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Press Release

Mar 19,2024

Mitek Reports Record Revenue and Earnings for Fiscal 2023

Total Revenue for Fiscal 2023 Increased 19% Year Over Year;
Company Reiterates Guidance for Fiscal 2024

SAN DIEGO--(BUSINESS WIRE)--Mar. 19, 2024-- Mitek Systems, Inc. (NASDAQ: MITK, www.miteksystems.com, “Mitek” or the “Company”), a global leader in digital identity and fraud prevention, today reported financial results for its fourth quarter and full fiscal year ended September 30, 2023, and reiterated its previously provided guidance for its 2024 fiscal year ending September 30, 2024.

Fiscal 2023 Full Year Financial Highlights

  • Total revenue increased 19% to a record $172.6 million.
  • GAAP operating income increased 28% to $15.6 million, an operating margin of 9%.
  • GAAP net income increased 117% to $8.0 million, or $0.17 per diluted share.
  • Non-GAAP operating income increased 20% to $53.2 million, a Non-GAAP operating margin of 31%.
  • Non-GAAP net income increased 10% to a record $44.4 million, or $0.95 per diluted share.
  • Cash flow from operations increased 50% to $31.6 million.
  • Total cash and investments increased 34% to $134.9 million at September 30, 2023.

Fiscal Fourth Quarter 2023 Financial Highlights

  • Total revenue decreased 5% year over year to $37.7 million.
  • GAAP operating loss was $3.3 million, an operating margin of negative 9%, compared to operating income of $3.8 million, or an operating margin of 10%, for fiscal fourth quarter 2022.
  • GAAP net loss was $1.4 million, or $0.03 per diluted share compared to a net income of $0.4 million, or $0.01 per diluted share for fiscal fourth quarter 2022.
  • Non-GAAP operating income was $5.3 million, an operating margin of 14%, compared to Non-GAAP operating income of $11.8 million, or a Non-GAAP operating margin of 30% a year ago.
  • Non-GAAP net income decreased 30% year over year to $6.9 million, or $0.15 per diluted share.
  • Cash flow from operations decreased 32% year over year to $3.5 million.

Mitek CEO Max Carnecchia’s Comments

"In fiscal 2023, we delivered record revenue and profitability, driven by our commitment to innovation. With Deposit revenue up 20% and Identity revenue up 17% year over year, we've achieved remarkable growth. Our strong cash flow has further bolstered our balance sheet, while our net revenue retention rate was approximately 117% for the fiscal year, showcasing the value of our solutions and dedication to customer success. Having achieved product market fit, with established proof points for growth in our new products, including Check Fraud Defender, MiVIP, MiPass and ID R&D products, we have several growth drivers in place leveraging advanced AI and machine learning to meet evolving customer needs, while enhancing trust and convenience in digital interactions."

Fiscal 2024 Full Year Guidance

Mitek is reiterating its previously provided guidance for its fiscal year ending September 30, 2024, as follows:

  • Mitek expects full-year revenue to be in the range of $180.0 million to $185.0 million, a 6% growth rate at the midpoint of the range. In fiscal 2023, Mitek signed a large multi-year mobile deposit reorder with one customer that locked in favorable pricing over a four-year period. Due to the unique terms of this contract, Mitek recognized additional license revenue relating to future years of approximately $7.0 million in fiscal 2023. If the Company backs out the future year revenue from our fiscal 2023 revenue and attributes the portion of the $7.0 million that would have been recognized in fiscal 2024 to the midpoint of its fiscal 2024 revenue guidance, the fiscal 2024 revenue guidance would represent growth of approximately 12.0% at the midpoint.
  • Mitek expects its non-GAAP operating margin for fiscal 2024 to be between 30.0% and 31.0%.

Conference Call Information

Mitek management will host a conference call and live webcast for analysts and investors today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss the Company’s financial results for the fourth quarter and fiscal year ending September 30, 2023. To access the live call, dial 877-270-2148 (US and Canada) or +1 412-902-6510 (International) and ask to join the Mitek call. A live and archived webcast of the conference call will also be accessible on the Investor Relations section of the Company’s website at www.miteksystems.com. A phone replay will be available approximately two hours following the end of the call, and it will remain available for one week. The phone call replay can be accessed by dialing 877-344-7529 (US or Canada) or 1-412-317-0088 (International) and entering the passcode: 8245693.

About Mitek Systems, Inc.

