Mitek Systems Inc 10-Q for FY2021 Q2

Mitek Systems Inc (MITK)

10-Q 2021-05-06 For: 2021-03-31

Added on April 08, 2026

About this 10-Q

Mitek Systems Inc filed this 10-Q on May 6, 2021, covering the quarter ended March 31, 2021 (FY2021 Q2).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $28.77M; up 24.1% from $23.19M a year earlier
Net income: $1.02M; up 12.2% from net income of $908K a year earlier
Diluted EPS: $0.02; unchanged from $0.02 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 March 31, 2021 (Unaudited) and September 30, 2020	1
	Consolidated Statements of Operations and Other Comprehensive Income (Loss) (Unaudited) for the Three and Six Months Ended March 31, 2021 and 2020	2
	Consolidated Statements of Stockholders' Equity (Unaudited) for the Three and Six Months Ended March 31, 202 1 and 20 20	3
	Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended March 31, 202 1 and 20 20	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	37
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
	Signatures	44


	March 31, 2021 (Unaudited)		September 30, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	53,935	$	19,986
Short-term investments	131,314		40,035
Accounts receivable, net	14,162		15,612
Contract assets	3,577		5,187
Prepaid expenses	2,143		1,338
Other current assets	2,059		1,968
Total current assets	207,190		84,126
Long-term investments	34,258		1,963
Property and equipment, net	3,502		3,610
Right-of-use assets	4,791		5,407
Intangible assets, net	16,044		19,289
Goodwill	35,728		35,669
Deferred income tax assets	13,963		13,484
Convertible senior notes hedge	34,719		—
Other non-current assets	5,606		5,606
Total assets	$	355,801	$	169,154
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,878	$	3,909
Accrued payroll and related taxes	7,586		8,882
Deferred revenue, current portion	11,353		7,973
Lease liabilities, current portion	1,755		1,819
Acquisition-related contingent consideration	—		753
Other current liabilities	994		1,020
Total current liabilities	24,566		24,356
Convertible senior notes	117,692		—
Embedded conversion derivative	34,719		—
Deferred revenue, non-current portion	585		1,597
Lease liabilities, non-current portion	4,636		5,327
Deferred income tax liabilities	4,673		4,649
Other non-current liabilities	1,201		982
Total liabilities	188,072		36,911
Stockholders’ equity:
Preferred stock, $0.001 par value, 1,000,000 shares authorized, zero issued and outstanding	—		—
Common stock, $0.001 par value, 60,000,000 shares authorized, 43,052,478 and 41,779,853 issued and outstanding, as of March 31, 2021 and September 30, 2020, respectively	43		42
Additional paid-in capital	178,891		146,518
Accumulated other comprehensive loss	(397)		(323)
Accumulated deficit	(10,808)		(13,994)
Total stockholders’ equity	167,729		132,243
Total liabilities and stockholders’ equity	$	355,801	$	169,154


	Three Months Ended March 31,				Six Months Ended March 31,
	2021		2020		2021		2020
Revenue
Software and hardware	$	13,013	$	11,453	$	25,315	$	22,968
Services and other	15,760		11,739		29,433		22,291
Total revenue	28,773		23,192		54,748		45,259
Operating costs and expenses
Cost of revenue—software and hardware	670		864		1,915		1,635
Cost of revenue—services and other	3,122		2,322		6,015		4,484
Selling and marketing(1)	8,530		6,686		15,915		13,334
Research and development(1)	6,691		5,581		12,855		10,873
General and administrative	5,718		5,210		10,776		10,498
Acquisition-related costs and expenses	1,659		1,579		3,352		3,187
Restructuring costs	—		(114)		—		(114)
Total operating costs and expenses	26,390		22,128		50,828		43,897
Operating income	2,383		1,064		3,920		1,362
Interest expense	1,319		—		1,319		—
Other income, net	372		32		468		335
Income before income taxes	1,436		1,096		3,069		1,697
Income tax benefit (provision)	(417)		(188)		117		(229)
Net income	$	1,019	$	908	$	3,186	$	1,468
Net income per share—basic	$	0.02	$	0.02	$	0.07	$	0.04
Net income per share—diluted	$	0.02	$	0.02	$	0.07	$	0.03
Shares used in calculating net income per share—basic	43,138		41,022		42,835		40,817
Shares used in calculating net income per share—diluted	44,554		42,028		44,367		42,030
Other comprehensive income (loss)
Net income	$	1,019	$	908	$	3,186	$	1,468
Foreign currency translation adjustment	(2,648)		(1,064)		112		189
Unrealized gain (loss) on investments	(133)		56		(186)		58
Other comprehensive income (loss)	$	(1,762)	$	(100)	$	3,112	$	1,715


☒			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 March 31, 2021
	Common Stock Outstanding Shares	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Balance, December 31, 2020	42,668	$	43	$	151,153	$	(11,827)	$	2,384	$	141,753
Exercise of stock options	18	—		69		—		—		69
Settlement of restricted stock units	289	—		(1)		—		—		(1)
Issuance of common stock under employee stock purchase plan	77	—		793		—		—		793
Stock-based compensation expense	—	—		2,968		—		—		2,968
Sale of convertible senior notes warrants	—	—		23,909		—		—		23,909

