Call Start: 11:00
Call End: 11:49
Mitek Systems, Inc. (NASDAQ:MITK)
Q1 2016 Earnings Conference Call
January 28, 2016, 11:00 ET
Todd Kehrli - MKR Group
Jim DeBello - President & CEO
Russ Clark - CFO
Bhavan Suri - William Blair
Mike Grondahl - Northland Securities
Welcome to the Mitek Systems Fiscal 2016 First Quarter Financial Results Conference Call. At this time, I would like to turn the conference over to Mr. Todd Kehrli of the MKR Group. Please go ahead.
Thank you, operator. Good afternoon, and welcome to Mitek fiscal 2016 first quarter earnings conference call. With me on today’s call are Mitek’s President and CEO, Jim DeBello and CFO, Russ Clark. Before I turn the call over to Jim and Russ, I’d like to cover a quick few items. This afternoon, Mitek issued a press release announcing its fiscal 2016 first quarter financial results. That release is available on the company’s website at www.miteksystems.com. This call is being broadcast live over the Internet for all of the interested parties and the webcast will be archived on the Investor Relations page of the company’s website.
I would 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, specifically comments regarding our long-term prospects and market opportunities, should be considered forward-looking statements. These forward-looking statements may include comments about our plans and expectations of future performance.
Forward-looking statements are subject to a number of risks and uncertainties which could cause actual results to differ materially. We encourage all of our listeners to review our SEC filings, including our most recent 10-K for a more complete description of these risks. Our statements on this call are made as of today, January 28, 2016 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 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.
I’ll now turn the call over to Mitek’s CEO, Jim DeBello. Jim?
Well thanks Todd and good morning everyone. I'm happy to report strong financial results for the first quarter which included 37% revenue growth year over year and our seventh consecutive quarter of non-GAAP profitability. I'm equally pleased to report on a significant progress we've made in our new ID capture and verification business over the past 90 days. We've added several new customers for our ID verification solutions across many different verticals during the first quarter including four new Fortune 500 companies while significantly increasing our bookings and backlog for this new part of our business. As you may recall we set a goal on last quarter's call to sign 10 Fortune 500 companies in fiscal 2016 to use our new ID capture and verification solutions and we're well on our way to achieving that goal.
We're off to a terrific start to fiscal 2016 and look forward to building on our success throughout the remainder of the year and let me review our first quarter accomplishments in more detail. Our solid financial results were driven by increased revenue contribution from both of our new ID capture and verification product offerings as well as continued growth of our industry leading mobile check deposit product.
Let me first start with a review of our new ID products. As the pioneer behind mobile capture and the industry leader we have a first mover advantage in helping companies transform their business to more successfully capture the increase of commerce moving through the mobile channel. Enterprises need our products to effectively address the shift to mobile commerce that is now being driven by millennials who are demanding a mobile self-service experience. And we're leveraging our mobile capture expertise in building off of our success in financial services to expand the scope of our business globally to address the multibillion dollar identity capture and verification market. Our new ID products exponentially expand our addressable market and will enable us to drive higher ASPs while also increasing our mix of recurring revenue through the crowd.
Mobile Fill, our mobile identity capture solution directly addresses the mobile customer acquisition pain point by allowing the mobile customer to use their camera as a keyboard creating a great user experience. Using Mobile Fill which includes our touch free, auto capture experience MySnap, a consumer can quickly pre-fill any form with personal data by snapping a photo of their driver's license or other form of ID eliminating the hurdles they currently experience while trying to type. By providing a superior user experience that's easy and efficient Mobile Fill significantly reduces customer abandonment and improves completion rates through the mobile channel. Despite spending millions of dollars each year advertising to build their funnel of sales opportunities, many of our enterprise customers say they're unable to achieve acceptable conversion rates on the rapidly growing number of inquiries coming through the mobile channel.
They're unable to process these potential customers in a timely, easy and efficient manner. One large enterprise has told us that 40% of the new potential customers now come through the mobile channel but they're experiencing unacceptable customer conversion rates due to the abandonment of their existing mobile on boarding process. Our Mobile Fill solution provides a significant value proposition by increasing their new customer conversion rates. As I mentioned earlier, we've added several new customers including four new Fortune 500 companies. These included a Top 5 bank for a new account opening, a Top 5 carrier for auto insurance quotation, a Top 5 pharmacy and healthcare company for mobile account opening and a Top 5 private label credit card issuer for a new account opening.