Mitek (NASDAQ: MITK) is a global leader in digital access, founded to bridge the physical and digital worlds. Mitek’s advanced identity verification technologies and global platform make digital access faster and more secure than ever, providing companies new levels of control, deployment ease and operation, while protecting the entire customer journey. Trusted by 99% of U.S. banks for mobile check deposits and 7,900 of the world’s largest organizations, Mitek helps companies reduce risk and meet regulatory requirements. Learn more at www.miteksystems.com. [(MITK-F)]

Follow Mitek on LinkedIn and YouTube, and read Mitek’s latest blog posts here.

Notice Regarding Forward-Looking Statements

Statements contained in this news release relating to the Company or its management’s intentions, hopes, beliefs, expectations or predictions of the future, including, but not limited to, statements relating to the Company’s fiscal 2024 guidance, its intent to use its growth drivers in place that leverage advanced AI and machine learning to meet evolving customer needs and its intent to enhance trust and convenience in digital interactions, are forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties, including, but not limited to, risks related to the Company’s ability to withstand negative conditions in the global economy, a lack of demand for or market acceptance of the Company’s products, the impact of the Company’s acquisition of HooYu Ltd. including any operational or cultural difficulties associated with the integration of the businesses of Mitek and HooYu Ltd., the Company’s ability to continue to develop, produce and introduce innovative new products in a timely manner, the Company’s ability to capitalize on a growing market, quarterly variations in revenue, the profitability of certain sectors of the Company, the performance of the Company’s growth initiatives, the outcome of any pending or threatened litigation, and the timing of the implementation and launch of the Company’s products by the Company’s signed customers.

Additional risks and uncertainties faced by the Company are contained from time to time in the Company’s filings with the U.S. Securities and Exchange Commission (SEC), including, but not limited to, the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022, as filed with the SEC on July 31, 2023 and its quarterly reports on Form 10-Q and current reports on Form 8-K, which you may obtain for free on the SEC’s website at www.sec.gov. Collectively, these risks and uncertainties could cause the Company’s actual results to differ materially from those projected in its forward-looking statements and you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company disclaims any intention or obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Note Regarding Use of Non-GAAP Financial Measures

This news release contains non-U.S. generally accepted accounting principles (“GAAP”) financial measures for non-GAAP net income and non-GAAP net income per share that exclude amortization and acquisition-related costs, intellectual property litigation costs, executive transition costs, stock compensation expense, non-recurring audit fees, restructuring costs, amortization of debt discount and issuance costs, income tax effect of pre-tax adjustments, and the cash tax difference. These financial measures are not calculated in accordance with GAAP and are not based on any comprehensive set of accounting rules or principles. In evaluating the Company’s performance, management uses certain non-GAAP financial measures to supplement financial statements prepared under GAAP. Management believes these non-GAAP financial measures provide a useful measure of the Company’s operating results, a meaningful comparison with historical results and with the results of other companies, and insight into the Company’s ongoing operating performance. Further, management and the Board of Directors of the Company utilize these non-GAAP financial measures to gain a better understanding of the Company’s comparative operating performance from period-to-period and as a basis for planning and forecasting future periods. Management believes these non-GAAP financial measures, when read in conjunction with the Company’s GAAP financial statements, are useful to investors because they provide a basis for meaningful period-to-period comparisons of the Company’s ongoing operating results, including results of operations against investor and analyst financial models, which helps identify trends in the Company’s underlying business and provides a better understanding of how management plans and measures the Company’s underlying business.

The Company has not provided a reconciliation of its forward outlook for non-GAAP operating margin with its forward-looking GAAP operating margin in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable, without unreasonable efforts, to quantify share-based compensation expense, which is excluded from our non-GAAP operating margin, as it requires additional inputs such as the number of shares granted and market prices that are not ascertainable due to the volatility of the Company’s share price. Additionally, a significant portion of the Company’s operations are in foreign countries and the transactional currencies are primarily Euros and British pound sterling and the Company is not able to predict fluctuations in those currencies without unreasonable efforts.

Key Business Metrics

We monitor net revenue retention to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.

To calculate net revenue retention, the Company first calculates total revenue (including expansion revenue) and reduce that amount by revenue churn (e.g. contract expirations, cancellations, downgrades, or other reductions). To calculate net revenue retention rate, the Company specifies a measurement period consisting of the trailing 12 months from its current period end. The Company then calculates its net revenue retention rate as the quotient obtained by dividing its total revenue in the second year of the measurement period by its revenue in the first year of the measurement period (i.e. the numerator excludes revenue generated by customers newly acquired in the second year of measurement). The net revenue retention rate is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity, and the Company presents its net revenue retention rate for historical periods reflecting these adjustments.

