Earnings Call: Q4 2018

Nov 1, 2018

Good day, everyone, and welcome to the Mitek Fourth Quarter and Fiscal twenty eighteen Financial Results Conference Call. This call is being recorded. At this time, I would like to turn things over to Mr. Todd Curley, MKR Group. Please go ahead, sir. Thank you, operator. Good afternoon, and welcome to Mitek's fiscal twenty eighteen fourth quarter and year end earnings conference call. With me on today's call are Mitek's Chairman, Bruce Hanson and CFO, Jeff Dayton. Before I turn the call over to Bruce and Jeff, I'd like to cover a few quick items. This afternoon, Mitek issued a press release announcing its fourth quarter and full year fiscal twenty eighteen 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 that on today's call, management will discuss certain factors that are likely to influence the business going forward. Any factors discussed today that are not historical facts, particularly comments regarding our long term prospects and market opportunities, should be considered forward looking statements. These forward looking statements may include comments about the company's plans and expectations of future performance. Forward looking statements are subject to a number of risks and uncertainties, which could cause actual results to differ materially. We encourage all of our listeners to review our SEC filings, including our most recent 10 K and 10 Q for a complete description of these risks. Our statements on this call are made as of today, 11/01/2018, 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 will be discussing certain non GAAP financial measures. Today's earnings release and the related current report on Form eight 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. Two housekeeping items. First, during the question and answer session, we request that questioners limit themselves to two questions and then requeue with any follow ups. Second, all references we make to a specific quarter in the prepared remarks are to our fiscal year quarters. For example, statements regarding our fourth quarter refer to our fiscal fourth quarter ended September 3038. With that said, I'll now turn the call over to Mitek's Chairman, Bruce Hanson. Great. Thanks, Todd, and good afternoon, everyone. Thank you for joining today. As most of you know by now, my name is Bruce Hanson. I've been a Mitek Board member since 2012 and its Lead Director since 2016. I also assume the role of Chairman on August 27 following the announcement of the departure of our CEO. And I have twenty years of industry experience as the Co founder and CEO of ID Analytics, which we sold to LifeLock in 2012. And before that as President of machine learning pioneer HNC Software, which was acquired by FICO in 02/2002. I want to start the call today by addressing a few framework items regarding where we stand and where we are going as a company. I will also address the public letter put out yesterday by ASG regarding their interest in acquiring Mitek. First, it was an outstanding quarter and year at Mitek. We achieved record revenue for both the fourth quarter and the full year, as well as our nineteenth consecutive quarter of non GAAP profitability. I will focus on the details related to our earnings more fully later in the call, but suffice to say that we're hitting on all cylinders and remain confident in our growth prospects. Second, I have been assisting with the search for Mitek's new CEO along with new CFO. The company has retained top national executive search firms for both searches and I'm pleased to report that we've narrowed the search down to a few finalists in each case and expect that we will be able to announce our selection soon. Third, and perhaps most importantly, I would like to make some or at least a few comments on behalf of our Board with respect to our singular focus on maximizing value for you, our shareholders. Mitek sits at the forefront of powerful global trends in mobile commerce. We believe that we are well positioned to deliver significant and sustained growth as we tap into our technology leadership, customer relationships and our proven ability to innovate and to scale. Our results this quarter were strong and provide a clear indication of the continuing upward momentum of the franchise. In particular, our value creation track record has been demonstrated through our revenue growth and continued profitability, including record revenues of nearly $64,000,000 for FY 2018, representing 40% growth and a 38% CAGR since 2012 and non GAAP net income of $11,000,000 with non GAAP profit margins of 17% for FY 2018. And most encouraging, our strategically important ID business grew 69% for the fiscal year and 79% for the fourth quarter, highlighting the significant growth opportunities we have there. With these strong results, we believe there continues to be substantial upside and value creation opportunities ahead for our shareholders. To realize this value, the company has outlined a long term value creation