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 2023 ended June 30, 2023.
Fiscal 2023 Third Quarter Financial Highlights
- Total revenue increased 10% year over year to $43.1 million in
a record third quarter.
- GAAP net loss was $0.4 million, or $0.01 per diluted
share.
- Non-GAAP net income was $9.5 million, or $0.20 per diluted
share.
- Cash flow from operations was $16.6 million.
- Total cash and investments were $131.0 million on June 30,
2023.
Fiscal 2023 First Nine Months Financial Highlights
- Total revenue increased 28% year over year to $134.9
million.
- GAAP net income was $9.5 million, or $0.20 per diluted
share.
- Non-GAAP net income was $37.4 million, or $0.81 per diluted
share.
- Cash flow from operations was $28.1 million.
Mitek CEO Max Carnecchia’s Comments
"Our third-quarter results put us on track to meet our full-year
revenue guidance of 18% growth year over year and 30% to 31%
non-GAAP operating margins for the full fiscal year ended September
30, 2023. We expect our Deposits revenue to grow over 20% year over
year for our full fiscal year, while Identity revenue is on track
to grow at least 18% year over year. Also, over the trailing twelve
months ended June 30, 2023, Mitek’s net revenue retention rate was
over 120%, which underscores the value our solutions deliver in the
growing markets we serve. We also continue to drive toward
profitability for our Identity business, which we expect to occur
by the end of fiscal 2024. Lastly, during the third quarter, we
continued to generate significant cash flow and strengthen our
balance sheet."
Fiscal 2023 Full Year Guidance
Mitek is reiterating its fiscal 2023 guidance for the year
ending September 30, 2023, expecting revenue to be in the range of
$169.0 million to $171.0 million, an increase of approximately 18%
year over year from the mid-point of the guidance range. Mitek
expects its non-GAAP operating margin for fiscal 2023 to be in the
range of 30.0% to 31.0%.
Conference Call Information
Mitek management will host a conference call and live webcast
for analysts and investors on October 26, 2023 at 2:00 p.m. Pacific
Time (5:00 p.m. Eastern Time) to discuss the Company’s financial
results for the three and nine months ended June 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 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 accessed by dialing 877-344-7529 (US or Canada) or
1-412-317-0088 (International) and entering the passcode:
5586065.
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 estimates and
expectations for the year ended September 30, 2023 and its fiscal
2023 guidance, long-term prospects and market opportunities of the
Company and the Company’s expectations regarding profitability of
its Identity business. 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.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(amounts in thousands except
share data)
June 30, 2023
September 30, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
87,490
$
32,059
Short-term investments
40,651
58,268
Accounts receivable, net
37,616
27,874
Contract assets, current portion
7,420
6,273
Prepaid expenses
2,227
2,000
Other current assets
2,828
2,622
Total current assets
178,232
129,096
Long-term investments
2,815
10,633
Property and equipment, net
3,010
3,493
Right-of-use assets
4,335
5,155
Goodwill and intangible assets
201,949
195,942
Deferred income tax assets
18,553
10,245
Contract assets, non-current portion
7,050
4,218
Other non-current assets
1,533
1,628
Total assets
$
417,477
$
360,410
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
7,733
$
4,974
Accrued payroll and related taxes
9,548
10,393
Accrued liabilities
1,231
1,155
Accrued interest payable
673
202
Income tax payables
10,059
194
Deferred revenue, current portion
12,786
13,394
Lease liabilities, current portion
2,123
2,110
Acquisition-related contingent
consideration
8,013
5,920
Restructuring accrual
—
901
Other current liabilities
1,521
1,254
Total current liabilities
53,687
40,497
Convertible senior notes
133,579