MITEK SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(amounts in thousands except share data)

 

 

 

 

 

September 30,
2023

 

September 30,
2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

58,913

 

 

$

32,059

 

Short-term investments

 

74,700

 

 

 

58,268

 

Accounts receivable, net

 

32,132

 

 

 

35,922

 

Contract assets, current portion

 

18,355

 

 

 

7,037

 

Prepaid expenses

 

3,513

 

 

 

1,946

 

Other current assets

 

2,396

 

 

 

2,622

 

Total current assets

 

190,009

 

 

 

137,854

 

Long-term investments

 

1,304

 

 

 

10,633

 

Property and equipment, net

 

2,829

 

 

 

3,493

 

Right-of-use assets

 

4,140

 

 

 

5,155

 

Goodwill and intangible assets

 

188,222

 

 

 

191,388

 

Deferred income tax assets

 

11,645

 

 

 

10,110

 

Contract assets, non-current portion

 

5,579

 

 

 

4,218

 

Other non-current assets

 

1,647

 

 

 

1,628

 

Total assets

 

405,375

 

 

 

364,479

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

7,589

 

 

$

4,974

 

Accrued payroll and related taxes

 

10,554

 

 

 

10,393

 

Accrued interest payable

 

305

 

 

 

202

 

Income tax payables

 

4,329

 

 

 

206

 

Deferred revenue, current portion

 

17,360

 

 

 

21,350

 

Lease liabilities, current portion

 

1,902

 

 

 

2,110

 

Acquisition-related contingent consideration

 

7,976

 

 

 

5,920

 

Restructuring accrual

 

 

 

 

901

 

Other current liabilities

 

1,482

 

 

 

2,402

 

Total current liabilities

 

51,497

 

 

 

48,458

 

Convertible senior notes

 

135,516

 

 

 

127,970

 

Deferred revenue, non-current portion

 

957

 

 

 

1,775

 

Lease liabilities, non-current portion

 

2,867

 

 

 

4,106

 

Deferred income tax liabilities, non-current portion

 

6,476

 

 

 

9,578

 

Other non-current liabilities

 

2,874

 

 

 

1,613

 

Total liabilities

 

200,187

 

 

 

193,500

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.001 par value, 1,000,000 shares authorized, none issued and outstanding

 

 

 

 

 

Common stock, $0.001 par value, 120,000,000 shares authorized, 45,591,199 and 44,680,429 issued and outstanding, as of September 30, 2023 and September 30, 2022, respectively

 

46

 

 

 

44

 

Additional paid-in capital

 

228,691

 

 

 

216,493

 

Accumulated other comprehensive loss

 

(14,237

)

 

 

(28,219

)

Accumulated deficit

 

(9,312

)

 

 

(17,339

)

Total stockholders’ equity

 

205,188

 

 

 

170,979

 

Total liabilities and stockholders’ equity

$

405,375

 

 

$

364,479

 

MITEK SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(amounts in thousands except per share data)

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue

 

 

 

 

 

 

 

Software and hardware

$

15,291

 

 

$

19,818

 

 

$

88,374

 

 

$

72,928

 

Services and other

 

22,365

 

 

 

19,808

 

 

 

84,178

 

 

 

71,876

 

Total revenue

 

37,656

 

 

 

39,626

 

 

 

172,552

 

 

 

144,804

 

Operating costs and expenses

 

 

 

 

 

 

 

Cost of revenue—software and hardware (exclusive of depreciation & amortization)

 

597

 

 

 

380

 

 

 

1,413

 

 

 

1,576

 

Cost of revenue—services and other (exclusive of depreciation & amortization)

 

5,675

 

 

 

4,837

 

 

 

21,538

 

 

 

18,432

 

Selling and marketing

 

11,117

 

 

 

9,951

 

 

 

40,551

 

 

 

38,841

 

Research and development

 

6,484

 

 

 

8,278

 

 

 

28,988

 

 

 

30,192

 

General and administrative

 

13,212

 

 

 

7,993

 

 

 

43,338

 

 

 

26,591

 

Amortization and acquisition-related costs

 

3,744

 

 

 

4,395

 

 

 

19,046

 

 

 

15,172

 

Restructuring costs

 

114

 

 

 

(7

)

 

 

2,114

 

 

 

1,800

 

Total operating costs and expenses

 

40,943

 

 

 

35,827

 

 

 

156,988

 

 

 

132,604

 

Operating income (loss)

 

(3,287

)

 

 

3,799

 

 

 

15,564

 

 

 

12,200

 

