Company Announces $50 Million Share Repurchase
Plan
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 second quarter ended March 31,
2024, and reiterated its previously provided guidance for its 2024
fiscal year ending September 30, 2024.
Fiscal 2024 Second Quarter Financial Results
- Total revenue was $47.0 million, compared to $46.1 million a
year ago.
- GAAP operating income was $0.7 million, an operating margin of
1%, compared to GAAP operating income of $8.7 million, an operating
margin of 19% a year ago.
- GAAP net income was $0.3 million, or $0.01 per diluted share,
compared to GAAP net income of $5.2 million, or $0.11 per diluted
share a year ago.
- Non-GAAP net income was $11.5 million, or $0.24 per diluted
share, compared to $13.7 million, or $0.30 per diluted share last
year.
- Non-GAAP operating income was $12.8 million and non-GAAP
operating margin was 27%, compared to non-GAAP operating income of
$17.6 million and a non-GAAP operating margin of 38% last
year.
- Cash flow from operations was $7.1 million, compared to $6.3
million last year.
- Total cash and investments was $130.3 million at March 31,
2024, an increase of $6.4 million from $123.9 million at December
31, 2023.
Mitek Chairman of the Board Scott Carter’s Comments
"Today, we are reiterating our fiscal 2024 guidance. Our recent
product innovations, including Check Fraud Defender, MiVIP, MiPass,
and ID R&D biometrics, are gaining market acceptance,
positioning us well for continued growth. We're harnessing advanced
AI and machine learning to enhance trust and convenience in digital
interactions. All of this gives us confidence in our ability to
profitably grow revenue. As such, we announced today in a separate
press release that our Board of Directors has authorized a two year
share repurchase program for up to $50 million of our common stock.
Using our strong balance sheet to reduce the number of outstanding
common shares, we believe we can increase shareholder value while
maintaining sufficient cash resources to fund our operations,
invest in our new growth products and service our existing debt
obligations."
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 between $180.0 million
and $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 of $7 million from its fiscal 2023 revenue
and attributes the $2.7 million that would have been attributable
to fiscal 2024 to the midpoint of the fiscal 2024 revenue guidance,
it 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%.
CEO Transition
Today in a separate press release the Company announced that it
will terminate the employment of the Company’s CEO, Max Carnecchia,
on May 31, 2024 and that Board has appointed Scott Carter as
Interim CEO, beginning June 1, 2024. The Board is conducting a
comprehensive search for a permanent CEO with the support of a
leading global executive search firm. At the request of the Board,
Max will remain on the Board of Directors and will be available to
assist with the CEO transition process.
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
its fiscal 2024 second quarter ended March 31, 2024. To access the
live call, dial 844-481-3005 (US and Canada) or +1 412-317-1889
(International) and ask to join the Mitek call. A live and archived
conference call webcast 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 after the
end of the call and 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
1835642.
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 expectation regarding continued growth, including
profitable revenue growth, its ability to harness advanced AI and
machine learning to enhance trust and convenience in digital
interactions, the share repurchase program, including that it will
use its strong balance sheet to reduce the number of its
outstanding common shares, and its belief that it can increase
shareholder value while maintaining sufficient cash resources to
fund its operations, invest in its new growth products and service
its existing debt obligations, 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, 2023, as filed with the SEC on March 19,
2024 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, litigation and other legal
costs, executive transition costs, stock compensation expense,
non-recurring audit fees, enterprise risk, portfolio positioning
and other related costs, restructuring costs and amortization of
debt discount and issuance costs. 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.
MITEK SYSTEMS, INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(amounts in thousands except
share data)
March 31, 2024
September 30, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
80,939
$
58,913
Short-term investments
42,987
74,700
Accounts receivable, net
52,061
32,132
Contract assets, current portion
15,140
18,355
Prepaid expenses
7,783
3,513
Other current assets
2,705
2,396
Total current assets
201,615
190,009
Long-term investments
6,337
1,304
Property and equipment, net
2,708
2,829
Right-of-use assets
3,313
4,140
Goodwill and intangible assets
185,240
188,222
Deferred income tax assets
13,521
11,645
Contract assets, non-current portion
2,692
5,579
Other non-current assets
1,604
1,647
Total assets
$
417,030
$
405,375
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
9,056
$
7,589
Accrued payroll and related taxes
9,592
10,554
Accrued interest payable
210
305
Income tax payables
190
4,329
Deferred revenue, current portion
25,728
17,360
Lease liabilities, current portion
1,168
1,902
Acquisition-related contingent
consideration
—
7,976
Other current liabilities
1,318
1,482
Total current liabilities
47,262
51,497
Convertible senior notes
139,492
135,516
Deferred revenue, non-current portion
1,020
957
Lease liabilities, non-current portion
2,590
2,867
Deferred income tax liabilities
6,690
6,476
Other non-current liabilities
3,830
2,874
Total liabilities
200,884
200,187
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, 46,790,611 and 45,591,199 issued and
outstanding, as of March 31, 2024 and September 30, 2023,
respectively
47
46
Additional paid-in capital
240,521
228,691
Accumulated other comprehensive loss
(9,599
)
(14,237
)
Accumulated deficit
(14,823
)
(9,312
)
Total stockholders’ equity
216,146
205,188
Total liabilities and stockholders’
equity
$
417,030
$
405,375
MITEK SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(amounts in thousands except
per share data)
Three Months Ended March
31,
Six Months Ended March
31,
2024
2023
2024
2023
Revenue
Software and hardware
$
24,889
$
25,260
$
40,869
$
51,636
Services and other
22,079
20,863
43,016
40,190
Total revenue
46,968
46,123
83,885
91,826
Operating costs and expenses
Cost of revenue—software and hardware
(exclusive of depreciation & amortization)
29
219
69
388
Cost of revenue—services and other
(exclusive of depreciation & amortization)
6,186
5,679
11,680
10,579
Selling and marketing
11,021
9,623
20,877
19,138
Research and development
9,713
7,373
18,587
15,043
General and administrative
14,943
10,059
30,481
18,538
Amortization and acquisition-related
costs
3,848
4,274
7,831
9,095
Restructuring costs
530
210
578
1,986
Total operating costs and expenses
46,270
37,437
90,103
74,767
Operating income (loss)
698
8,686
(6,218
)
17,059
Interest expense
2,303
2,163
4,566
4,300
Other income, net
1,190
454
2,832
794
Income (loss) before income taxes
(415
)
6,977
(7,952
)
13,553
Income tax benefit (provision)
697
(1,808
)
2,441
(3,654
)
Net income (loss)
$
282
$
5,169
$
(5,511
)
$
9,899
Net income (loss) per share—basic
$
0.01
$
0.11
$
(0.12
)
$
0.22
Net income (loss) per share—diluted
$
0.01
$
0.11
$
(0.12
)
$
0.22
Shares used in calculating net income
(loss) per share—basic
46,896
45,377
46,593
45,317
Shares used in calculating net income
(loss) per share—diluted
48,041
45,780
46,593
45,932
MITEK SYSTEMS, INC.
