UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 28, 2022
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
Registrant’s telephone number, including area code: (619 ) 269-6800
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
The | ||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||||
Item 2.02 Results of Operations and Financial Condition.
On July 28, 2022, Mitek Systems, Inc. (the “Company”) issued a press release announcing the Company’s financial results for the third quarter ended June 30, 2022. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | |||||||
| 99.1 | Press Release issued by Mitek Systems, Inc. on July 28, 2022 | |||||||
| 104 | Cover Page Interactive Data File, formatting Inline Extensible Business Reporting Language (iXBRL) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Mitek Systems, Inc. | |||||||||||
| July 28, 2022 | By: | /s/ Frank Teruel | |||||||||
| Frank Teruel | |||||||||||
| Chief Financial Officer | |||||||||||
Exhibit Index
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File, formatting Inline Extensible Business Reporting Language (iXBRL) | |||||||
Mitek Delivers Record Revenue in Fiscal Third Quarter,
Up 24% Year Over Year
Mitek Launches MiVIP, the Mitek Verified Identity Platform, During the Third Quarter,
Making Digital Access Faster and More Secure Than Ever
SAN DIEGO, CA, July 28, 2022 - Mitek Systems, Inc. (NASDAQ: MITK, www.miteksystems.com, “Mitek” or the “Company”), a global leader in digital identity and digital fraud prevention, today reported financial results for its third quarter of fiscal 2022 ended June 30, 2022. Total revenue increased 24% year over year as commerce continues its rapid shift to digital channels.
Fiscal Third Quarter 2022 Financial Highlights
•Total revenue increased 24% year over year to $39.3 million in a record third quarter.
•GAAP net loss was $0.9 million, or $0.02 per diluted share.
•Non-GAAP net income was $10.2 million, or $0.23 per diluted share.
•Total cash and investments were $90.6 million at the end of the quarter.
“As consumers transact more business online than ever, identity verification has become essential to safe digital access,” said CEO Max Carnecchia. “In 2021, the combined impact of traditional identity fraud and identity fraud scams cost companies $52 billion and affected 42 million U.S. consumers.1 During the quarter, we launched MiVIP, the Mitek Verified Identity Platform, making digital access faster and more secure than ever while giving companies comprehensive, secure control over their entire customer identity journey, saving them time and money,” Carnecchia continued. “Mitek’s new platform is the culmination of our best technologies, our most recent acquisition, and our ongoing commitment to putting our customers in control of their consumers’’ experiences.”
“Our customers feel the weight of staggering fraud losses, significant operational costs, and the brand damage associated with identity fraud, all while trying to maintain a seamless customer experience,” said CFO Frank Teruel. “MiVIP provides our customers the tools to quickly deploy and balance these constant tensions.”
Conference Call Information
Mitek management will host a conference call and live webcast for analysts and investors today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss the Company’s financial results. 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 be accessible on the Investor Relations section of the Company’s website at www.miteksystems.com. In addition, 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 access by dialing 877-344-7529 (US or Canada) or 1-412-317-0088 (International) and entering the passcode: 9315135.
About Mitek Systems, Inc.
Mitek (NASDAQ: MITK) is a global leader in digital identity and digital fraud prevention, with technology 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. More than 7,500 organizations use Mitek to enable trust and convenience for mobile check deposit, new account opening and more. Learn more at www.miteksystems.com. [(MITK-F)]
1 Javelin Strategy - “2022 Identity Fraud Study: The Virtual Background”
Follow Mitek on LinkedIn, Twitter 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 long-term prospects and market opportunities 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, 2021, as filed with the SEC on December 13, 2021 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.
Investor Contact:
Todd Kehrli or Jim Byers
MKR Investor Relations, Inc.
mitk@mkr-group.com
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 acquisition-related costs and expenses, intellectual property litigation costs, executive transition costs, stock compensation expenses, 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.