Interest expense

 

2,401

 

 

 

2,107

 

 

 

9,063

 

 

 

8,232

 

Other income (expense), net

 

2,121

 

 

 

(365

)

 

 

3,840

 

 

 

(366

)

Income (loss) before income taxes

 

(3,567

)

 

 

1,327

 

 

 

10,341

 

 

 

3,602

 

Income tax benefit (provision)

 

2,123

 

 

 

(976

)

 

 

(2,314

)

 

 

92

 

Net income (loss)

$

(1,444

)

 

$

351

 

 

$

8,027

 

 

$

3,694

 

Net income (loss) per share—basic

$

(0.03

)

 

$

0.01

 

 

$

0.18

 

 

$

0.08

 

Net income (loss) per share—diluted

$

(0.03

)

 

$

0.01

 

 

$

0.17

 

 

$

0.08

 

Shares used in calculating net income (loss) per share—basic

 

45,997

 

 

 

44,693

 

 

 

45,533

 

 

 

44,595

 

Shares used in calculating net income (loss) per share—diluted

 

47,050

 

 

 

45,311

 

 

 

46,461

 

 

 

45,780

 

MITEK SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(amounts in thousands)

 

 

For the twelve months ended
September 30,

 

 

2023

 

 

 

2022

 

Operating activities:

 

 

 

Net income

$

8,027

 

 

$

3,694

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Stock-based compensation expense

 

10,463

 

 

 

13,346

 

Amortization of intangible assets

 

16,992

 

 

 

13,547

 

Depreciation and amortization

 

1,727

 

 

 

1,401

 

Amortization of investment premiums & other

 

(722

)

 

 

1,684

 

Accretion and amortization on debt securities

 

7,546

 

 

 

7,053

 

Net changes in estimated fair value of acquisition-related contingent consideration

 

2,056

 

 

 

(1,358

)

Deferred taxes

 

(5,496

)

 

 

(8,988

)

Changes in assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable

 

4,316

 

 

 

(19,004

)

Contract assets

 

(12,471

)

 

 

(3,095

)

Other assets

 

(1,124

)

 

 

417

 

Accounts payable

 

2,535

 

 

 

2,183

 

Accrued payroll and related taxes

 

18

 

 

 

(2,195

)

Income taxes payable

 

5,577

 

 

 

422

 

Deferred revenue

 

(5,217

)

 

 

9,950

 

Restructuring accrual

 

(977

)

 

 

991

 

Other liabilities

 

(1,664

)

 

 

1,071

 

Net cash provided by operating activities

 

31,586

 

 

 

21,119

 

Investing activities:

 

 

 

Purchases of investments

 

(71,733

)

 

 

(47,818

)

Sales and maturities of investments

 

66,250

 

 

 

173,316

 

Acquisitions, net of cash acquired

 

(267

)

 

 

(122,672

)

Purchases of property and equipment, net

 

(1,034

)

 

 

(1,126

)

Net cash provided by (used in) investing activities

 

(6,784

)

 

 

1,700

 

Financing activities:

 

 

 

Proceeds from the issuance of equity plan common stock

 

1,737

 

 

 

1,725

 

Repurchases and retirements of common stock

 

 

 

 

(15,176

)

Payment of acquisition-related contingent consideration

 

 

 

 

(7,656

)

Principal payments on other borrowings

 

(36

)

 

 

(36

)

Net cash provided by (used in) financing activities

 

1,701

 

 

 

(21,143

)

Foreign currency effect on cash and cash equivalents

 

351

 

 

 

71

 

Net increase in cash and cash equivalents

 

26,854

 

 

 

1,747

 

Cash and cash equivalents at beginning of period

 

32,059

 

 

 

30,312

 

Cash and cash equivalents at end of period

$

58,913

 

 

$

32,059

 

MITEK SYSTEMS, INC.

DISAGGREGATION OF REVENUE

(Unaudited)

(amounts in thousands)

 

 

Twelve Months Ended September 30,

 

 

2023

 

 

 

2022

 

Major product category

 

 

 

Deposits software and hardware

$

78,212

 

$

64,548

Deposits services and other

 

25,922

 

 

 

22,013

 

Deposits revenue

 

104,134

 

 

 

86,561

 

Identity verification software and hardware

 

10,162

 

 

 

8,380

 

Identity verification services and other

 

58,256

 

 

 

49,863

 

Identity verification revenue

 

68,418

 

 

 

58,243

 

Total revenue

$

172,552

 

 

$

144,804

 

MITEK SYSTEMS, INC.

