Carnecchia

Yes, thank you.

Operator

Mike Grondahl, Northland Securities.

Mike Grondahl

Hey, thanks, guys. A couple of follow up questions on Check Fraud Defender. And the first one is you guys said that was exceeding your internal expectations. Just curious what that relates to is that revenue number of banks, maybe if you can cover that? And then secondly, and you're expanding that reseller channel past the Brico. Is that going to include like a Fiserv Jack Henry FI. S's of the world? Like how extensive will your retail Part B or your reseller partners B? And when do you expect that to start?

Scipio Carnecchia

Yes. Some great questions in there, Mike. So obviously, we're very bullish about Check Fraud Defender, both in the near term, but also on the more intermediate term for your for the other callers or listeners here, just to state the top half point of this check fraud has become a board-level issue for every financial institution in the United States. If your Board meeting in a bank in the United States doesn't matter whether you're a small community bank or whether you're Jamie Dimon, JPMC, this is coming up and that be I mean, that's that's the level of losses and the kind of disruption and damaged customer relationships that's going on with this activity So back to your question that put the spotlight on Prego because they started to have success and they turned they turned to sales cycles very, very quickly, which we're quite impressed impressed with, but you pointed to some of the longer term much larger institutions that service for service providers to the bank and they have for the better part of 15 years been very trusted partners of both the bank and Sumitomo. And I don't want to use any of the names, but we're very close to getting those folks signed up and getting them online with Check Fraud Defender.
The start of your question was around our internal expectations. And I think if you had sat down with me and as you know, at the beginning of the year on October first, the beginning of the fiscal year, how many consortium contracted customers we have coming out of March out of that.
If we do this, the right way, we'll have 15 and we're over twice.
So that's the reason that I feel like we're ahead of expectations is largely around that.

Mike Grondahl

Got it. And then just one question on mobile check deposit, I think you talked about for the year 2024 sort of like 10% to 12% normalized growth, roughly half of that coming from price and half of that coming from transactions? How do we just get a feel for the mix there?

Scipio Carnecchia

Yes. I'll let Dave see if he wants to take a swing at how we break the mix up. But from what we said, the normalized again, it's trying to do the math backing out the additional three years of the contract, the very large contract we took in Q1 fiscal year 23 and then layering in one-third of that into Q1 of 24. I think we laid that out either in the press release in the press release yet.
As far as you know, that 10% to 12% is part of it is price increases and part of it is increased adoption of mobile banking.
I don't know if you break it out a net and roadmap and further than that publicly. But those are the two variables that are at play and we probably shouldn't do that today.

Mike Grondahl

No. Okay. Thanks, guys. You got too much thinking.

Operator

Allen Klee, Maxim.

Allen Klee

Yes, hi. I'm interested in some of the add-backs. You have for coming up with your arm with your adjusted numbers. Some I had questions if if you could kind of go into what was happening there and if you're expecting any large ones in the first quarter in on the March quarter, you had a $2.2 million litigation cost in the December quarter are legal costs and what is the enterprise risk portfolio positioning and other related costs?

Scipio Carnecchia

Thank you. Yes, I think it's a good question in fiscal quarter one and taking out the we'll address the legal questions in a second but in this quarter, one of these third-party experts to evaluate our product portfolio, positioning, competitive landscape there, price risks as well as some other related analyses. And that's really important time and kind of study costs. So you won't see that come back in fiscal Q2.
And then on the legal side, I guess we had at CAD2 million higher legal expense and if you look back it in into the details of fiscal Q1, we use, but we will see news of Kwikee third party legal experts to do a variety of important activities. Some of those activities include getting our SEC filings, current navigating the NASDAQ and the potential delisting activity that happened with NASDAQ personal ongoing mitigation that we show and the Q and that that continues and there are some outside legal experts help there. And then lastly, providing some support for customers in America related to litigation. So it was a combination of events, not necessarily one thing that was specific.

Allen Klee

Okay. Thank you.

Operator

(Operator Instructions) Chad Bennett, Craig-Hallum.

Chad Bennett

Thanks for taking my questions. So just maybe shifting over to the ID verification business and the 10% to 12% growth expectation there is is there a way to think about that side of the business from ENLA. transaction growth kind of same store sales standpoint versus a cross-sell upsell of my B of AMIVIP., myPath idea R & D type offerings and kind of how you think about that and just generally come from a transaction growth rate standpoint, are we seeing just year over year volume or transaction growth in that business this year? And do you see that strengthening throughout the year? And then maybe last one tied to all of it is Max. You mentioned in the press release, I think product market fit for MIVIP. myPath and IDR. and D. How do you kind of define that? Or what are examples of that?

