Total Revenue for Fiscal 2023 Increased 19%
Year Over Year; Company Reiterates Guidance for Fiscal 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
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240319563820/en/
Investor Contact: Todd Kehrli or Jim Byers MKR Investor
Relations, Inc. mitk@mkr-group.com
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