Mitek Systems Inc 10-Q for FY2020 Q3

Mitek Systems Inc (MITK)

10-Q 2020-08-05 For: 2020-06-30

Added on April 08, 2026

About this 10-Q

Mitek Systems Inc filed this 10-Q on August 5, 2020, covering the quarter ended June 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $25.41M; up 16.0% from $21.91M a year earlier
Net income: $1.35M; compared with a net loss of $99K a year earlier
Diluted EPS: $0.03; compared with $0.00 a year earlier

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Delaware						87-0418827
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

600 B Street, Suite 100
San Diego, California						92101
(Address of principal executive offices)						(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	MITK	The NASDAQ Capital Market


	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets at June 30 , 2020 (Unaudited) and September 30, 2019	1
	Consolidated Statements of Operations and Other Comprehensive Income (Loss) (Unaudited) for the Three and Nine Months Ended June 30 , 2020 and 2019	2
	Consolidated Statements of Stockholders' Equity (Unaudited) for the Three and Nine Months Ended June 3 0 , 2020 and 2019	3
	Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended June 30 , 2020 and 2019	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	37
Item 6.	Exhibits	38
	Signatures	39


	June 30, 2020 (Unaudited)		September 30, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	18,938	$	16,748
Short-term investments	30,281		16,502
Accounts receivable, net	12,943		14,938
Contract assets	3,410		2,350
Prepaid expenses	2,016		1,487
Other current assets	1,454		2,105
Total current assets	69,042		54,130
Long-term investments	2,942		1,552
Property and equipment, net	3,638		4,231
Right-of-use assets	5,683		—
Intangible assets, net	20,151		24,405
Goodwill	34,249		32,636
Deferred income tax assets, net	15,875		16,596
Other non-current assets	5,647		2,347
Total assets	$	157,227	$	135,897
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,304	$	3,555
Accrued payroll and related taxes	7,375		6,410
Deferred revenue, current portion	9,089		5,612
Lease liabilities, current portion	1,651		—
Acquisition-related contingent consideration	686		1,036
Restructuring accrual	220		1,526
Other current liabilities	942		1,909
Total current liabilities	24,267		20,048
Deferred revenue, non-current portion	1,240		736
Lease liabilities, non-current portion	5,674		—
Deferred income tax liabilities	5,699		5,555
Other non-current liabilities	964		2,225
Total liabilities	37,844		28,564
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, 41,282,779 and 40,367,456 issued and outstanding, as of June 30, 2020 and September 30, 2019, respectively	41		40
Additional paid-in capital	140,915		132,160
Accumulated other comprehensive loss	(2,581)		(4,061)
Accumulated deficit	(18,992)		(20,806)
Total stockholders’ equity	119,383		107,333
Total liabilities and stockholders’ equity	$	157,227	$	135,897


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Revenue
Software and hardware	$	13,212	$	11,888	$	36,180	$	32,468
Services and other	12,201		10,018		34,492		27,104
Total revenue	25,413		21,906		70,672		59,572
Operating costs and expenses
Cost of revenue—software and hardware	623		838		2,258		2,590
Cost of revenue—services and other	2,873		2,330		7,357		6,447
Selling and marketing	7,791		6,935		22,569		20,895
Research and development	5,111		4,663		14,540		14,441
General and administrative	5,884		5,074		16,382		15,743
Acquisition-related costs and expenses	1,697		1,761		4,884		5,361
Restructuring costs	—		3,214		(114)		3,214
Total operating costs and expenses	23,979		24,815		67,876		68,691
Operating income (loss)	1,434		(2,909)		2,796		(9,119)
Other income, net	145		98		480		252
Income (loss) before income taxes	1,579		(2,811)		3,276		(8,867)
Income tax benefit (provision)	(231)		2,712		(460)		4,861
Net income (loss)	$	1,348	$	(99)	$	2,816	$	(4,006)
Net income (loss) per share—basic	$	0.03	$	(0.00)	$	0.07	$	(0.10)
Net income (loss) per share—diluted	$	0.03	$	(0.00)	$	0.07	$	(0.10)
Shares used in calculating net income (loss) per share—basic	41,483		39,936		41,251		39,034
Shares used in calculating net income (loss) per share—diluted	42,428		39,936		42,239		39,034
Other comprehensive income (loss)
Net income (loss)	$	1,348	$	(99)	$	2,816	$	(4,006)
Foreign currency translation adjustment	1,135		814		1,324		(1,213)
Unrealized gain on investments	98		7		156		26
Other comprehensive income (loss)	$	2,581	$	722	$	4,296	$	(5,193)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended June 30, 2020
	Common Stock Outstanding Shares	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Balance, March 31, 2020	41,076	$	41	$	138,021	$	(20,340)	$	(3,814)	$	113,908
Exercise of stock options	116	—		393		—		—		393
Settlement of restricted stock units	91	—		—		—		—		—