Components of other comprehensive loss
Net income	—	—		—		1,019		—		1,019
Currency translation adjustment	—	—		—		—		(2,648)		(2,648)
Change in unrealized gain (loss) on investments	—	—		—		—		(133)		(133)
Total other comprehensive loss										(1,762)
Balance, March 31, 2021	43,052	$	43	$	178,891	$	(10,808)	$	(397)	$	167,729


	Three Months Ended March 31, 2020
	Common Stock Outstanding Shares	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Balance, December 31, 2019	40,865	$	41	$	134,535	$	(20,246)	$	(2,806)	$	111,524
Exercise of stock options	161	—		572		—		—		572
Settlement of restricted stock units	112	—		—		—		—		—
Issuance of common stock under employee stock purchase plan	75	—		606		—		—		606

Stock-based compensation expense	—	—		2,308		—		—		2,308
Repurchases and retirements of common stock	(137)	—		—		(1,002)		—		(1,002)

Components of other comprehensive loss
Net income	—	—		—		908		—		908
Currency translation adjustment	—	—		—		—		(1,064)		(1,064)
Change in unrealized gain (loss) on investments	—	—		—		—		56		56
Total other comprehensive loss										(100)
Balance, March 31, 2020	41,076	$	41	$	138,021	$	(20,340)	$	(3,814)	$	113,908


	Six Months Ended March 31, 2021
	Common Stock Outstanding Shares	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Balance, September 30, 2020	41,780	$	42	$	146,518	$	(13,994)	$	(323)	$	132,243
Exercise of stock options	260	—		1,958		—		—		1,958
Settlement of restricted stock units	935	1		(1)		—		—		—
Issuance of common stock under employee stock purchase plan	77	—		792		—		—		792
Stock-based compensation expense	—	—		5,715		—		—		5,715
Sale of convertible senior notes warrants	—	—		23,909		—		—		23,909
Repurchases and retirements of common stock	—	—		—		—		—		—
Components of other comprehensive income
Net income	—	—		—		3,186		—		3,186
Currency translation adjustment	—	—		—		—		112		112
Change in unrealized gain (loss) on investments	—	—		—		—		(186)		(186)
Total other comprehensive income										3,112
Balance, March 31, 2021	43,052	$	43	$	178,891	$	(10,808)	$	(397)	$	167,729


	Six Months Ended March 31, 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	185	—		645		—		—		645
Settlement of restricted stock units	586	1		(1)		—		—		—
Issuance of common stock under employee stock purchase plan	75	—		606		—		—		606

Stock-based compensation expense	—	—		4,611		—		—		4,611
Repurchases and retirements of common stock	(137)	—		—		(1,002)		—		(1,002)

Components of other comprehensive income
Net income	—	—		—		1,468		—		1,468
Currency translation adjustment	—	—		—		—		189		189
Change in unrealized gain (loss) on investments	—	—		—		—		58		58
Total other comprehensive income										1,715
Balance, March 31, 2020	41,076	$	41	$	138,021	$	(20,340)	$	(3,814)	$	113,908


	March 31, 2021		September 30, 2020
Contract assets, current	$	3,577	$	5,187
Contract assets, non-current	3,900		4,468
Contract liabilities (deferred revenue), current	11,353		7,973
Contract liabilities (deferred revenue), non-current	585		1,597


March 31, 2021:	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Available-for-sale securities:
U.S. Treasury, short-term	$	7,735	$	3	$	—	$	7,738
Asset-backed securities, short-term	5,616		6		(1)		5,621
Corporate debt securities, short-term	118,004		10		(59)		117,955
U.S. Treasury, long-term	6,532		2		(1)		6,533
Asset-backed securities, long-term	959		—		(1)		958
Corporate debt securities, long-term	26,804		1		(38)		26,767
Total	$	165,650	$	22	$	(100)	$	165,572


September 30, 2020:	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Available-for-sale securities:
U.S. Treasury, short-term	$	10,245	$	38	$	—	$	10,283
Asset-backed securities, short-term	4,723		36		—		4,759
Corporate debt securities, short-term	24,956		37		—		24,993

Corporate debt securities, long-term	1,966		—		(3)		1,963
Total	$	41,890	$	111	$	(3)	$	41,998


March 31, 2021:	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	$	7,738	$	7,738	$	—	$	—
Asset-backed securities	5,621		—		5,621		—
Corporate debt securities	52,354		—		52,354		—
Commercial paper	65,601		—		65,601		—
Total short-term investments at fair value	131,314		7,738		123,576		—
Long-term investments:
U.S. Treasury	6,533		6,533		—		—
Foreign government and agency securities	2,929		—		2,929		—
Asset-backed securities	958		—		958		—
Corporate debt securities	23,838		—		23,838		—
Total long-term investments at fair value	34,258		6,533		27,725		—