plan, which includes four key elements. First, extending our leadership position in mobile deposit, making Mitek the global standard in check imaging across all channels, mobile, RDC, ATM and branch. Secondly, rapidly growing our market share and ID verification through the continued integration of eCAR and A2iA, our recent acquisitions and by serving those customers across many different geographies. Thirdly, transforming the company into a cloud based provider and increasing the velocity of that business to ensure that we serve our enterprise customers. Finally, building our technology capabilities and our global market share through selective disciplined acquisitions to complement our organic growth. So looking ahead, as Jeff will share in our FY 2019 guidance, the Board expects the company to grow revenues between 3135% in FY 2019, while concurrently improving overall profitability at an even faster rate. In sum, we remain confident in the significant opportunity we have in the market and will continue to execute on our strategic plan. At the same time, we are open to all alternatives to maximize value for our shareholders, including strategic transactions. The Mitek Board is comprised of independent directors who are professionals with substantial transaction experience and a track record of delivering value for shareholders. Our Board members have collectively approved more than two dozen M and A transactions with a total value in excess of $15,000,000,000 combined in other companies where they've served. We also are assisted by leading financial and legal advisors as we do our work and will measure ASG's recent proposal as well as any others against the substantial upside available to Mitek shareholders under our current plan. Against that backdrop, we wanted to briefly discuss the proposal from ASG. ASG reached out to us shortly after the announcement of our executive changes and we responded by saying that we would be open to a discussion with them post our earnings report. They indicated they decided instead to publicly disclose their proposal yesterday, the day before we announced our earnings results. As our shareholders are well aware, ASG's proposal offers zero premium to our fifty two week high and is also well below the recent price targets set by every analyst that covers Mitek, all of which by the way were issued prior to today's positive earnings report. Nonetheless, the Mitek Board has not yet formally responded to ASG's proposal. We intend to address it following our earnings report as we had indicated to them. Now that we have our reported financial results, the Mitek Board in consultation with its financial and legal advisors will carefully review and consider the ASG proposal in order to pursue the course of action that is in the best interest of Mitek shareholders. We will not have any further comment until the Board has completed its review. Now back to the main focus of today's call, which is our outstanding fourth quarter and full year financial results. As I indicated earlier, Mitek has achieved record revenue for both the fourth quarter and the full year, as well as our nineteenth consecutive quarter of non GAAP profitability. Full year revenue increased 40% to nearly $64,000,000 driven by strong growth in our mobile deposit business along with the rapid adoption of our ID verification solutions. Because of our team's continued success, our ID business grew 79% year over year in the fourth quarter. Mitek's Mobile Verify is becoming a critical enabler of digital commerce and is being embraced by customers and partners across the world. One good example is MoneyGram. After deploying Mobile Verify on 11 country websites across the globe, MoneyGram has reported a reduction in both payment and account takeover fraud. And even more importantly, they've been able to streamline their new customer onboarding process as a result. Going forward, MoneyGram now plans to add Mobile Verify in over 20 more countries, as well as to build it into their mobile apps, ultimately making it easier for their customers to send money anytime from anywhere. This type of customer success is driving our sales efforts and we are able to add several new financial services customers as a result throughout FY 2018, including one of The UK's leading financial institutions, another top 10 U. S. Bank, top banks in Spain and Mexico, fast growing alternative lenders, another leading global payments provider, a leading EU Bitcoin platform, just to name a few. Mobile Verify has also continued to gain traction in the peer to peer economy on both sharing and marketplace platforms. The demand in this market was recently highlighted by Zogby Analytics in its 2018 Digital Identity Consumer Confidence Report. This study found that 85% of consumers are more likely to interact with websites that verify the identity of all their users. So not surprisingly, Mitek is seeing excellent transaction in this segment as well. Our customers include a global marketplace