Stock-based compensation expense	—	—		2,501		—		—		2,501

Components of other comprehensive income:
Net income	—	—		—		1,348		—		1,348
Currency translation adjustment	—	—		—		—		1,135		1,135
Change in unrealized gain (loss) on investments	—	—		—		—		98		98
Total other comprehensive income										2,581
Balance, June 30, 2020	41,283	$	41	$	140,915	$	(18,992)	$	(2,581)	$	119,383


	Three Months Ended June 30, 2019
	Common Stock Outstanding Shares	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Balance, March 31, 2019	39,348	$	39	$	124,613	$	(23,989)	$	(2,594)	$	98,069
Exercise of stock options	726	1		2,264		—		—		2,265
Settlement of restricted stock units	103	—		—		—		—		—


Stock-based compensation expense	—	—		2,268		—		—		2,268


Components of other comprehensive income:
Net loss	—	—		—		(99)		—		(99)
Currency translation adjustment	—	—		—		—		814		814
Change in unrealized gain (loss) on investments	—	—		—		—		7		7
Total other comprehensive income										722
Balance, June 30, 2019	40,177	$	40	$	129,145	$	(24,088)	$	(1,773)	$	103,324


	Nine Months Ended June 30, 2020
	Common Stock Outstanding Shares	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Balance, September 30, 2019	40,367	$	40	$	132,160	$	(20,806)	$	(4,061)	$	107,333
Exercise of stock options	301	—		1,038		—		—		1,038
Settlement of restricted stock units	677	1		(1)		—		—		—
Issuance of common stock under employee stock purchase plan	75	—		606		—		—		606
Stock-based compensation expense	—	—		7,112		—		—		7,112
Repurchases and retirements of common stock	(137)	—		—		(1,002)		—		(1,002)
Components of other comprehensive income:
Net income	—	—		—		2,816		—		2,816
Currency translation adjustment	—	—		—		—		1,324		1,324
Change in unrealized gain (loss) on investments	—	—		—		—		156		156
Total other comprehensive income										4,296
Balance, June 30, 2020	41,283	$	41	$	140,915	$	(18,992)	$	(2,581)	$	119,383


	Nine Months Ended June 30, 2019
	Common Stock Outstanding Shares	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Balance, September 30, 2018	37,961	$	38	$	116,944	$	(21,002)	$	(586)	$	95,394
Exercise of stock options	1,362	1		4,420		—		—		4,421
Settlement of restricted stock units	786	1		(1)		—		—		—
Issuance of common stock under employee stock purchase plan	68	—		491		—		—		491

Stock-based compensation expense	—	—		7,291		—		—		7,291

Cumulative-effect adjustment from the adoption of ASU 2014-09	—	—		—		920		—		920
Components of other comprehensive loss:
Net loss	—	—		—		(4,006)		—		(4,006)
Currency translation adjustment	—	—		—		—		(1,213)		(1,213)
Change in unrealized gain (loss) on investments	—	—		—		—		26		26
Total other comprehensive loss										(5,193)
Balance, June 30, 2019	40,177	$	40	$	129,145	$	(24,088)	$	(1,773)	$	103,324


	June 30, 2020		September 30, 2019
Contract assets, current	$	3,410	$	2,350
Contract assets, non-current	4,338		581
Contract liabilities (deferred revenue), current	9,089		5,612
Contract liabilities (deferred revenue), non-current	$	1,240	$	736


Balance at September 30, 2019	$	1,526
Accrual reversed	(114)
Payments	(1,165)
Foreign currency effect on the restructuring accrual	(27)
Balance at June 30, 2020	$	220


June 30, 2020:	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Available-for-sale securities:
U.S. Treasury, short-term	$	8,245	$	62	$	—	$	8,307
Asset-backed securities, short-term	3,769		34		—		3,803
Corporate debt securities, short-term	18,147		24		—		18,171

Asset-backed securities, long-term	964		14		—		978
Corporate debt securities, long-term	1,936		28		—		1,964
Total	$	33,061	$	162	$	—	$	33,223


September 30, 2019:	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Available-for-sale securities:
U.S. Treasury, short-term	$	4,240	$	2	$	—	$	4,242
Corporate debt securities, short-term	12,258		2		—		12,260
U.S. Treasury, long-term	1,102		—		(1)		1,101
Corporate debt securities, long-term	451		—		—		451
Total	$	18,051	$	4	$	(1)	$	18,054


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Major product category
Deposits software and hardware	$	12,222	$	10,521	$	32,822	$	28,786
Deposits services and other	4,726		4,528		13,399		11,041
Deposits revenue	16,948		15,049		46,221		39,827
Identity verification software and hardware	990		1,367		3,358		3,682
Identity verification services and other	7,475		5,490		21,093		16,063
Identity verification revenue	8,465		6,857		24,451		19,745
Total revenue	$	25,413	$	21,906	$	70,672	$	59,572