Convertible senior notes hedge	34,719		—		34,719		—

Total assets at fair value	$	200,291	$	14,271	$	186,020	$	—
Liabilities:
Embedded conversion derivative	34,719		—		34,719		—
Total liabilities at fair value	$	34,719	$	—	$	34,719	$	—


	Three Months Ended March 31,				Six Months Ended March 31,
	2021		2020		2021		2020
Major product category
Deposits software and hardware	$	12,134	$	10,317	$	22,888	$	20,600
Deposits services and other	5,063		4,305		9,924		8,673
Deposits revenue	17,197		14,622		32,812		29,273
Identity verification software and hardware	879		1,136		2,427		2,368
Identity verification services and other	10,697		7,434		19,509		13,618
Identity verification revenue	11,576		8,570		21,936		15,986
Total revenue	$	28,773	$	23,192	$	54,748	$	45,259


March 31, 2021:	Weighted Average Amortization Period	Cost		Accumulated Amortization		Net
Completed technologies	6.4 years	$	20,341	$	11,026	$	9,315
Customer relationships	4.8 years	17,628		11,000		6,628
Trade names	4.5 years	618		517		101
Total intangible assets		$	38,587	$	22,543	$	16,044


September 30, 2020:	Weighted Average Amortization Period	Cost		Accumulated Amortization		Net
Completed technologies	6.4 years	$	20,341	$	9,416	$	10,925
Customer relationships	4.8 years	17,628		9,390		8,238
Trade names	4.5 years	618		492		126
Total intangible assets		$	38,587	$	19,298	$	19,289


	Estimated Future Amortization Expense
2021—remaining	$	3,104
2022	5,965
2023	3,915
2024	1,860
2025	1,200

Total	$	16,044


Balance at September 30, 2020	$	753




Foreign currency effect on contingent consideration	29
Payment of contingent consideration	$	(782)
Balance at March 31, 2021	$	—


Balance at September 30, 2020	$	35,669

Foreign currency effect on goodwill	59
Balance at March 31, 2021	$	35,728


	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at September 30, 2020	1,162,505	$	7.51	6.1	$	6,081
Granted	—	$	—
Exercised	(259,865)	$	7.54
Canceled	—	$	—
Outstanding at March 31, 2021	902,640	$	7.50	6.0	$	11,368
Vested and Expected to Vest at March 31, 2021	902,640	$	7.50	6.0	$	11,368
Exercisable at March 31, 2021	625,015	$	6.61	5.2	$	4,979


	Number of Shares	Weighted-Average Fair Market Value Per Share
Outstanding at September 30, 2020	2,661,943	$	7.95
Granted	706,412	$	12.27
Settled	(845,420)	$	7.39
Canceled	(77,635)	$	9.20
Outstanding at March 31, 2021	2,445,300	$	9.35


	March 31, 2021
2026 Notes:
Principal amount	$	155,250
Less: unamortized discount and issuance costs, net of amortization	(37,558)
Carrying amount	$	117,692

2026 Notes embedded conversion derivative	$	34,719


Embedded conversion derivative
Fair value as of February 5, 2021	$	33,192
Change in fair value	1,527
Fair value as of March 31, 2021	$	34,719


	Operating leases
2021—remaining	$	1,089
2022	1,824
2023	1,722
2024	1,388
2025	302
2026	296
Thereafter	377
Total lease payments	6,998
Less: amount representing interest	(607)
Present value of future lease payments	$	6,391


	Three Months Ended March 31,
					Percentage of Total Revenue				Increase (Decrease)
	2021		2020		2021		2020		$		%
Revenue
Software and hardware	$	13,013	$	11,453	45	%	49	%	$	1,560	14	%
Services and other	15,760		11,739		55	%	51	%	4,021		34	%
Total revenue	$	28,773	$	23,192	100	%	100	%	$	5,581	24	%
Cost of revenue	3,792		3,186		13	%	14	%	606		19	%
Selling and marketing	8,530		6,686		30	%	29	%	1,844		28	%
Research and development	6,691		5,581		23	%	24	%	1,110		20	%
General and administrative	5,718		5,210		20	%	22	%	508		10	%
Acquisition-related costs and expenses	1,659		1,579		6	%	7	%	80		5	%
Restructuring costs	—		(114)		—	%	—	%	114		(100)	%
Interest expense	1,319		—		5	%	—	%	1,319		100	%
Other income, net	372		32		1	%	—	%	340		1063	%
Income tax provision	(417)		(188)		(1)	%	(1)	%	(229)		(122)	%
Net income	$	1,019	$	908	4	%	4	%	$	111	12	%


*						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.
(6)						Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 5, 2021.
(7)						Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 25, 2021.


May 6, 2021	MITEK SYSTEMS, INC.

	By:	/s/ Scipio Maximus Carnecchia
		Scipio Maximus Carnecchia
		Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Jeffrey C. Davison
		Jeffrey C. Davison
		Chief Financial Officer (Principal Financial and Accounting Officer)