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Mitek Delivers Record Revenue in Fiscal Third Quarter, Up 24% Year Over Year

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Mitek Launches MiVIP, the Mitek Verified Identity Platform, During the Third Quarter, Making Digital Access Faster and More Secure Than Ever

SAN DIEGO, July 28, 2022--(BUSINESS WIRE)--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)]

Follow Mitek on LinkedIn, Twitter and YouTube, and read Mitek’s latest blog posts here.

_________________________
1
Javelin Strategy - "2022 Identity Fraud Study: The Virtual Background"

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.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220728006004/en/

Contacts

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