Even more significant than the number of new deals signed is the fact that many of these were outside of our stronghold financial services. During the quarter we signed our first online gaming company, our first retailer, our first cryptocurrency company and our first customer on the Forbes Fortune 10 list. All of these new deals were for Mobile Fill solution highlighting the importance that's being placed on improving the new customer acquisition experience through the rapidly growing mobile channel. These new logos underscore the value that our new mobile identity solutions bring to businesses that are looking to optimize the mobile channel for customer acquisition by reducing friction and we've made tremendous progress in the first quarter with Mobile Fill and look forward to getting these new customers online and generating revenue soon.
The opportunity however doesn't stop there. We believe that many of these new Mobile Fill customers will soon evolve into Mobile Verify customers to allowing us to cross sell. So now let's talk a little bit about Mobile Verify. The second major pain point that businesses faces is they seek to meet growing customer demand in the mobile self-service channel is the inability to accurately verify the identity of mobile customers. This is particularly important in highly regulated markets due to know your customer anti-money laundering requirements otherwise known as KYC and AML. Our second ID product Mobile Verify addresses this challenge. Mobile Verify which we announced at the end of last year enables banks and other businesses to improve their KYC process using mobile images for ID document authentication.
Mobile Verify instantly verifies the authenticity of an underlying identity document with computer vision algorithms. The authenticity of that ID can be verified entirely through a mobile device eliminating the need for a new customer to appear in person to prove their identity. It's been proven that when a new customer prospect are asked to leave the mobile channel and physically present their identity abandonment can be as high as 90%. Today we have one of the largest global payment processing companies using our product to provide ID verification. And we're expanding with them every day. This customer is using Mobile Verify to verify the identity of its customers worldwide enabling them to transact safely, securely and efficiently.
With Mobile Verify this customer has seen their time to verify a customer go from days to minutes significantly improving the efficiency of their compliance process while improving customer satisfaction. With Mobile Verify we believe we have the leading mobile ID document verification solution in the world and our goal is to further extend our capabilities to also offer our customers a multi-factor ID verification solution in combination with our ID document verification offering.
Through the acquisition of ID Checker last year we obtained facial comparison capabilities which we have implemented at a large European Bank. Our facial comparison offering matches photo of an ID with a selfie taken by the mobile user there by adding a second factor of mobile verification. We're focused on further developing our facial comparison offering in fiscal 2016 as well as providing additional multi-factor ID verification capabilities either through acquisition or partnership to help us further capitalize on the multi-billion dollar ID verification market.
With our innovative new ID products we believe we have a substantial opportunity ahead. We're focused on targeted verticals that are seeking to improve new customer acquisition and ID verification via the mobile channel. And we're well on our way to reaching our goal of signing 10 Fortune 500 customers this fiscal year that we can then uses reference accounts to further expand within these key verticals. This is a very large and growing market and we believe we have the right solutions to address the pain points that these companies are encountering as they try to offer a mobile self-service environment.
Now let me review our mobile deposit products where we continue to dominate this growing market. Mitek's mobile deposit was the mobile users first exposure to mobile capture. The popularity of mobile deposit with it's high quality fast and easy user experience continues to drive user adoption today with more than 60 million consumers using our mobile deposit solution. While consumers love the convenience and ease of use financial institutions recognize the substantially lower transaction cost associated with processing checks through the mobile channel. As such mobile deposit has been broadly adopted by the top banks in the world including the Top 10 U.S. retail banks and it continues to grow among both consumers and the financial institutions that serve them.
With another 300 financial institutions added this quarter we now have approximately 4800 financial institutions in the country licensing our technology. Yesterday we announced a significant alliance with Harland Clarke, the number one check printing company in the world to further improve security of our mobile deposit solution for consumers and financial institutions. Personal checks printed by Harland Clarke now carry new photo safe deposit features that can only be recognized by the advanced computer vision software embedded in Mitek's mobile deposit solution.
Our alliance with Harland Clarke further strengthens our dominant market leadership in mobile deposit and we believe will also help us gain further traction in both the consumer and commercial mobile deposit markets. Well adoption and usage of mobile deposit continues to grow rapidly it still represents significantly less than 5% of the across approximately 19 billion checks deposited in the U.S. each year representing a significant opportunity for growth for many years to come. This speaks to the growth opportunity that exists for Mitek as we drive more consumer mobile deposit transactions either through new users or through an increase in the frequency of usage.