Scipio Carnecchia

Thanks. Sure. I'll answer lots of facts there, Chad. I'll do my best maybe to start with the with a little bit of a bigger picture here. You know, the market was the identity market has changed pretty significantly in the last two or three years with all that's happened with interest rates and the slowing of maybe some of the new competitor formation and then trying to get funding. And we've definitely seen some us some pressure on some of our high flying competitors from last three or four years, which I think both in the intermediate term and long term is going to benefit.
It's going to benefit, Mike, and the reason I start there is today, our model is very much a land-and-expand model.
We're targeted on these regulated industries. The top companies within those regulated industries, primarily in North America and in Europe, of the majority of the identity business is done through our direct selling activities. So about 80% of the revenues come from our direct selling activities and about 20% from our valued partners that get us into geographies, use cases and certain industries that we don't necessarily focus on.
But if I had to look back on the last 18 months, I tell you that probably 75% of the growth that we've enjoyed in identity has been from the expand part of land and expand. No, we've reported this before, but new logo acquisition has become a very, very hard fought battle, both because of the desperation of some of the competitors that I started with explain, but also just because of the uncertainty, the geopolitical landscape and the global economic uncertainty. And so we've really been able to enjoy the relationships that we have with these big institutions where we might start in the retail bank in one geography with an onboarding journey. And then two to three years later, we woke up and through our activities and working with that customer, the success that they're adding, we'll find ourselves in five or six different use cases, some of which are onboarding some new geographies, but many are identity authentication. So those are those step-up transactions for reverifications of identity and in the real world.
So when I come back to your question and then I'll talk about product market fit. When I come back to your question, we have seen transaction volumes grow and in some geographies and some areas grow quite nicely.
And we've also been able to do a good job of cross-selling. So some of the new capabilities that we have back into again that expand within the previously landed logo.
But we've also, as Dave alluded to, in some of the heritage areas of the identity attributes, we've seen some some per unit pricing pressure.
So when it all washes out, I think you get the complexion of where we are today from a from a product market fit perspective.
Brian, I mean, these are some some basic value proposition things, right? You have all the do. You have all the key features at our Newsday crisis, the audience really care.
And you have a business model that is enticing and all of that resonates.
Then you've established product market fit in a given segment. And our segments are based on industry. They're based on geographies and they're based on use cases.
So that's what I'm referring to.

Chad Bennett

Got it. And I know that that's great color. And then just in terms of the ability to get and maybe timing more importantly to get to what I think you guys have talked about for us, I think a part of the businesses that's kind of an industry or market growth rate of kind of high 10s on that, you know, a potential fourth quarter event or fiscal year 25 event. Is there anything company specific that needs to happen to achieve those growth rates or is it macro related or none of the above? So I think it's combination of those things.

David Lyle

Yes. So if we talk about a 14% to 16% CAGR growth over the next five years, those numbers come from third parties like Gartner or Liminal third-party analyst firms that focus on this identity category of that is a five-year figure, if that's going to bounce around a little bit and talk about the macroeconomic circumstance. But we go back to some comments that both I mean, the prepared remarks that also being made in the prepared remarks. The composition of the Mitek identity portfolio today is just Head & Shoulders over where it was three or four years ago between the biometrics enlightened category creation that we're doing with IDR. and D., then translating that into something that could be class consumed for customers through my VITI. through bypass, obviously plugging that into my VIPD. into end low-code, no-code orchestration, layer of there's just so many things going on there that we have to offer customers that just a short three years ago, we didn't have. Those are the growth drivers in the identity side of things. And I think you'll see that in this second half of this year, but you'll see it going into 25 as well.
And that's without even I don't want to reach back, but that's without even talking about CSC, again, which very much is a digital banking offering.
But I've said this many times now, but there's this very growing important intersection between what we do for fighting fraud for these financial institutions and what we do from an identity perspective it's very rare for somebody to perpetrate check fraud without simultaneously perpetrate an identity fraud and the access that we're having to these customers project front, the vendor, the insights of the kind of challenges that they face is helping us in both mindset.

Chad Bennett

Got it. Thanks so much. Nice job.

Operator

Scott Buck, H.C. Wainwright.

Scott Buck

Your afternoon, guys. Just one for me on with the ID business moving towards breakeven in the fourth quarter. What kind of margin tailwind on a consolidated basis should we be thinking about for fiscal 25?
You've got for 2015 yet?

Scipio Carnecchia

Not. We're not guiding for '25 outside of what we are and yet, but I wouldn't say we're going to see directionally material changes, obviously, Pat.

Scott Buck

Okay. I appreciate that. Thanks.

Scipio Carnecchia

Thanks, sir.

Operator

Thank you. This concludes our question-and-answer session. I'd like to turn the call back over to Todd Kehrli for closing remarks.

Todd Kehrli

But you, operator, and thank you, all, for joining us today and for your continued support. As always, if you have any follow-up questions we'd love to be with management. Please feel free to reach out to me and also something up. Thanks again, and have a great rest of your day.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.