DISAGGREGATION OF
REVENUE
(Unaudited)
(amounts in thousands)
Three Months Ended March
31,
Six Months Ended March
31,
2024
2023
2024
2023
Major product category
Deposits software and hardware
$
22,494
$
22,226
$
36,542
$
46,679
Deposits services and other
7,010
6,534
14,038
12,362
Deposits revenue
29,504
28,760
50,580
59,041
Identity verification software and
hardware
2,395
3,034
4,327
4,957
Identity verification services and
other
15,069
14,329
28,978
27,828
Identity verification revenue
17,464
17,363
33,305
32,785
Total revenue
$
46,968
$
46,123
$
83,885
$
91,826
MITEK SYSTEMS, INC.
NON-GAAP NET INCOME
RECONCILIATION
(Unaudited)
(amounts in thousands except
per share data)
Three Months Ended March
31,
Six Months Ended March
31,
2024
2023
2024
2023
Net income (loss)
$
282
$
5,169
$
(5,511
)
$
9,899
Non-GAAP adjustments:
Acquisition-related costs and
expenses(1)
3,848
4,274
7,831
9,095
Litigation and other legal costs(2)
918
473
3,087
725
Executive transition costs
559
581
768
581
Stock compensation expense
3,888
2,704
7,318
5,146
Non-recurring audit fees
2,373
633
4,011
1,373
Enterprise risk, portfolio positioning and
other related costs(3)
—
—
996
—
Restructuring costs
530
210
578
1,986
Amortization of debt discount and issuance
costs
2,006
1,857
3,975
3,700
Income tax effect of pre-tax
adjustments
(4,427
)
(2,706
)
(7,394
)
(5,698
)
Cash tax difference(4)
1,559
505
2,200
1,167
Non-GAAP net income
$
11,536
$
13,700
$
17,859
$
27,974
Non-GAAP income per share—basic
$
0.25
$
0.30
$
0.38
$
0.62
Non-GAAP income per share—diluted
$
0.24
$
0.30
$
0.38
$
0.61
Shares used in calculating non-GAAP net
income per share—basic
46,896
45,377
46,593
45,317
Shares used in calculating non-GAAP net
income per share—diluted
48,041
45,780
46,593
45,932
(1)
Amortization of intangible assets recognized primarily from the
ID R&D and HooYu acquisitions and the change in fair value of
acquisition-related contingent consideration.
(2)
During the three and six month periods
ended December 31, 2023 and March 31, 2024, our legal team used
third party legal experts to perform and provide advice regarding a
variety of activities including intellectual property litigation
matters and risk analysis and in providing support for customers in
their litigation, matters and options related to getting our SEC
filings current, the process for a potential delisting from the
Nasdaq Capital Market, ongoing litigation support, and various
other projects.
(3)
During the six months ended March 31,
2024, we used three third party experts to evaluate our product
portfolio positioning, competitive landscape, enterprise risk and
other related analyses.
(4)
The Company’s non-GAAP net income is calculated using a cash tax
rate of 13% in fiscal 2024 and 23% in fiscal 2023. 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, and the
utilization of research and development tax credits 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 for fiscal
2024 and 2023 was 31% and 27%, respectively.
MITEK SYSTEMS, INC.
NON-GAAP OPERATING INCOME
RECONCILIATION
(Unaudited)
(amounts in thousands)
Three Months Ended March
31,
Six Months Ended March
31,
2024
2023
2024
2023
GAAP operating income
$
698
$
8,686
$
(6,218
)
$
17,059
Non-GAAP adjustments:
Acquisition-related costs and expenses
3,848
4,274
7,831
9,095
Litigation and other legal costs
918
473
3,087
725
Executive transition costs
559
581
768
581
Stock compensation expense
3,888
2,704
7,318
5,146
Non-recurring audit fees
2,373
633
4,011
1,373
Enterprise risk, portfolio positioning and
other related costs
—
—
996
—
Restructuring costs
530
210
578
1,986
Non-GAAP operating income
$
12,814
$
17,561
$
18,371
$
35,965
Total Revenue
$
46,968
$
46,123
$
83,885
$
91,826
Non-GAAP operating margin
27
%
38
%
22
%
39
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240513078356/en/
Investor Contact: Todd Kehrli or Jim Byers MKR Investor
Relations, Inc. mitk@mkr-group.com
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