for hospitality services, a leading on demand delivery service, a growing fashion marketplace and a leading disruptor in car sales. And beyond these two key target markets, we also closed deals in several other verticals during the fourth quarter, including a leading European mobile service provider, a retail post office company in The UK and a business that will be using Mobile Verify for age verification as part of its cannabis ordering app. Not only is our technology being embraced by the market, but it's also being recommended by industry analysts. The Aitei Group, a leading independent research firm in its latest study of identity verification providers ranked Mitek number one overall ahead of all other competitors in the study. If you're interested in reading the details, we posted that study on our website, feel free to take a look. This type of analyst coverage is a key indicator of a maturing ID verification market and our growing opportunity within that market. With all this momentum among customers, partners and analysts, we're pleased that during this past fiscal year that our identity business grew its revenues at a robust 69% clip. So in addition to our growth in innovation and identity, most of you know that we remain the undisputed leader in the mobile deposit market with over 6,100 financial institutions and over 80,000,000 consumers using our mobile capture technology. Mitek pioneered mobile deposit and we are committed to its ongoing innovation. In fact, the acquisition of A2iA brought to Mitek new proprietary handwriting recognition capabilities that along with A2IA's optical character recognition technology has helped Mitek solidify its leadership position. It also makes Mitek the global standard in check imaging across all channels. Following the acquisition, we also announced Mobile Deposit version 4.7, which is our twenty fourth release since Mitek invented Mobile Deposit over ten years ago. This newest version integrates A2IA's award winning AI and machine learning based software called CheckReader into Mitek's flagship product. While adoption of mobile deposit has steadily increased over the past five years, we continue to see plenty of room for further growth. The key drivers are consumer penetration and frequency of use with banks driving their customers to this lower cost digital channel. So overall, companywide fiscal twenty eighteen was a great year across the board, driven by very meaningful top line growth in both our identity and mobile deposit businesses, as well as significant progress strengthening our underlying technology. Congratulations to all our teams for making this happen. Going forward into FY 2019 and beyond, we expect demand in our markets to remain strong. In addition, our recent technology investments are paying off by way of increased competitive differentiation. We therefore feel especially well positioned for robust top line growth well into the future. As well as you will note in our FY 2019 profit guidance that the company's greater scale is also enabling it to benefit from improved operating leverage. We expect our operating leverage to improve throughout FY 2019 and beyond resulting in margin expansion. Now, I will turn the call over to Jeff to discuss the financial results in more detail. Following Jeff remarks, we will open the call for questions. Jeff, it's all yours. Thanks, Bruce, and thank you everyone for joining us this afternoon. Let's start with the Q4 revenue and operating results. For the fourth quarter of fiscal twenty eighteen, Mitek generated record revenue of $21,000,000 a 63% increase year over year. Software and hardware revenue of $14,300,000 was up 70% year over year. The increase in software and hardware revenue was due primarily to growth in mobile deposit and the addition of A2iA and iCar. We maintained strong software and hardware gross margins at 94% for the quarter. SaaS maintenance and consulting revenue was $6,800,000 for the quarter, an increase of 51% over revenue of $4,500,000 in Q4 last year. This increase is primarily due to growth in transactional SaaS revenues, which increased 64% year over year and 27% sequentially to $4,000,000 SaaS maintenance and consulting gross margin was 73% for the quarter, up sequentially from 71% last quarter. Total GAAP operating expenses including cost of revenue were $22,400,000 compared to $11,200,000 in Q4 last year. The year over year increase in operating expense reflects our continued investments to grow our identity business, an increase in acquisition related costs, the addition of operating costs associated with our acquisitions of I CAR and A2iA, increased stock compensation expense and one time executive transition costs. Sales and marketing expenses for the quarter were $5,800,000 compared to $3,500,000 a year ago. R and D expenses were $4,700,000 compared to $2,900,000 last year. And our G and A expenses were $6,500,000 compared to $3,000,000 a year ago. Executive transition costs. GAAP operating expenses include $2,600,000 of acquisition related costs compared to $690,000 a year ago. GAAP net loss for the fourth quarter was $2,100,000 or $0.06 per diluted share, which is mainly attributable to increased acquisition related costs and one time charges related to executive transitions announced in late August. 