NON-GAAP NET INCOME RECONCILIATION

(Unaudited)

(amounts in thousands except per share data)

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income (loss)

$

(1,444

)

 

$

351

 

 

$

8,027

 

 

$

3,694

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Acquisition-related costs and expenses(2)

 

3,744

 

 

 

4,395

 

 

 

19,046

 

 

 

15,533

 

Intellectual property litigation costs

 

250

 

 

 

348

 

 

 

1,369

 

 

 

1,446

 

Executive transition costs

 

7

 

 

 

 

 

 

679

 

 

 

 

Stock compensation expense

 

2,673

 

 

 

3,278

 

 

 

10,463

 

 

 

13,346

 

Non-recurring audit fees

 

1,815

 

 

 

 

 

 

4,001

 

 

 

 

Restructuring costs

 

114

 

 

 

(7

)

 

 

2,114

 

 

 

1,800

 

Amortization of debt discount and issuance costs

 

1,937

 

 

 

1,813

 

 

 

7,546

 

 

 

7,053

 

Income tax effect of pre-tax adjustments

 

(1,002

)

 

 

(2,457

)

 

 

(10,115

)

 

 

(9,799

)

Cash tax difference(1)

 

(1,175

)

 

 

2,165

 

 

 

1,235

 

 

 

7,440

 

Non-GAAP net income

$

6,919

 

 

$

9,886

 

 

$

44,365

 

 

$

40,513

 

Non-GAAP income per share—basic

$

0.15

 

 

$

0.22

 

 

$

0.97

 

 

$

0.91

 

Non-GAAP income per share—diluted

$

0.15

 

 

$

0.22

 

 

$

0.95

 

 

$

0.88

 

Shares used in calculating non-GAAP net income per share—basic

 

45,997

 

 

 

44,693

 

 

 

45,533

 

 

 

44,595

 

Shares used in calculating non-GAAP net income per share—diluted

 

47,050

 

 

 

45,311

 

 

 

46,461

 

 

 

45,780

 

(1)

The Company’s non-GAAP net income is calculated using a cash tax rate of 20% in fiscal 2023 and 5% in fiscal 2022. The estimated cash tax rate is the estimated annual tax payable on the Company’s tax returns as a percentage of estimated annual non-GAAP pre-tax net income. The Company uses an estimated cash tax rate to adjust for the historical variation in the effective book tax rate associated with the reversal of valuation allowances. The fiscal 2022 cash tax rate includes a beneficial impact of reduced taxes payable due to the utilization of research and development tax credits and the utilization of loss carryforward. The Company believes that the cash tax rate provides a more transparent view of the Company’s operating results. The Company’s effective tax rate used for the purposes of calculating GAAP net income for fiscal 2023 and 2022 was 22% and negative 3%, respectively.

 

(2)

Included in acquisition-related costs and expenses in fiscal 2022 is $0.3 million of foreign exchange and investment losses incurred in connection with the acquisition of HooYu Ltd. which is included in other income (expense), net in the consolidated statements of operations.

MITEK SYSTEMS, INC.

NON-GAAP OPERATING INCOME RECONCILIATION

(Unaudited)

(amounts in thousands)

 

 

Three Months Ended September 30,

 

Twelve Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

GAAP operating income

$

(3,287

)

 

$

3,799

 

 

$

15,564

 

 

$

12,200

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Acquisition-related costs and expenses

 

3,744

 

 

 

4,395

 

 

 

19,046

 

 

 

15,533

 

Intellectual property litigation costs

 

250

 

 

 

348

 

 

 

1,369

 

 

 

1,446

 

Executive transition costs

 

7

 

 

 

 

 

 

679

 

 

 

 

Stock compensation expense

 

2,673

 

 

 

3,278

 

 

 

10,463

 

 

 

13,346

 

Non-recurring audit fees

 

1,815

 

 

 

 

 

 

4,001

 

 

 

 

Restructuring costs

 

114

 

 

 

(7

)

 

 

2,114

 

 

 

1,800

 

Non-GAAP operating income

$

5,316

 

 

$

11,813

 

 

$

53,236

 

 

$

44,325

 

 

 

 

 

 

 

 

 

Total Revenue

$

37,656

 

 

$

39,626

 

 

$

172,552

 

 

$

144,804

 

Non-GAAP operating margin

 

14

%

 

 

30

%

 

 

31

%

 

 

31

%

 

Investor Contact:
Todd Kehrli or Jim Byers
MKR Investor Relations, Inc.
mitk@mkr-group.com

Source: Mitek Systems, Inc.