Financial institutions today continue to spend significant marketing dollars to drive their customers to use mobile check deposit and Mitek continus to benefit from this push to the lower cost mobile channels. Both the consumer side of the market which makes up one quarter of the checks deposit annually and the commercial side which makes up the remaining three quarters of the checks deposited annually remain significant growth opportunities for Mitek.
On the consumer side of mobile deposit a growth driver that will generate an increased number of transactions will be increased deposit limits debt [ph] by financial institutions. Many of our bank customers today set low dollar amounts on checks that can be deposited via mobile for their own risk mitigation. Sometimes these low deposit limits make it impossible for our consumer to deposit a check through their mobile device. Today we're seeing increasing numbers of financial institution proactively address this issue by creating advanced KYC engines so they can raise deposit limits and eliminate hold times for customers where appropriate. Many of our customers are implementing this type of systems in hopes of driving further adoption of mobile deposit and one of our customers told us they were able to almost double eligibly across their customer base and reduce holds on the deposited funds down to same day availability while increasing the deposit limit per check to $30,000 for individuals and up to $36,000 for small business checks.
They reported as a result of their efforts their mobile deposit adoption and usage increased dramatically and became a key driver of both customer acquisition and retention as well as providing a significant cost savings for the financial institutions and they told us that they were able to increase their number of mobile deposits by 365% in one year and increased the number of accounts using mobile deposit by 500% in 18 months.
Many of our customers are implementing similar best practices just like this to accelerate adoption of mobile deposit and drive significant cost savings. We see these types of programs as a big growth driver for mobile deposit. We also believe that our partnership with Harland Clarke and the new photo safe deposit feature it provides will further mitigate risk on the part of the financial institution and may result in higher deposit limits which will in turn drive increased adoption of mobile deposit and increased number of transactions.
As I noted earlier 3/4ths of the 19 billion checks deposited annually are deposited by business. Just like the retail side of the banks the commercial and treasury divisions recognize the substantially lower transaction costs associated with processing checks. Through the mobile channel and they are highly motivated to drive more mobile deposit transactions as an alternative to branch or ATM deposits. In addition businesses themselves are seeking to lower their costs with mobile tools that enable them to quickly access their funds and process payments without a trip to the bank extra hardware or the interchange fees associated with credit card payments.
Last quarter we announced mobile multi-check capture, a powerful new capability that enables businesses to make batched deposits with a mobile device and also includes advanced risk management and business intelligence features including endorsement detection. Mobile multi- check capture is aimed squarely at addressing the untapped commercial mobile deposit market. To underscore the value proposition in commercial mobile deposit let me quickly highlight one of our first commercial customer case studies. This customer is one of the largest independent food distributors in the United States, generates over 7 million invoices annually and receives more than 3 million payments each year. They were looking for a way to consolidated streamline their payments processing to increase efficiency and lower their cost. By enabling this customer to deposit checks mobily at the point of [indiscernible] with Mitek's mobile deposit solution we provided them with faster access to funds and eliminated expensive and tedious manual processing associated with matching and posting payments. And as a result of adopting mobile deposit this commercial customer reduced its overall payment processing cost by 29%.
Commercial mobile check deposit is an untapped market, businesses are just beginning to turn the mobile deposit to process payments building the habits we created in the consumer market. And we believe it represents a substantial opportunity to drive further growth for Mitek this fiscal year and well beyond. In conclusion we had a strong first quarter giving us a great start to fiscal 2016. Our new ID products exponentially expand our addressable market and will enable us to drive higher ASPs while also increasing our mix of recurring revenue through the cloud.
We saw increased revenue contribution from both of our new ID capture and verification products and continued growth in our industry leading mobile check deposit product. We will continue to expand into the multi-billion dollar ID capture verification market with our new ID products Mobile Fill and Mobile Verify while we'll see continued growth in mobile deposit driven by increasing usage by the retail banking and commercial markets.
We’re energized by the significant growth opportunities and look forward to updating you on our progress in the coming months.
Now with that I'll turn the call over to Russ to discuss the quarter in more detail. Russ?