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, one time expenses related to executive transitions and litigation costs related to protecting our intellectual property. Non GAAP net income was $5,700,000 or $0.14 per diluted share. In Q4, our non GAAP expenses exclude $3,000,000 of stock compensation expense, $2,600,000 of acquisition related costs and expenses and $1,600,000 of one time charges related to the CEO and CFO transitions. Our diluted share count was 39,700,000.0 shares compared to 36,300,000.0 shares a year ago. Now looking at results for the full fiscal year 2018. Revenue totaled $63,600,000 an increase of 40% year over year. Software and hardware revenue of $40,700,000 was up 37% over the prior year. The increase in software and hardware revenue was due primarily to growth in mobile deposit and the addition of I CAR and A2iA. We maintained strong software and hardware gross margins at 92% for the year. SaaS maintenance and consulting revenue was $22,900,000 for fiscal twenty eighteen, an increase of 45% over the prior year's revenue of $15,700,000 dollars This increase is due primarily to growth in transactional SaaS revenues, which increased 68% to $13,100,000 SaaS transactional volumes increased 72% year over year. The majority of our SaaS revenue to date continues to be pay as you go and is based on transactional volumes processed and billed each month and therefore subject to fluctuations depending on volumes in any given month. SaaS maintenance and consulting gross margin was 76% for the year. This was down from 82% last year due primarily to increased personnel and hosting web services costs related to the delivery of our solutions. In terms of product contributions to total revenue for the full year, our ID products contributed approximately 35% of our total revenue, representing a very strong year over year growth rate of 69%, highlighting our momentum in the market. Our payments products, which include mobile deposit and A2iA, comprised approximately 65% of our total revenue and continued to see a strong growth rate of 28% year over year. Total GAAP operating expenses for twenty eighteen were $71,400,000 an increase of 67% compared to total operating expenses of $42,600,000 in 2017. This increase is due to the additional investments throughout the year to fuel our growth in the identity business as well as the costs associated with our acquisitions of A2iA and I CAR. GAAP net loss for 2018 was $11,800,000 or a loss of $0.33 per share. Non GAAP net income for the year was $11,000,000 or $0.29 per diluted share compared to non GAAP net income of $11,400,000 or $0.32 per diluted share for fiscal twenty seventeen. GAAP EPS share count was 35,800,000.0 shares for 2018. Non GAAP EPS share count was 37,800,000.0 fully diluted shares for fiscal twenty eighteen. Stock compensation expense was $9,000,000 for fiscal twenty eighteen compared to $5,500,000 for fiscal twenty seventeen. As of September 3038, our headcount was three zero eight FT feet feet feet feet feet feet feet feet feet feet feet Es compared to 139 a year ago. Turning to the balance sheet. We generated $4,200,000 in cash flow from operations during the year, bringing our total cash and investments to $17,500,000 at the end of the fiscal year. Our accounts receivable balance grew significantly at the end of the year to $17,200,000 This growth is partially due to timing of sales transactions in the last month of the quarter and represents a DSO of 53. Now moving to guidance for fiscal twenty nineteen. For our fiscal year ending September 3039, we expect full year total revenue to be between $83,000,000 and $86,000,000 This would represent revenue growth between 3135% year over year. We expect our non GAAP operating margins in fiscal twenty nineteen to be between 18% to 20%. Keep in mind, the impact of the purchase accounting on the A2I revenue is approximately $2,000,000 for the remainder of 2019. If we were to add this back, our revenue for 2019 would be $2,000,000 higher and our 2019 non GAAP operating profit would be in the range of 20% to 22%. Consistent with prior years, we typically experienced seasonality with a strong fiscal Q4 and a weaker fiscal Q1 and this year will be no exception. For Q1 of fiscal twenty nineteen, we expect total revenue of between $17,000,000 and $17,500,000 representing growth of between 40% to 44% year over year. We expect total operating expenses excluding acquisition related costs and stock comp expenses to be between $16,000,000 and $16,500,000 We expect acquisition related costs and expenses to be between $1,900,000 and $2,100,000 and stock comp expense to be between $2,200,000 and $2,400,000 for Q1. Operator, that concludes