127,970
Deferred revenue, non-current portion
2,056
1,775
Lease liabilities, non-current portion
2,968
4,106
Deferred income tax liabilities, non
current portion
15,970
14,132
Other non-current liabilities
1,573
1,613
Total liabilities
209,833
190,093
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, 45,507,401 and 44,680,429 issued and
outstanding, as of June 30, 2023 and September 30, 2022,
respectively
45
44
Additional paid-in capital
225,633
216,493
Accumulated other comprehensive loss
(9,504
)
(28,219
)
Accumulated deficit
(8,530
)
(18,001
)
Treasury stock, at cost, no shares and
7,773 shares as of June 30, 2023 and September 30, 2022,
respectively
—
—
Total stockholders’ equity
207,644
170,317
Total liabilities and stockholders’
equity
$
417,477
$
360,410
MITEK SYSTEMS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(amounts in thousands except
per share data)
Three Months Ended June
30,
Nine Months Ended June
30,
2023
2022
2023
2022
Revenue
Software and hardware
$
21,447
$
19,515
$
73,083
$
53,110
Services and other
21,623
19,680
61,813
52,068
Total revenue
43,070
39,195
134,896
105,178
Operating costs and expenses
Cost of revenue—software and hardware
(exclusive of depreciation & amortization)
428
508
816
1,196
Cost of revenue—services and other
(exclusive of depreciation & amortization)
5,284
5,276
15,863
13,594
Selling and marketing
10,296
11,216
29,434
28,859
Research and development
7,461
8,411
22,504
21,914
General and administrative
11,588
6,591
30,126
18,628
Amortization and acquisition-related
costs
6,207
4,493
15,302
10,777
Restructuring costs
14
1,807
2,000
1,807
Total operating costs and expenses
41,278
38,302
116,045
96,775
Operating income
1,792
893
18,851
8,403
Interest expense
2,362
2,077
6,662
6,125
Other income (expense), net
925
89
1,719
(2
)
Income (loss) before income taxes
355
(1,095
)
13,908
2,276
Income tax benefit (provision)
(783
)
880
(4,437
)
1,068
Net income (loss)
$
(428
)
$
(215
)
$
9,471
$
3,344
Net income (loss) per share—basic
$
(0.01
)
$
(0.00
)
$
0.21
$
0.07
Net income (loss) per share—diluted
$
(0.01
)
$
(0.00
)
$
0.20
$
0.07
Shares used in calculating net income
(loss) per share—basic
46,002
44,669
45,625
44,721
Shares used in calculating net income
(loss) per share—diluted
46,473
45,224
46,210
45,793
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,
2023
2022
2023
2022
Net income (loss)
$
(428
)
$
(215
)
$
9,471
$
3,344
Non-GAAP adjustments:
Amortization and acquisition-related
costs(2)
6,207
4,493
15,302
11,138
Intellectual property litigation costs
393
438
1,119
1,098
Executive transition costs
91
—
672
—
Stock compensation expense
2,629
3,688
7,790
10,117
Non-recurring audit fees
812
—
2,185
—
Restructuring costs
14
1,807
2,000
1,807
Amortization of debt discount and issuance
costs
1,909
1,787
5,609
5,239
Income tax effect of pre-tax
adjustments
(3,415
)
(3,045
)
(9,113
)
(7,342
)
Cash tax difference(1)
1,243
1,902
2,410
5,275
Non-GAAP net income
9,455
10,855
37,445
30,676
Non-GAAP income per share—basic
$
0.21
$
0.24
$
0.82
$
0.69
Non-GAAP income per share—diluted
$
0.20
$
0.24
$
0.81
$
0.67
Shares used in calculating non-GAAP net
income per share—basic
46,002
44,669
45,625
44,721
Shares used in calculating non-GAAP net
income per share—diluted
46,473
45,224
46,210
45,793
(1)
The Company’s non-GAAP net income is calculated using a cash tax
rate of 23% in fiscal 2023 and 3% 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 loss for the three
months ended June 30, 2023 and 2022 was negative 221% and negative
80%, respectively. The Company’s effective tax rate used for the
purposes of calculating GAAP net income for the nine months ended
June 30, 2023 and 2022 was negative 32% and 47%, respectively.
(2)
Included in acquisition-related costs and expenses in the nine
months ended June 30, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026874089/en/
Investor Contact: Todd Kehrli or Jim Byers MKR Investor
Relations, Inc. mitk@mkr-group.com
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