MITEK SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(amounts in thousands except share data)
| June 30, 2022 | September 30, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 21,522 | $ | 30,312 | |||||||
| Short-term investments | 49,531 | 149,057 | |||||||||
| Accounts receivable, net | 29,672 | 16,602 | |||||||||
| Contract assets | 5,125 | 4,080 | |||||||||
| Prepaid expenses | 3,453 | 1,920 | |||||||||
| Other current assets | 4,634 | 2,085 | |||||||||
| Total current assets | 113,937 | 204,056 | |||||||||
| Long-term investments | 19,534 | 48,051 | |||||||||
| Property and equipment, net | 3,723 | 3,671 | |||||||||
| Right-of-use assets | 5,503 | 7,056 | |||||||||
| Goodwill and intangible assets | 215,003 | 91,830 | |||||||||
| Deferred income tax assets | 11,963 | 10,511 | |||||||||
| Convertible senior notes hedge | — | 48,208 | |||||||||
| Other non-current assets | 5,342 | 6,310 | |||||||||
| Total assets | $ | 375,005 | $ | 419,693 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 4,200 | $ | 2,507 | |||||||
| Accrued payroll and related taxes | 10,173 | 11,776 | |||||||||
| Deferred revenue, current portion | 13,274 | 10,381 | |||||||||
| Lease liabilities, current portion | 1,908 | 1,943 | |||||||||
| Acquisition-related contingent consideration | 4,860 | 11,050 | |||||||||
| Restructuring accrual | 1,807 | — | |||||||||
| Other current liabilities | 7,522 | 1,552 | |||||||||
| Total current liabilities | 43,744 | 39,209 | |||||||||
| Convertible senior notes | 126,157 | 120,918 | |||||||||
| Embedded conversion derivative | — | 48,208 | |||||||||
| Deferred revenue, non-current portion | 1,409 | 955 | |||||||||
| Lease liabilities, non-current portion | 4,789 | 6,588 | |||||||||
| Deferred income tax liabilities | 20,493 | 4,117 | |||||||||
| Other non-current liabilities | 2,011 | 6,868 | |||||||||
| Total liabilities | 198,603 | 226,863 | |||||||||
| 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, 44,396,263 and 44,168,745 issued and outstanding, as of June 30, 2022 and September 30, 2021, respectively | 44 | 44 | |||||||||
| Additional paid-in capital | 211,087 | 199,935 | |||||||||
| Accumulated other comprehensive loss | (17,880) | (943) | |||||||||
| Accumulated deficit | (16,849) | (6,066) | |||||||||
| Treasury stock, at cost, no shares and 7,773 shares as of June 30, 2022 and September 30, 2021, respectively | — | (140) | |||||||||
| Total stockholders’ equity | 176,402 | 192,830 | |||||||||
| Total liabilities and stockholders’ equity | $ | 375,005 | $ | 419,693 | |||||||
MITEK SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(amounts in thousands except per share data)
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Software and hardware | $ | 19,820 | $ | 16,973 | $ | 54,545 | $ | 42,288 | |||||||||||||||
| Services and other | 19,513 | 14,805 | 51,975 | 44,238 | |||||||||||||||||||
| Total revenue | 39,333 | 31,778 | 106,520 | 86,526 | |||||||||||||||||||
| Operating costs and expenses | |||||||||||||||||||||||
| Cost of revenue—software and hardware | 508 | 293 | 1,196 | 2,208 | |||||||||||||||||||
| Cost of revenue—services and other | 4,059 | 3,117 | 10,038 | 9,132 | |||||||||||||||||||
| Selling and marketing | 11,174 | 8,133 | 28,817 | 24,048 | |||||||||||||||||||
| Research and development | 9,411 | 6,946 | 25,253 | 19,801 | |||||||||||||||||||
| General and administrative | 6,667 | 5,633 | 18,704 | 16,409 | |||||||||||||||||||