our prepared remarks. If you could please open the line for questions. Certainly. We'll go first to Bhavan Suri with William Blair. Please go ahead. Hey, guys. It's actually Arjun Bhatia on for Bhavan. Congrats on the quarter. Just wanted to I think I missed this in your prepared remarks, but what was the contribution from A2IA in the quarter? And can you provide some commentary on how the cross sell efforts are going with A2iA? And if you could share, is that primarily in the mobile check deposit business or are you seeing some cross sell in ID verification as well? Hi, Arjun. Thanks for the congrats. We're really happy with the year. So A2IA contributed about $3,000,000 in top line revenue to the quarter, which was great. That was pretty much what we targeted. So we're really pleased with the performance there. The products that they're selling, it's primarily their check reader product and then a little bit the document reader. As to the cross sell, we have actually seen pipeline opportunities develop through relationships with A2IA and banks in Europe. And those pipeline opportunities are in fact for our ID products. So I think that's a great benefit that we've already seen just three months into the acquisition and we'll continue to look for more as our pipeline grows and the relationship integrates. Okay. That's helpful. And just in the quarter, 63% growth, that's significantly higher than we saw for the first three quarters in the year. Was there anything internally that you guys that Mitek changed around or is it generally demand trends that you can attribute the increased growth to? I would say the trends were pretty consistent with what we're seeing. Keep in mind, you add the $3,000,000 of revenue for A2IA, so that bumps up that adds some nice growth. But we also had a really nice strong quarter in mobile deposit and we were planning for a strong quarter, but they had good numbers come in and that group turned in a nice growth rate in excess total payments in excess of 25% for the year. Okay. And then just a last one for me. On sales and marketing expense, we saw sequentially it was generally flat as a percentage of revenue sorry, not as a percentage of revenue in total dollars. Was that expected going into the fourth quarter? And what can we expect in 2020 and fiscal twenty nineteen on sales and marketing expense? Sure. Yes, our plan was all year long that we were ramping earlier in the year. So we were building a sales team as we entered 2018. We added a lot of infrastructure there. We added sales reps. And so I guess it slowed a little bit over the last months of the summer. We're going to continue to invest in sales and marketing. It probably won't be as significant rate as you saw at the beginning of twenty eighteen, but we're going to continue to ramp that team as the IDNIT market really opens up. Great. Thanks for taking my questions. Sure. We'll move now to Darren Aftahi with ROTH Capital Partners. Please go ahead. Yes, good afternoon. Thanks for taking my questions. Just two, if I may. So first, with your fiscal twenty nineteen guidance, can you talk about kind of the mix composition of ID versus payments? And then second question, I know you called out the $1,600,000 executive transition. It sort of seemed like G and A ex that was still fairly elevated. Is there anything in that number that's sort of non core maybe perhaps related to what's going on in the capital markets area or anything else you would call out? Thanks. Hi, Darren. So let's go to your first question on 2019 guide. The mix for ID and payments next year, it's not going to be a lot dissimilar than where we ended this year. If you recall, we were on a trajectory where ID was approaching 40%, but when we added A2iA that brought the payments back up. I expect next year 2019 payments will be somewhere between 6065%, so probably around 62%, sixty three % and ID will be the inverse probably around 38% or so. So not dissimilar, but ID should as that market opens up and we grow ID business, it will increase. On the G and A expenses, yes, there's $1,600,000 of executive costs in there. There's like a good $3,000,000 size of I think it's $3,000,000 There's a big stock based compensation number in there as well. The company had a full impact of the LTIP this year versus 2017. And so that gives a pretty good bump in the stock based comp. Otherwise, the G and A spend is just reflecting the normal growth to support the company. We may have had a little more legal costs in quarter just due to some of the activity going on, But I can't think of anything else unusual in there. Great. And then just one last one. So I know there's seasonality in the business, but the net margin was 27% in the fourth quarter and you guys are guiding to 18% to 20% next year, which looks like it's at the midpoint 200 basis points higher. I'm just kind of curious how to kind of connect between 27% net margins and the guide at the midpoint of the 19% going forward? Thank you. Sure. So just if you look