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Press Release

May 13,2024

Mitek Reports Fiscal 2024 Second Quarter Financial Results and Reiterates 2024 Fiscal Full Year Guidance

Company Announces $50 Million Share Repurchase Plan

SAN DIEGO--(BUSINESS WIRE)--May 13, 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 second quarter ended March 31, 2024, and reiterated its previously provided guidance for its 2024 fiscal year ending September 30, 2024.

Fiscal 2024 Second Quarter Financial Results

  • Total revenue was $47.0 million, compared to $46.1 million a year ago.
  • GAAP operating income was $0.7 million, an operating margin of 1%, compared to GAAP operating income of $8.7 million, an operating margin of 19% a year ago.
  • GAAP net income was $0.3 million, or $0.01 per diluted share, compared to GAAP net income of $5.2 million, or $0.11 per diluted share a year ago.
  • Non-GAAP net income was $11.5 million, or $0.24 per diluted share, compared to $13.7 million, or $0.30 per diluted share last year.
  • Non-GAAP operating income was $12.8 million and non-GAAP operating margin was 27%, compared to non-GAAP operating income of $17.6 million and a non-GAAP operating margin of 38% last year.
  • Cash flow from operations was $7.1 million, compared to $6.3 million last year.
  • Total cash and investments was $130.3 million at March 31, 2024, an increase of $6.4 million from $123.9 million at December 31, 2023.

Mitek Chairman of the Board Scott Carter’s Comments

"Today, we are reiterating our fiscal 2024 guidance. Our recent product innovations, including Check Fraud Defender, MiVIP, MiPass, and ID R&D biometrics, are gaining market acceptance, positioning us well for continued growth. We're harnessing advanced AI and machine learning to enhance trust and convenience in digital interactions. All of this gives us confidence in our ability to profitably grow revenue. As such, we announced today in a separate press release that our Board of Directors has authorized a two year share repurchase program for up to $50 million of our common stock. Using our strong balance sheet to reduce the number of outstanding common shares, we believe we can increase shareholder value while maintaining sufficient cash resources to fund our operations, invest in our new growth products and service our existing debt obligations."

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 between $180.0 million and $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 of $7 million from its fiscal 2023 revenue and attributes the $2.7 million that would have been attributable to fiscal 2024 to the midpoint of the fiscal 2024 revenue guidance, it 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%.

CEO Transition

Today in a separate press release the Company announced that it will terminate the employment of the Company’s CEO, Max Carnecchia, on May 31, 2024 and that Board has appointed Scott Carter as Interim CEO, beginning June 1, 2024. The Board is conducting a comprehensive search for a permanent CEO with the support of a leading global executive search firm. At the request of the Board, Max will remain on the Board of Directors and will be available to assist with the CEO transition process.

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 its fiscal 2024 second quarter ended March 31, 2024. To access the live call, dial 844-481-3005 (US and Canada) or +1 412-317-1889 (International) and ask to join the Mitek call. A live and archived conference call webcast 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 after the end of the call and 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 1835642.

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 expectation regarding continued growth, including profitable revenue growth, its ability to harness advanced AI and machine learning to enhance trust and convenience in digital interactions, the share repurchase program, including that it will use its strong balance sheet to reduce the number of its outstanding common shares, and its belief that it can increase shareholder value while maintaining sufficient cash resources to fund its operations, invest in its new growth products and service its existing debt obligations, 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, 2023, as filed with the SEC on March 19, 2024 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 acquisition-related costs and expenses, litigation and other legal costs, executive transition costs, stock compensation expense, non-recurring audit fees, enterprise risk, portfolio positioning and other related costs, restructuring costs and amortization of debt discount and issuance costs. 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.

MITEK SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(amounts in thousands except share data)

 

 

 

 

 

March 31, 2024

 

September 30, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

80,939

 

 

$

58,913

 

Short-term investments

 

42,987

 

 

 

74,700

 

Accounts receivable, net

 

52,061

 

 

 

32,132

 

Contract assets, current portion

 

15,140

 

 

 

18,355

 

Prepaid expenses

 

7,783

 

 

 

3,513

 

Other current assets

 

2,705

 

 

 

2,396

 

Total current assets

 

201,615

 

 

 

190,009

 

Long-term investments

 

6,337

 

 

 

1,304

 

Property and equipment, net

 

2,708

 

 

 

2,829

 

Right-of-use assets

 

3,313

 

 

 

4,140

 

Goodwill and intangible assets

 

185,240

 

 

 

188,222

 

Deferred income tax assets

 

13,521

 

 

 

11,645

 

Contract assets, non-current portion

 

2,692

 

 

 

5,579

 

Other non-current assets

 

1,604

 

 

 

1,647

 

Total assets

$

417,030

 

 