Thanks Jim. I would like start by thanking everyone joining us a little earlier than usual on today's call especially those of you here in the West Coast. Q1 was another strong quarter for Mitek and I'm pleased to provide some additional details on our results. Let's start with revenue and operating results. In Q1 Mitek generated total revenue of $7.4 million, a 37% increase year over year. As Jim, mentioned we also achieved non-GAAP net income in Q1 of $1.3 million or $0.04 per diluted share representing our 7th consecutive quarter of non-GAAP net income.
Q1 software revenue of $4.7 million included 11 Mobile Deposit reorders and is up 26% compared to revenue of $3.7 million in the year ago quarter. Mobile Deposit fuel most of this growth however Mobile Fill for U.S. drivers licenses also made a meaningful contributions to Q1 software revenue. In addition we maintain strong software gross margins at 92% for the quarter. Q1 services revenue of $2.7 million increased 63% over last year's Q1 revenue of $1.6 million due primarily to the addition of transactional SAS revenues for our mobile verify product. Q1 services gross margins were 79%, total Q1 operating expenses were $7.7 million compared to $5.3 million in the year ago quarter.
Q1 selling and marketing expenses were $2.5 million compared to $1.4 million in the year ago quarter while R&D expenses were $1.7 million in Q1 compared to $1.2 million a year ago.
Our Q1 G&A expenses were $2.1 million compared to $2.2 million in the year ago period. The year-over-year increases in OpEx reflect our continuing investments in growth including the acquisition of ID Checker at the end of Q3 of fiscal 2015, as a reminder our earnings releases include a reconciliation between GAAP and non-GAAP net income. We believe that non-GAAP net income provide the useful measure of the companies operating results by excluding the following items. Acquisition related costs and expenses, stock compensation expense and litigation costs related to protecting our intellectual property.
In Q1 we incurred $453,000 in acquisition related costs and expenses. Stock compensation expense during Q1 was $989,000 compared $814,000 in the year ago quarter. IP litigation expenses totaled $113,000 in Q1 versus $501,000 in Q1 of last year.
GAAP net loss in Q1 was $322,000 or $0.01 per share compared to GAAP net income of $146,000 or breakeven per share in the year ago quarter. Non-GAAP net income in Q1 was $1.3 million or $0.04 per diluted share compared to non-GAAP net income of $1.5 million or $0.05 per diluted share for Q1 of 2015. Our diluted share count for Q1 was 32.1 million shares. As of December 31, 2015 our headcount was around 87 employees.
Turning to the balance sheet, during the quarter we generated $1 million of operating cash flows raising our total cash investments to $26.7 million at the end of Q1. Our Q1 accounts receivable balance of $4.2 million represented a DSO of 53 days.
Now moving to guidance for fiscal 2016, we’re reiterating our previous guidance of annual revenue between $31 million and $33 million for our fiscal year ending September 30, 2015. Our guidance is based on continued growth in mobile deposit as well as increasing contribution from our Mobile Fill and Mobile Verify ID product. We are also reiterating our expectation of non-GAAP profit margins of at 20% for the full 2016 fiscal year. We expect Q2 OpEx excluding acquisition related costs and expenses, stock compensation expense and litigation costs to be between $6.25 million and $6.75 million. As we've previously stated this guidance reflects our increased investment in sales and marketing to drive adoption of our new ID products as well as our continuing efforts to add more top talent to our world class software engineering, science and computer vision teams.
We expect Q2 acquisition related costs and expenses to be between $500,000 and $600,000. Q2 stock compensation expense to be between $1.0 million and $1.1 million and Q2 litigation cost to be between $200,000 and $300,000. That concludes our prepared remarks. Operator, please open the line for questions.
[Operator Instructions]. And we will take our first question from Bhavan Suri with William Blair.
Just to dive into the numbers first of all with the trajectory and obviously it was a nice mobile reorder quarter but you obviously had the other products fill in nicely. As I look at a longer term road map and again you’ve given guidance but as we look out three, four years and you look at the split between check deposit versus the Mobile Fill and the ID Checker product. How should we about what the split of the overall revenue could look like say three, four years down the road?
Three, four years out if we look at the size of markets and growth rates we expect that revenues generated by our ID products could equal those generated by our mobile the deposit business. So not to downplay what we're doing in mobile deposit that business continues to grow nicely but again when we look at market sizes for ID and pipelines we think the two could be equally as large three, four years from now.