back at Mitek's history over 2018 and 2017, the way the years have ramped from a margin perspective is pretty low, single digits even sometimes in Q1. And then it has ramped up over the year. And that's primarily related to how the payments mobile deposit revenue comes in and the timing of those transaction reorders. So when we look forward to 2019, that's it's going to be very similar. You're going to have a step down in Q1 and then it's going to come back over the rest of the year. In Q4 next year, you'll have a greater than 20% margin again because it's going to bring it back up. So it will be pretty consistent with what's happened. And part of the reason for that and the strength in Q4 is the mobile deposit strength in revenue plus that A2iA revenue that comes in, that comes in at a nice margin. So that helps the company. Thank you. Thank you. Our next question will come from Mike Grondahl with Northland Securities. Please go ahead. Hi, it's Michael on for Mike. Thanks for taking our questions. Maybe first off just on the ID side, obviously strong 79% growth number in the quarter. Is that more just seasonal strength or is there any kind of lumpiness in that number? The ID growth at 79%, that is pardon me. Sorry, go ahead. It's performance of the ID Group. So over the year, we've been investing in that team. We've been building pipeline and closing deals and the transactions are coming in. So we had some really nice transaction growth from a few of our top customers in ID on a monthly basis. A couple of them, I think, there was just some things in their business that was maybe seasonal that came up. And then we had a couple that came on with a good set of new transactions for us. They opened up like a new branch. So one of those, for example, is a company in The UK that is performing work for government offices and they're using our product to identify verify identities for constituents who go to the government for services. We saw a nice increase in that and I believe it's due to them just turning on more of our service. So as the adoption of these products increases, that's where this really starts to pay off for Mitek and this transactional revenue model we'll continue to see the growth. I hope that answers your question. Yes, that's helpful. And then maybe a little bit more on for the 2019, the 18% to 20% margin guidance. Is there any maybe for Bruce as well, as far as the expense structure, any more granular thoughts on that? I missed the last part of your question, the what about it? Just as far as cost structure as a whole and thoughts on that? Yes. I mean, I'll take a quick shot at that and then Jeff, I'm sure will have some may have some input as well. We've made a ton of investment on the operating costs and infrastructure side over the last couple of years and we're starting to see the benefits of scale and leverage on that. So certainly we're going to keep investing on both the R and D and the sales and marketing side to scale our business, but at not at as heavier rate as we have historically just simply because of scale and some of those investments have already yielded benefit. So, but we haven't done anything structurally different if that's what you're getting at. Just growing into the frame that the company has built, particularly in the ID business over the last two or three years. Yes. I'd just add on that previously we've been investing. We made the investments. The investments will continue probably not at the ramp that we just did. But that's where we've said we're going to see leverage come out of the ID model and out of that business. And we expect that business to be contributing to the bottom line here in the next couple of years. So to get there, you're going to see a margin improvement and it's going to come. You can start to see it in 2019. Thank you. We'll move next to Mark Schappel with Benchmark. Please go ahead. Hi. Thank you for taking my question. Jeff, starting with you, the payments business, mobile deposit and HUIA, revenue growth for the year, I think, if I recall correctly, was 28%. And I was wondering if you could just give us a sense of what the organic growth rate would have been if you stripped out A2IA for the year? 17%. Seventeen %, great. Thanks. Yes. So that's sorry to be so brief. It's right in line with our we've been looking at that going I think our last guidance was 15% to 20% growth and they ended right in the middle there. And then when you pair it with A2IA, we're at the 28%. Okay, great. And then cash flow from operations, according to my model numbers here, it was basically flat or basically there was zero for the quarter and that's down from about $3,200,000 last year. Why was the strong quarter, why was the cash flow from ops office this quarter? Yes, that's a good question. I was actually when we finished up and closed the books, I was like, hey, Whit. We just had a large number of sales transactions come in at the end of the quarter. And so they're all sitting in receivables. So