$

405,375

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,056

 

 

$

7,589

 

Accrued payroll and related taxes

 

9,592

 

 

 

10,554

 

Accrued interest payable

 

210

 

 

 

305

 

Income tax payables

 

190

 

 

 

4,329

 

Deferred revenue, current portion

 

25,728

 

 

 

17,360

 

Lease liabilities, current portion

 

1,168

 

 

 

1,902

 

Acquisition-related contingent consideration

 

—

 

 

 

7,976

 

Other current liabilities

 

1,318

 

 

 

1,482

 

Total current liabilities

 

47,262

 

 

 

51,497

 

Convertible senior notes

 

139,492

 

 

 

135,516

 

Deferred revenue, non-current portion

 

1,020

 

 

 

957

 

Lease liabilities, non-current portion

 

2,590

 

 

 

2,867

 

Deferred income tax liabilities

 

6,690

 

 

 

6,476

 

Other non-current liabilities

 

3,830

 

 

 

2,874

 

Total liabilities

 

200,884

 

 

 

200,187

 

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, 46,790,611 and 45,591,199 issued and outstanding, as of March 31, 2024 and September 30, 2023, respectively

 

47

 

 

 

46

 

Additional paid-in capital

 

240,521

 

 

 

228,691

 

Accumulated other comprehensive loss

 

(9,599

)

 

 

(14,237

)

Accumulated deficit

 

(14,823

)

 

 

(9,312

)

Total stockholders’ equity

 

216,146

 

 

 

205,188

 

Total liabilities and stockholders’ equity

$

417,030

 

 

$

405,375 

MITEK SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(amounts in thousands except per share data)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenue

 

 

 

 

 

 

 

Software and hardware

$

24,889

 

 

$

25,260

 

 

$

40,869

 

 

$

51,636

 

Services and other

 

22,079

 

 

 

20,863

 

 

 

43,016

 

 

 

40,190

 

Total revenue

 

46,968

 

 

 

46,123

 

 

 

83,885

 

 

 

91,826

 

Operating costs and expenses

 

 

 

 

 

 

 

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

 

29

 

 

 

219

 

 

 

69

 

 

 

388

 

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

 

6,186

 

 

 

5,679

 

 

 

11,680

 

 

 

10,579

 

Selling and marketing

 

11,021

 

 

 

9,623

 

 

 

20,877

 

 

 

19,138

 

Research and development

 

9,713

 

 

 

7,373

 

 

 

18,587

 

 

 

15,043

 

General and administrative

 

14,943

 

 

 

10,059

 

 

 

30,481

 

 

 

18,538

 

Amortization and acquisition-related costs

 

3,848

 

 

 

4,274

 

 

 

7,831

 

 

 

9,095

 

Restructuring costs

 

530

 

 

 

210

 

 

 

578

 

 

 

1,986

 

Total operating costs and expenses

 

46,270

 

 

 

37,437

 

 

 

90,103

 

 

 

74,767

 

Operating income (loss)

 

698

 

 

 

8,686

 

 

 

(6,218

)

 

 

17,059

 

Interest expense

 

2,303

 

 

 

2,163

 

 

 

4,566

 

 

 

4,300

 

Other income, net

 

1,190

 

 

 

454

 

 

 

2,832

 

 

 

794

 

Income (loss) before income taxes

 

(415

)

 

 

6,977

 

 

 

(7,952

)

 

 

13,553

 

Income tax benefit (provision)

 

697

 

 

 

(1,808

)

 

 

2,441

 

 

 

(3,654

)

Net income (loss)

$

282

 

 

$

5,169

 

 

$

(5,511

)

 

$

9,899

 

Net income (loss) per share—basic

$

0.01

 

 

$

0.11

 

 

$

(0.12

)

 

$

0.22

 

Net income (loss) per share—diluted

$

0.01

 

 

$

0.11

 

 

$

(0.12

)

 

$

0.22

 

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

 

46,896

 

 

 

45,377

 

 

 

46,593

 

 

 

45,317

 

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

 

48,041

 

 

 

45,780

 

 

 

46,593

 

 

 

45,932

MITEK SYSTEMS, INC.

DISAGGREGATION OF REVENUE

(Unaudited)

(amounts in thousands)

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

2024

 

2023

 

2024

 

2023

Major product category

 

 

 

 

 

 

 

Deposits software and hardware

$

22,494

 

$

22,226

 

$

36,542

 

$

46,679

Deposits services and other

 

7,010

 

 

6,534

 

 

14,038

 

 

12,362

Deposits revenue

 

29,504

 

 

28,760

 

 

50,580

 

 

59,041

Identity verification software and hardware

 

2,395

 

 

3,034

 

 

4,327

 

 

4,957

Identity verification services and other

 

15,069

 

 

14,329

 

 

28,978

 

 

27,828

Identity verification revenue

 

17,464

 

 

17,363

 

 

33,305

 

 

32,785

Total revenue

$

46,968

 

$

46,123

 

$

83,885

 

$

91,826

MITEK SYSTEMS, INC.