June 30, 2020:	Weighted Average Amortization Period	Cost		Accumulated Amortization		Net
Completed technologies	6.4 years	$	20,341	$	9,095	$	11,246
Customer relationships	4.8 years	17,628		8,866		8,762
Trade names	4.5 years	618		475		143
Total intangible assets		$	38,587	$	18,436	$	20,151


September 30, 2019:	Weighted Average Amortization Period	Cost		Accumulated Amortization		Net
Completed technologies	6.4 years	$	20,341	$	7,104	$	13,237
Customer relationships	4.8 years	17,628		6,701		10,927
Trade names	4.5 years	618		377		241
Total intangible assets		$	38,587	$	14,182	$	24,405


	Estimated Future Amortization Expense
2020—remaining	$	1,585
2021	6,134
2022	5,738
2023	3,766
2024	1,779
2025	1,149

Total	$	20,151


June 30, 2020:	Balance		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Short-term investments:
U.S. Treasury	$	8,307	$	8,307	$	—	$	—
Asset-backed securities	3,803		—		3,803		—
Corporate debt securities
Financial	6,385		—		6,385		—
Industrial	1,918		—		1,918		—
Commercial paper
Financial	6,978		—		6,978		—
Industrial	2,890		—		2,890		—
Total short-term investments at fair value	30,281		8,307		21,974		—
Long-term investments:
U.S. Treasury	—		—		—		—
Asset-backed securities	978		—		978		—
Corporate debt securities
Financial	997		—		997		—
Industrial	967		—		967		—
Total assets at fair value	$	33,223	$	8,307	$	24,916	$	—
Liabilities:
Acquisition-related contingent consideration	686		—		—		686
Total liabilities at fair value	$	686	$	—	$	—	$	686


Balance at September 30, 2019	$	1,601

Expenses recorded due to changes in fair value	98
Payment of contingent consideration	(1,049)

Foreign currency effect on contingent consideration	36
Balance at June 30, 2020	$	686


Balance at September 30, 2019	$	32,636
Other adjustments(1)	806
Foreign currency effect on goodwill and other	807
Balance at June 30, 2020	$	34,249


	Nine Months Ended June 30, 2020	Nine Months Ended June 30, 2019
Risk-free interest rate	1.35%	2.88% – 3.08%
Expected life (years)	5.78	5.46
Expected volatility	48%	57%
Expected dividends	None	None


	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at September 30, 2019	1,686,902	$	7.00	5.4	$	4,882
Granted	92,610	$	9.49
Exercised	(301,060)	$	3.46
Canceled	(36,146)	$	10.76
Outstanding at June 30, 2020	1,442,306	$	7.81	5.5	$	2,978
Vested and Expected to Vest at June 30, 2020	1,442,306	$	7.81	5.5	$	2,978
Exercisable at June 30, 2020	1,015,542	$	7.16	4.2	$	2,876


	Number of Shares	Weighted-Average Fair Market Value Per Share
Outstanding at September 30, 2019	2,352,487	$	8.26
Granted	1,346,405	$	7.20
Settled	(676,473)	$	7.66
Canceled	(221,435)	$	8.37
Outstanding at June 30, 2020	2,800,984	$	7.89


	Operating leases
2020—remaining	$	355
2021	2,068
2022	1,707
2023	1,709
2024	1,378
2025	290
Thereafter	644
Total lease payments	8,151
Less: amount representing interest	(826)
Present value of future lease payments	7,325


	Operating leases
2020	$	1,641
2021	2,157
2022	1,777
2023	1,550
2024	1,151
2025	36
Thereafter	—
Total minimum lease payments	$	8,312


	Three Months Ended June 30,
					Percentage of Total Revenue						Increase (Decrease)
	2020		2019		2020		2019		$		%
Revenue
Software and hardware	$	13,212	$	11,888	52	%	54	%	$	1,324	11	%
Services and other	12,201		10,018		48	%	46	%	2,183		22	%
Total revenue	$	25,413	$	21,906	100	%	100	%	$	3,507	16	%
Cost of revenue	3,496		3,168		14	%	14	%	328		10	%
Selling and marketing	7,791		6,935		31	%	32	%	856		12	%
Research and development	5,111		4,663		20	%	21	%	448		10	%
General and administrative	5,884		5,074		23	%	23	%	810		16	%
Acquisition-related costs and expenses	1,697		1,761		7	%	8	%	(64)		(4)	%
Restructuring costs	—		3,214		—	%	15	%	(3,214)		(100)	%
Other income, net	145		98		1	%	—	%	47		48	%
Income tax benefit (provision)	(231)		2,712		(1)	%	12	%	(2,943)		(109)	%
Net income (loss)	$	1,348	$	(99)	5	%	—	%	$	1,447	*

* Not meaningful.


*						Filed herewith.
**						Certain schedules, appendices and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the SEC upon request.
(1)						Incorporated by reference to the Company’s Current Report on Form 8-K/A filed with the SEC on October 20, 2017.
(2)						Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 23, 2018.
(3)						Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015.
(4)						Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 10, 2014.
(5)						Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on October 23, 2018.