you had $17,200,000 in receivables and I think last quarter was $12,000,000 So it's huge record receivables for us. And with that working capital change, it just hits that cash from ops number. Okay. That's helpful. And then Bruce, the question Question for Bruce, with respect to the executive searches, why interview and hire a CEO and CFO in parallel? Why not just hire a CEO and then let him or her bring in their own person? Yes. No, it's an excellent question. And that actually is our preferred plan that to get our CEO on board and allow them to make the selection on CFO. But we felt that with the fact that Jeff is going to fade out here within the next month or so that it would be prudent to also concurrently start a search for CFO to get to a final set of candidates that we hope a handful, if you will, of highly qualified vetted candidates that have met our audit committee members and met the key members of the team that we could deliver on a silver platter, if you will, to our freshly minted CEO and give them essentially a jump start at getting a CFO on board I mean, a CFO on board. And also, certainly a new CEO may have their own candidates they want to throw into the mix and we absolutely encourage that. But what we didn't want to do is be in a position where the CEO search lagged for some reason and the company for an extended period of time was without a CFO. So this way we left ourselves the backstop option to potentially hire a CFO ahead of CEO, although that's I don't think it's going to play out that way. And it's certainly not our preferred option. We just felt we need to do it for contingency purposes. Thank you. That's helpful. Does that help? It does, yes. Thank you. We'll go next to Ilya Grozovsky with National Securities. Please go ahead. Thanks. First, a clarification on the mix. In the quarter, the ID business contributed what percentage? I think I caught it, but I just wanted to make sure I got it right. What was that number? I see. In the quarter, I don't know if I actually gave you that number. Hold on a sec here. Okay. And then while you're looking for that also That's about Sorry. It's okay. It's about 28. 20 eight percent in the quarter. Okay. And then just wanted to kind of delve into that ID piece a little bit. How big is the sales force right now that's focused on the ID? On the ID business? We don't ever give out just the number of sales reps, but we do describe our sales and marketing and go to market organization, and it's well into the 40 to 50 headcount. But that's going to include customer facing people. So sales reps, we have a group of solution consultants or sales engineers, we have channel sales reps, we have strategic account reps, we have enterprise reps, we have customer success managers in there and we have a group of BDRs or sales development reps. So it's a full fledged software sales organization and kind of when you grow it all together, you get to those numbers 40 to 50. And that 40 to 50 is focused on the ID exclusively, right? Yes. Okay. The team focused on the go ahead. Sorry. And then if you can just talk about the sales funnel on the ID piece, kind of how big is the funnel right now and wins versus losses when you don't have success in this, what is the customer going with? Who are you seeing out there on the ID side? Thank you. Well, I don't think that the competitive landscape hasn't really changed. It's all the same usual suspects that we've been seeing. The sales funnel, we don't ever give out the size of the sales funnel, but we've seen great progress in building the sales funnel this year. The sales team has done a fantastic job just going out, identifying leads, responding to leads, pulling them in and developing those into opportunities in our sales funnel. So we're very pleased with that. And the results that we saw in Q4 demonstrated closing many deals that were in the funnel that brought us a good cap to the year on the ID team. So we're really pleased with the performance there. Win loss, I would say we win more than we lose. A lot of these opportunities are proof of concept. A lot of them sometimes are pilots. Some of them are bake offs. And it's a matter of does the prospect have a fully baked concept of what they're going to do because sometimes that's a moving target. They're not quite sure how to go about identifying their or where or when they want to verify their identity for their consumers. So, I don't know if that answers your question, but I would say that the company we feel pretty good about our competitive ability to win when we're in takeoffs or competitive sales opportunities. Great. Thanks. Thank you. That will conclude our question and answer session for today's call. At this time, I would like to turn the conference back over to the company for any additional or closing remarks. 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 great day. Again, everyone, that will conclude today's conference. Thank you all for your participation. You may now disconnect.