Okay. And then a quick one for Jim too, when you look at some of the newer functionality like the decryption type stuff that you’re adding to the identification products. You know some sense Jim of how hard that is to do sort of man hours or development time or patents would be helpful just understand you know fit someone else and replicate -- it's technology so I know [Technical Difficulty] enough time but some sense of sort of how differentiate of what the motive is around some of these new features too would be great.
And to answer your question prior to the door closing on your airplane. The idea behind what we're doing is to drive a consumer experience as unparalleled, so our effort really is to use the camera to replace typing and to replace mistakes and do improve completion rates on the Mobile Fill product and ultimately identify and verify the authenticity of the document and the identity of the individual behind that document. So as we see our products the science is intended to be very simple to use but it's very difficult to build, these are advanced computer vision algorithms, machine learning and deep learning [ph] as three fundamental areas in the area of the research and development that we're investing in that makes that user experience so pleasant.
Second thing, we're doing is building a consumer habit, if you think about what we've accomplished with mobile deposit as a beachhead 60 million people and more are using our technology seamlessly easily to do a transaction daily and as a result of that this habit is being formed and we think it will also extend other uses of mobile capture and therefore we think laterally moving in identity using the capture ability on the phone or the tablet is going to be much easier and the sales cycles ultimately will be compressed.
We have seen increasing traction with our enterprise adoption of our Mobile Fill and Verify products. This is very, very good news and the pipeline is deepening. So we think we're in the right place at the right time but it will take continued investment in the core science which has been very complicated and our time to market advantage complemented with our IP, I think gives a strong defensible barriers.
And then turning to obviously enterprise adoption which is great. Do you think -- you remember couple years ago you decide to vertilize a little bit and people sell right into insurance guys and things like that but you think now it's a vertical approach, or do you think you can use a broader base sort of horizontal sales force to grow that enterprises. How should we think about
How you're driving the investments in sales and who are the typical hires are there?
Our feeling is that we want to deposit the ID space in the financial services vertical as much as we do with mobile deposit. So we have a concentrated effort in financial services among our current banking customers and also new banking customers globally for that, that is our primary focus. However what's happening and which is interesting is that we're moving into adjacent markets by being pulled there by customer demand, enterprise demand. So the retailer that we mentioned or other types of vertical markets even age restricted commerce like gaming or other types of sale are coming to us because of our reputation in the banking market. So we're being pulled into latter vertical markets which are very, very large and I think very exciting for the company. So no longer and I anticipate in the future in a year or two we're going to have multiple strong verticals including healthcare, telecom retail, on top of banking.
It's Russ, if I could augment that a little further. Our sales in your words is more horizontal although as you would expect our key sales reps that call in the top insurance companies know everyone in that space. However using technology to broaden out the footprint as well so we’re investing more in digital marketing, SEO and those types of sort of touchless marketing efforts and lead-gen efforts are really helping us expand outside of our core verticals and helping us get companies in places like online gaming as Jim mentioned.
And then Russ, actually one for you. As you look at the deferred line that obviously grew quite nicely sequentially as I recall 13% and then you obviously had the services increase from the transaction business the SAS. Is there any transaction business that was booked in the deferred line or is that all maintenance on the license line?
Yes Bhavan, the increase quarter-over-quarter in deferred revenue is primarily related to maintenance renewals which primarily come for our mobile deposit business. There is some contribution in the deferred revenue line from the SAS business it's more modest. So really what you’re seeing there is a timing effect. If you look historically deferred revenue has typically trended up from the end of Q4 to the end Q1 just with normal mean renewal cycles and this quarter is consistent with that.
Jim, I was wondering if you could through your recent partnership with Harland Clarke again, some of the details there -- particularly the benefits of the relationship what you think that would bring?
That's really interesting, a good question Mark with regard to Harland Clarke. They are the largest check printing [Technical Difficulty]. They sell their checks through banks to consumers and so their initiative really is to create this unique check which has an icon on the front which triggers our computer vision algorithms to match the image of the front and information from that with information that is identically printed on the back and that's an innovation in the check printing business. And so it's been a challenge because the ink density on the back has to be lighter by regulatory requirement and then be able to optimize our algorithms to actually read that accurately has been our challenge internally in partnership so we have been working months on this with Harland Clarke in deep testing to perfect the technology and they have announced it, they actually as of January 17, have begun printing all new personal checks with this icon and the information on the back of the check.
