Revenue clearly beat the standing expectation. Third-quarter revenue was $54.0 million, up 18% year over year and above the published consensus of approximately $50.8 million. The beat was broad: Fraud & Identity revenue rose 14% to $29.0 million, while Check Verification rose 24% to $25.0 million, although the more strategically important Fraud & Identity SaaS business grew a much stronger 37% (Disaggregation of Revenue by Product and Type).
| Metric | Q3 FY26 | Q3 FY25 / expectation | Read |
|---|---|---|---|
| Total revenue | $54.0M (Condensed Statements of Operations) | $45.7M prior year; ~$50.8M consensus | Beat |
| GAAP diluted EPS | $0.17 (Condensed Statements of Operations) | $0.05 prior year; ~$0.28 consensus | Below consensus on a GAAP basis |
| Non-GAAP diluted EPS | $0.34 (Non-GAAP Net Income Reconciliation) | $0.22 prior year | Strong improvement |
| Adjusted EBITDA | $20.8M (GAAP Net Income to Adjusted EBITDA Reconciliation) | $13.1M prior year | Up 59% |
| Adjusted EBITDA margin | 38.5% (GAAP Net Income to Adjusted EBITDA Reconciliation) | 28.6% prior year | Strong operating leverage |
| Nine-month revenue | $153.1M (Condensed Statements of Operations) | $134.9M prior year | Up 14% |
The growth mix is better than the headline suggests. Fraud & Identity SaaS revenue reached $24.8 million, up from $18.1 million, while Fraud & Identity software license and support revenue fell to $3.6 million from $6.9 million (Disaggregation of Revenue by Product and Type). That shift toward recurring SaaS revenue supports the company's stated growth strategy and helps explain why adjusted EBITDA margin expanded to 38.5% despite total revenue growth of 18%.
The raised outlook is a genuine upgrade, not just a favorable presentation. Management lifted full-year revenue guidance to $195–$200 million from the prior $189–$198 million range and raised the adjusted EBITDA margin target to 32%–34% from 30%–33% (Guidance). The new midpoint implies approximately $197.5 million of fiscal-year revenue, about $4 million above the prior midpoint, with Fraud & Identity revenue now expected to grow approximately 19% at the midpoint (Guidance). The $42–$47 million fourth-quarter revenue range is below the current quarter, but it still supports the higher full-year target.
Profitability outperformed, though GAAP EPS was less clean. Adjusted EBITDA rose 59% year over year, while GAAP operating income nearly tripled to $11.5 million (GAAP Net Income to Adjusted EBITDA Reconciliation; Condensed Statements of Operations). GAAP diluted EPS of $0.17 was below the approximately $0.28 published estimate, but the comparison is distorted by tax and non-GAAP adjustment differences; non-GAAP diluted EPS was $0.34, up from $0.22, and the quarter included $4.9 million of stock-based compensation and $3.3 million of acquired-intangible amortization (Non-GAAP Net Income Reconciliation; Stock-Based Compensation Expense).
Cash generation is the main offset to the positive operating read. Nine-month operating cash flow fell to $34.2 million from $35.9 million, and trailing-twelve-month free cash flow declined to $48.6 million from $55.8 million (Statements of Cash Flows; Non-GAAP Free Cash Flow Reconciliation). Cash and investments were $100.2 million at June 30, down $96.3 million from fiscal year-end after repaying $155.3 million of convertible notes and repurchasing $19.8 million of stock; the balance sheet is less leveraged, but liquidity is materially lower (Financial Highlights; Condensed Consolidated Balance Sheets). Net, the filing is significantly better than expected on revenue, recurring growth, margins, and guidance, with weaker GAAP EPS and reduced cash reserves as secondary cautions.
Read the original 8-K on SEC EDGAR ↗