| Amortization and acquisition-related costs | 4,492 | 2,224 | 9,827 | 5,576 | |||||||||||||||||||
| Restructuring costs | 1,807 | — | 1,807 | — | |||||||||||||||||||
| Total operating costs and expenses | 38,118 | 26,346 | 95,642 | 77,174 | |||||||||||||||||||
| Operating income | 1,215 | 5,432 | 10,878 | 9,352 | |||||||||||||||||||
| Interest expense | 2,077 | 2,223 | 6,125 | 3,543 | |||||||||||||||||||
| Other income (expense), net | 49 | 80 | (48) | 549 | |||||||||||||||||||
| Income (loss) before income taxes | (813) | 3,289 | 4,705 | 6,358 | |||||||||||||||||||
| Income tax provision | (39) | (304) | (522) | (187) | |||||||||||||||||||
| Net income (loss) | $ | (852) | $ | 2,985 | $ | 4,183 | $ | 6,171 | |||||||||||||||
| Net income (loss) per share—basic | $ | (0.02) | $ | 0.07 | $ | 0.09 | $ | 0.14 | |||||||||||||||
| Net income (loss) per share—diluted | $ | (0.02) | $ | 0.07 | $ | 0.09 | $ | 0.14 | |||||||||||||||
Shares used in calculating net income (loss) per share—basic | 44,591 | 43,773 | 44,721 | 43,145 | |||||||||||||||||||
Shares used in calculating net income (loss) per share—diluted | 45,145 | 45,194 | 45,793 | 44,646 | |||||||||||||||||||
MITEK SYSTEMS, INC.
NON-GAAP NET INCOME RECONCILIATION
(Unaudited)
(amounts in thousands except per share data)
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income (loss) | $ | (852) | $ | 2,985 | $ | 4,183 | $ | 6,171 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
Amortization and acquisition-related costs(2) | 4,492 | 2,224 | 10,188 | 5,576 | |||||||||||||||||||
| Intellectual property litigation costs | 438 | 128 | 1,098 | 645 | |||||||||||||||||||
| Executive transition costs | — | 428 | — | 428 | |||||||||||||||||||
| Stock compensation expense | 3,563 | 2,867 | 9,992 | 8,582 | |||||||||||||||||||
| Restructuring costs | 1,807 | — | 1,807 | — | |||||||||||||||||||
| Amortization of debt discount and issuance costs | 1,787 | 1,933 | 5,239 | 3,080 | |||||||||||||||||||
| Income tax effect of pre-tax adjustments | (3,021) | (1,743) | (7,081) | (4,211) | |||||||||||||||||||
Cash tax difference(1) | 1,971 | 1,776 | 5,764 | 3,781 | |||||||||||||||||||
| Non-GAAP net income | 10,185 | 10,598 | 31,190 | 24,052 | |||||||||||||||||||
| Non-GAAP income per share—basic | $ | 0.23 | $ | 0.24 | $ | 0.70 | $ | 0.56 | |||||||||||||||
| Non-GAAP income per share—diluted | $ | 0.23 | $ | 0.23 | $ | 0.68 | $ | 0.54 | |||||||||||||||
| Shares used in calculating non-GAAP net income per share—basic | 44,591 | 43,773 | 44,721 | 43,145 | |||||||||||||||||||
| Shares used in calculating non-GAAP net income per share—diluted | 45,145 | 45,194 | 45,793 | 44,646 | |||||||||||||||||||
(1)The Company’s non-GAAP net income is calculated using a cash tax rate of 3% in both fiscal 2022 and 2021. The estimated cash tax rate is the estimated 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 utilization of research and development tax credits, and the utilization of loss carryforwards which currently have an overall effect of reducing taxes payable. 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 (loss) for the three months ended June 30, 2022 and 2021 was 5% and 9%, respectively. The Company’s effective tax rate used for the purposes of calculating GAAP net income for the nine months ended June 30, 2022 and 2021 was 11% and negative 3%, respectively.
(2)Included in acquisition-related costs and expenses 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.