Here's the benefit, when you endorse a check you need to write your name on the back and it's associated with the front of the check and when you presented to a teller at a branch of course. You have a single item, a single check. When you do it mobily you're required to photograph the front and back and occasionally there are occasional and inadvertent situations when people make duplicate deposits or they may if they are ill-intended try to use an endorsement on the back of the check for different checks that what was intended. So to stop this potential risk and also prevent accidental duplicate deposits Harland has invented this new check and we’re able to uniquely and with our technology the only company able to read this.
And so as a result of that it's a risk mitigation and security feature that I think will give banks the confidence to begin raising their limits that are constructed by the risk management people. Raising limits benefits might add, and we think as a result of that transaction volumes could go up and therefore we benefit from that and Harland of course is the first innovate in the area of the check and they will benefit we think through their continued marketing to their customers and beyond.
And as a follow up in your prepared remarks Jim you discussed I believe about adding additional multi- factor verification capabilities to your ID verification solution. I was wondering if you just run through one or two examples of what maybe some of those additional capabilities could look like sure?
Sure, Mark as we think about this market is very interesting. Today we believe the center of the consumer habit is around the physical document, in that case it would be your driver's license or perhaps a passport. So imagine your day checking in through TSA physically presenting your driver's license [indiscernible]. Physically presenting your driver's license, it's the same thing at Marriott perhaps. So that is the human experience today. However as you become more digital and you conduct mobile commerce and mobile commerce to us could be in rolling for a new service like a quotation for insurance, a new loan, new mortgage or a new transaction, a deposit. At times you're going to need to present identity information. We can obviously capture that with regard to the driver's license but you want to match that to a physical attribute.
So a facial recognition matching is a biometric. But there are other biometrics that are also interesting including being able to read the eye, being able to read fingerprints and you can do this through a camera. And you can do that with a selfie camera as well as the front camera on a mobile device. So we think that’s one very exciting area of biometrics that would complement what we were doing and provide a second factor of authentication particularly for enrollment when you want to have and tie that document to the physical being. The third area would be the area of devices, devices themselves are connected to the network. There are characteristics of usage in the device that are recorded, [indiscernible] and the usage of the frequency of the device is one factor, the location of the device is another factor and there are many others. And those can also be used to identify location as it relates to the physical presence of the individual. And again as another factor in the authentication process and for example Mark, in your case if your phone was being registered in Russia and yet you're based in the U.S. it would be a red flag that could be used in the identity through a transaction or through an enrollment.
The third factor which we think is really new and very interesting is with regard to deep mining of data. Data particularly in countries that don't have access to financial data or data services, those would be in the African continent, perhaps in the Indian area well as China and other areas where by social profiles maybe use more appropriately to mine that data as another factor of authentication. So we're pretty excited about being able to in concert with partners or perhaps in concert through acquisitions be able to add other capabilities to make our offer multi-factor offer and to satisfy the demands that new enterprises are seeing.
And then one final question, ID Checker revenue in the quarter, Russ I don't know if you mentioned that, was it similar to last quarter?
Mark, I didn't mention that. I did mention that our year-over-year growth in the services line was driven in large part by the addition of ID Checker revenue. It was a strong quarter. Our SAS revenues for the ID product which is legacy ID Checker were very strong.
[Operator Instructions]. And we will now go to Mike Grondahl with Northland Securities.
First a couple on mobile deposit, any anecdotal information on kind of what's going on with customer penetration trends or customer usage trends and then maybe how many banks went live during the quarter?
As Jim mentioned in his remarks we added another 300 banks who signed for a mobile deposit during the quarter. So we’re around 4800 total now, so nice progress, continued progress there from end user bank prospective. If I drill through the banks to the end user consumers as Jim mentioned there is some industry research that shows around 60 million people using mobile deposit today. That same research forecast the number of mobile deposit users to increase to over 80 million by the end of this year and that trend has continued to grow as well.
