Mitek (NASDAQ: MITK, www.miteksystems.com), a global leader in
mobile capture and digital identity verification solutions, today
announced its financial results for the second quarter of fiscal
2019 ended March 31, 2019.
Fiscal Second Quarter 2019 Financial
Highlights
- Total revenue increased 40% year over year to $20.0 million in
a record second quarter.
- GAAP net loss was $(0.7) million, or $(0.02) per share.
- Non-GAAP net income increased 28% year over year to $2.7
million, or $0.07 per diluted share.
- Cash flow from operations was $4.3 million.
- Total cash and investments were $24.6 million at the end of the
fiscal second quarter.
Commenting on the results and the process to review
strategic alternatives, Max Carnecchia, CEO of Mitek,
said:
“Today, customer relationships are being established without
ever physically meeting. Identity verification is foundational to
trust between parties in these interactions, and Mitek’s mission is
empowering trust and convenience in these essential relationships.
We took another important step in delivering on that mission during
the quarter, resulting in our significant operating progress and
record second quarter revenue driven by strong growth in both of
our product families.”
“Over the past several months, our Board of Directors has led a
process to engage with several interested parties to evaluate the
relative benefits of various strategic alternatives, with a view to
maximizing value for our shareholders. Following a thorough review
of the results, the Board of Directors determined that there were
no offers that it deemed in the best interest of Mitek
shareholders, and today, we are announcing that we have concluded
this process. We continue to focus on maximizing the significant
opportunities we see for Mitek in the marketplace and remain
thoroughly committed to delivering shareholder value through
operating and growing the business.”
Fiscal 2019 Financial Guidance
For the fiscal year ending September 30, 2019, the Company is
updating its previously provided guidance for full year total
revenue of $84 million to $86 million, which would represent growth
between 32% and 35% year over year and continues to expect to
generate a non-GAAP profit margin of approximately 18% to 20%.
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 800-667-5617 (US and Canada) or +1
334-323-0509 (International) and give the participant passcode
9443215.
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. To access the call
replay dial-in information, please click here.
About Mitek
Mitek (NASDAQ: MITK) is a global leader in mobile capture and
digital identity verification solutions built on the latest
advancements in AI and machine learning. Mitek’s identity
verification solutions enable an enterprise to verify a user’s
identity during a digital transaction, which assists financial
institutions, payments companies and other businesses operating in
highly regulated markets in mitigating financial risk and meeting
regulatory requirements while increasing revenue from digital
channels. Mitek also reduces the friction in the users’ experience
with advanced data prefill and automation of the onboarding
process. Mitek’s innovative solutions are embedded into the apps of
more than 6,500 organizations and used by more than 80 million
consumers for mobile check deposit, new account opening and more.
Learn more at www.miteksystems.com. [(MITK-F)]
Notice Regarding Forward-Looking Statements
Statements contained in this news release relating to the
Company’s or 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 Company’s ability to continue to develop, produce and introduce
innovative new products in a timely manner or 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, 2018 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-GAAP financial measures for
non-GAAP net income and non-GAAP net income per share that exclude
stock compensation expenses, intellectual property litigation
costs, acquisition-related costs and expenses, costs associated
with our strategic process, executive transition costs, income tax
effect of pre-tax adjustments, impact of tax reform on deferred
taxes, and the cash tax difference. These financial measures are
not calculated in accordance with generally accepted accounting
principles (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 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)
| |
March 31, 2019 |
|
September 30, 2018 |
|
ASSETS |
|
|
|
| Current assets: |
|
|
|
| Cash and cash
equivalents |
$ |
18,745 |
|
|
$ |
9,028 |
|
| Short-term
investments |
5,861 |
|
|
8,448 |
|
| Accounts
receivable, net |
11,862 |
|
|
16,821 |
|
| Prepaid
expenses |
2,070 |
|
|
2,278 |
|
| Other
current assets |
2,600 |
|
|
1,053 |
|
| Total
current assets |
41,138 |
|
|
37,628 |
|
| Property and equipment,
net |
4,604 |
|
|
4,665 |
|
| Goodwill and intangible
assets |
61,908 |
|
|
67,354 |
|
| Deferred income tax
assets |
17,580 |
|
|
15,356 |
|
| Other non-current
assets |
2,410 |
|
|
2,147 |
|
| Total assets |
$ |
127,640 |
|
|
$ |
127,150 |
|
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
| Current liabilities: |
|
|
|
| Accounts
payable |
$ |
3,117 |
|
|
$ |
3,573 |
|
| Accrued
payroll and related taxes |
5,465 |
|
|
7,915 |
|