NON-GAAP NET INCOME RECONCILIATION

(Unaudited)

(amounts in thousands except per share data)

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income (loss)

$

282

 

 

$

5,169

 

 

$

(5,511

)

 

$

9,899

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Acquisition-related costs and expenses(1)

 

3,848

 

 

 

4,274

 

 

 

7,831

 

 

 

9,095

 

Litigation and other legal costs(2)

 

918

 

 

 

473

 

 

 

3,087

 

 

 

725

 

Executive transition costs

 

559

 

 

 

581

 

 

 

768

 

 

 

581

 

Stock compensation expense

 

3,888

 

 

 

2,704

 

 

 

7,318

 

 

 

5,146

 

Non-recurring audit fees

 

2,373

 

 

 

633

 

 

 

4,011

 

 

 

1,373

 

Enterprise risk, portfolio positioning and other related costs(3)

 

—

 

 

 

—

 

 

 

996

 

 

 

—

 

Restructuring costs

 

530

 

 

 

210

 

 

 

578

 

 

 

1,986

 

Amortization of debt discount and issuance costs

 

2,006

 

 

 

1,857

 

 

 

3,975

 

 

 

3,700

 

Income tax effect of pre-tax adjustments

 

(4,427

)

 

 

(2,706

)

 

 

(7,394

)

 

 

(5,698

)

Cash tax difference(4)

 

1,559

 

 

 

505

 

 

 

2,200

 

 

 

1,167

 

Non-GAAP net income

$

11,536

 

 

$

13,700

 

 

$

17,859

 

 

$

27,974

 

Non-GAAP income per share—basic

$

0.25

 

 

$

0.30

 

 

$

0.38

 

 

$

0.62

 

Non-GAAP income per share—diluted

$

0.24

 

 

$

0.30

 

 

$

0.38

 

 

$

0.61

 

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

 

46,896

 

 

 

45,377

 

 

 

46,593

 

 

 

45,317

 

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

 

48,041

 

 

 

45,780

 

 

 

46,593

 

 

 

45,932

 

(1)

Amortization of intangible assets recognized primarily from the ID R&D and HooYu acquisitions and the change in fair value of acquisition-related contingent consideration.

(2)

During the three and six month periods ended December 31, 2023 and March 31, 2024, our legal team used third party legal experts to perform and provide advice regarding a variety of activities including intellectual property litigation matters and risk analysis and in providing support for customers in their litigation, matters and options related to getting our SEC filings current, the process for a potential delisting from the Nasdaq Capital Market, ongoing litigation support, and various other projects.

(3)

During the six months ended March 31, 2024, we used three third party experts to evaluate our product portfolio positioning, competitive landscape, enterprise risk and other related analyses.

(4)

The Company’s non-GAAP net income is calculated using a cash tax rate of 13% in fiscal 2024 and 23% in fiscal 2023. 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, and the utilization of research and development tax credits 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 for fiscal 2024 and 2023 was 31% and 27%, respectively.

MITEK SYSTEMS, INC.

NON-GAAP OPERATING INCOME RECONCILIATION

(Unaudited)

(amounts in thousands)

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

GAAP operating income

$

698

 

 

$

8,686

 

 

$

(6,218

)

 

$

17,059

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Acquisition-related costs and expenses

 

3,848

 

 

 

4,274

 

 

 

7,831

 

 

 

9,095

 

Litigation and other legal costs

 

918

 

 

 

473

 

 

 

3,087

 

 

 

725

 

Executive transition costs

 

559

 

 

 

581

 

 

 

768

 

 

 

581

 

Stock compensation expense

 

3,888

 

 

 

2,704

 

 

 

7,318

 

 

 

5,146

 

Non-recurring audit fees

 

2,373

 

 

 

633

 

 

 

4,011

 

 

 

1,373

 

Enterprise risk, portfolio positioning and other related costs

 

—

 

 

 

—

 

 

 

996

 

 

 

—

 

Restructuring costs

 

530

 

 

 

210

 

 

 

578

 

 

 

1,986

 

Non-GAAP operating income

$

12,814

 

 

$

17,561

 

 

$

18,371

 

 

$

35,965

 

 

 

 

 

 

 

 

 

Total Revenue

$

46,968

 

 

$

46,123

 

 

$

83,885

 

 

$

91,826

 

Non-GAAP operating margin

 

27

%

 

 

38

%

 

 

22

%

 

 

39

%

 

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

Source: Mitek Systems, Inc.