And then in terms of lives I think Mike you're familiar with the story for a while and we continue to see that gap close between the number of bank sign and number of banks live. So out of that 4800 banks who have signed around 4400 of those were live at the end of the quarter and I think you know as we sort of work down market through the remaining banks that aren't using mobile deposit today, the implementation times have decreased as well. So some of the majors in the early days could take months maybe even over 12 months to get live. But the banks that we’re signing up today many of whom are accessing our technology through a SaaS offering at one of our channel partners can be hooked up in a matter of weeks or months so that cycle times really shortened.
And Mike, let me add a little bit to that and for the benefit of those listening, the three key drivers to mobile deposit, one is bank acquisition and Russ has covered that and we continue to acquire more banks but fundamentally the banks we're adding now or late adopters are typically not large. Secondly would be consumers who have adopted a mobile banking and now are depositing checks and the third driver would be the frequency of usage. So on that latter part we think that's a really interesting statistic and we do try to monitor that and we continue to see very strong usage growth across the board from large to small banks as it relates to quarter over quarter sequential growth typically in the double digits and we've seen that again this quarter. So we're just really of the tip of the iceberg. Studies have shown that 1 out of 7 Americans about 15% are using mobile deposits today. And imagine if that that doubles. And this is a low cost channel for banks so they continue to market and promote this and as millennium's become more of age and more centrally focused on their financial lifestyles it's going to be mobile. So that's an advantage to us as well so we continue to see growth in usage, we consider to see growth in penetration of consumers and obviously adoption by banks.
So all in all we're firing in all cylinders, there's upside potential in mobile deposit which continues to allow us to grow the business while investing in new markets that are global like identity verification.
And then moving do Mobile Fill. You sort of announced about 10 customers give or take a few there. Could you give us an example of maybe one or two of the use cases you know how that customer is using Mobile Fill, I mean is it simply just to populate an application. I think that would be helpful to hear one or two examples.
Mike, I will run through a couple of those. So the one you're probably most familiar with would be auto insurance quotation. So we added during the quarter our fourth Top Five P&C carrier who's also a Fortune 500 and the use case there is typically an auto insurance quote. So at the consumer end the consumer is able to use their smartphone to take a picture of the driver's license, take a picture of their insurance card to get the VIN number and based on extracting information from those two documents the carrier can put together an insurance quote and return that right into the mobile device.
So insurance quotation is fairly prevalent out there. One of the other Fortune 500 clients we added during the quarter is a Top 5 pharmacy and healthcare company and they're using our technology to extract information to open up your mobile app for their pharmacy on your smartphone. So the user who wants to initiate an account in the mobile app on their phone will take a picture of the driver's license. Our technology will extract the information and pre-fill the information that's needed to register the app.
Let me add a third which I think is fun and interesting it's a mobile network operator. a large one who has an in-store presence and you know the Apple trend is to move from behind the kiosk and have a self-service. Well in this case it's a retail assisted. So a particular clerk with an iPad will greet a customer and this is happening today and you'll present your license and it will image it to activate your account or to pull up information relevant to your current account. And so it's customer service in a retail environment and amplify on that a large credit card issuer, white labels a credit card, wants to facilitate a better workflow within store locations. So when you sign up for your retail loyalty card instead of providing and typing in each of yours symbols from your driver's license at the clerk, a simple image at the point of sale could be used to populate the form and activate your credit card.
So we see a variety of instances Russ mention insurance, healthcare and I mention mobile network operator and credit card issuing. And this is what the opportunity is ahead of us. When we’re learning new things every quarter it's really exciting to see the kind of inquiries we’re getting the needs that people have which lead us to believe that this product line dramatically extends our markets beyond the FinTech vertical, fin services into a variety of other vertical markets. So I think that momentum will continue.
Mike, let me add one more there briefly. So I think all the use cases we went through were more on the Mobile Fill side. I also mentioned that we're broadening out vertical industry footprint with our digital marketing platforms and Jim mentioned that we recently signed an online gaming company. So as we move over into Mobile Verify online gaming companies have requirements to verify ID at certain points when funds are being transferred back and forth. So that really gets us in from the fill application where we’re extracting and filling information into the area where we're actually verifying the authenticity of the license.
And ladies and gentlemen that does conclude today's question and answer session. I will now turn the call back over to Mr. Todd Kehrli for any additional or closing remarks.
Thank you operator and thank you everyone for joining us today. This concludes our call and we look forward to updating you next quarter.
Ladies and gentlemen this does conclude today's conference. We thank you for your participation.
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