| Deferred
revenue, current portion |
7,973 |
|
|
4,792 |
|
|
Acquisition-related contingent consideration |
1,162 |
|
|
1,849 |
|
| Other
current liabilities |
1,639 |
|
|
2,278 |
|
| Total
current liabilities |
19,356 |
|
|
20,407 |
|
| Deferred revenue,
non-current portion |
516 |
|
|
485 |
|
| Deferred income tax
liabilities |
7,916 |
|
|
8,162 |
|
| Other non-current
liabilities |
1,783 |
|
|
2,702 |
|
| Total liabilities |
29,571 |
|
|
31,756 |
|
| Stockholders’ equity: |
|
|
|
| Preferred
stock, $0.001 par value, 1,000,000 shares authorized, none issued
and outstanding |
— |
|
|
— |
|
| Common
stock, $0.001 par value, 60,000,000 shares authorized, 39,348,080
and 37,961,224 issued and outstanding, as of December 31, 2018 and
September 30, 2018, respectively |
39 |
|
|
38 |
|
| Additional
paid-in capital |
124,613 |
|
|
116,944 |
|
| Accumulated
other comprehensive loss |
(2,594 |
) |
|
(586 |
) |
| Accumulated
deficit |
(23,989 |
) |
|
(21,002 |
) |
| Total
stockholders’ equity |
98,069 |
|
|
95,394 |
|
| Total liabilities and
stockholders’ equity |
$ |
127,640 |
|
|
$ |
127,150 |
|
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, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Revenue |
|
|
|
|
|
|
|
| Software and
hardware |
$ |
10,585 |
|
|
$ |
8,773 |
|
|
$ |
20,580 |
|
|
$ |
15,979 |
|
| Service and
other |
9,398 |
|
|
5,504 |
|
|
17,086 |
|
|
10,434 |
|
| Total
revenue |
19,983 |
|
|
14,277 |
|
|
37,666 |
|
|
26,413 |
|
| Operating costs and
expenses |
|
|
|
|
|
|
|
| Cost of revenue—software
and hardware |
907 |
|
|
485 |
|
|
1,752 |
|
|
1,204 |
|
| Cost of revenue—service
and other |
2,084 |
|
|
1,232 |
|
|
4,117 |
|
|
2,130 |
|
| Selling and
marketing |
6,752 |
|
|
5,348 |
|
|
13,960 |
|
|
10,123 |
|
| Research and
development |
5,290 |
|
|
3,501 |
|
|
9,778 |
|
|
6,781 |
|
| General and
administrative |
4,827 |
|
|
3,773 |
|
|
10,669 |
|
|
7,290 |
|
|
Acquisition-related costs and expenses |
1,773 |
|
|
1,203 |
|
|
3,600 |
|
|
2,462 |
|
| Total
operating costs and expenses |
21,633 |
|
|
15,542 |
|
|
43,876 |
|
|
29,990 |
|
| Operating loss |
(1,650 |
) |
|
(1,265 |
) |
|
(6,210 |
) |
|
(3,577 |
) |
| Other income, net |
140 |
|
|
204 |
|
|
154 |
|
|
394 |
|
| Loss before income
taxes |
(1,510 |
) |
|
(1,061 |
) |
|
(6,056 |
) |
|
(3,183 |
) |
| Income tax benefit
(provision) |
794 |
|
|
(99 |
) |
|
2,149 |
|
|
(3,713 |
) |
| Net loss |
$ |
(716 |
) |
|
$ |
(1,160 |
) |
|
$ |
(3,907 |
) |
|
$ |
(6,896 |
) |
| Net loss per share—basic
and diluted |
$ |
(0.02 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.20 |
) |
| Shares used in calculating
net loss per share—basic and diluted |
38,926 |
|
|
34,976 |
|
|
38,583 |
|
|
34,587 |
|
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, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Net loss |
$ |
(716 |
) |
|
$ |
(1,160 |
) |
|
$ |
(3,907 |
) |
|
$ |
(6,896 |
) |
| Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Acquisition-related costs and expenses |
1,773 |
|
|
1,203 |
|
|
3,600 |
|
|
2,462 |
|
|
Litigation costs |
— |
|
|
— |
|
|
— |
|
|
50 |
|
| Costs
associated with strategic process |
219 |
|
|
— |
|
|
1,083 |
|
|
— |
|
| Executive
transition costs(1) |
— |
|
|
— |
|
|
251 |
|
|
— |
|
| Stock
compensation expense |
2,353 |
|
|
2,058 |
|
|
5,023 |
|
|
3,947 |
|
| Income
tax effect of pre-tax adjustments |
(976 |
) |
|
(978 |
) |
|
(2,237 |
) |
|
(1,938 |
) |
| Impact of
tax reform on deferred taxes |
— |
|
|
— |
|
|
— |
|
|
4,417 |
|
| Cash tax
difference(2) |
85 |
|
|
1,024 |
|
|
(29 |
) |
|
1,136 |
|
| Non-GAAP net
income |
2,738 |
|
|
2,147 |
|
|
3,784 |
|
|
3,178 |
|
| Non-GAAP income per
share—basic |
$ |
0.07 |
|
|
$ |
0.06 |
|
|
$ |
0.10 |
|
|
$ |
0.09 |
|
| Non-GAAP income per
share—diluted |
$ |
0.07 |
|
|
$ |
0.06 |
|
|
$ |
0.09 |
|
|
$ |
0.09 |
|
| Shares used in calculating
non-GAAP net income per share—basic |
38,926 |
|
|
34,976 |
|
|
38,583 |
|
|
34,587 |
|
| Shares used in calculating
non-GAAP net income per share—diluted |
40,808 |
|
|
36,667 |
|
|
40,561 |
|
|
36,526 |
|
- Comprised of costs associated with the transition of the
Company’s executive officers. Our non-GAAP financial measures
exclude these transition costs as we believe that such expense is
inconsistent with the normally recurring operations of our Company
and it makes it difficult to make period-to-period comparisons of
our operating performance.
- The Company’s non-GAAP net income is calculated using the cash
tax rate of 3% in each of fiscal years 2019 and 2018. 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 loss for the three months ended March 31, 2019 and 2018
was 53% and negative 9%, respectively. The Company’s effective tax
rate used for the purposes of calculating GAAP net loss for the six
months ended March 31, 2019 and 2018 was 35% and negative 117%,
respectively.
________________
Follow Mitek on
LinkedIn: http://www.linkedin.com/company/mitek-systems-inc-Follow
Mitek on Twitter: @miteksystemsConnect with Mitek on Facebook:
http://www.facebook.com/MitekSystemsSee Mitek on YouTube:
http://www.youtube.com/miteksystemsRead Mitek’s latest blog post:
http://www.miteksystems.com/blog
Investor Contact:Todd Kehrli or Jim ByersMKR
Group, Inc.mitk@mkr-group.com
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