Business Wire | Apr 29, 2021 04:05PM EDT

Mitek Reports Record Second Quarter Revenue With Total Revenue Up 24% Year Over Year

Apr. 29, 2021

SAN DIEGO--(BUSINESS WIRE)--Apr. 29, 2021--Mitek (NASDAQ: MITK, www.miteksystems.com), a global leader in mobile capture and digital identify verification solutions, today reported record financial results for its second quarter of fiscal 2021 ended March 31, 2021. Total second quarter revenue increased 24% year over year fueled by an increase in demand for both mobile deposit and identity verification solutions as commerce continues its shift to digital channels.

Fiscal Second Quarter 2021 Financial Highlights

* Total revenue increased 24% year over year to $28.8 million in a record second quarter. * Transactional identify verification revenue increased 50% year over year. * GAAP net income was $1.0 million, or $0.02 per diluted share. * Non-GAAP net income increased 34% year over year to $7.3 million, or $0.16 per diluted share. * Cash flow from operations was $7.3 million. * Completed successful convertible debt offering adding approximately $150 million in cash to the balance sheet. * Total cash and investments were $219.5 million at the end of the fiscal second quarter.

Commenting on the results, Max Carnecchia, CEO of Mitek, said:

"We are pleased to report another strong quarter across the board for Mitek driven by solid revenue growth from both our deposits and identity businesses. This is our second consecutive quarter of more than 45% growth in our transactional identity verification revenue, highlighting our strong performance in this expanding market. Our deposit solutions also delivered solid revenue growth as consumer adoption continues to increase. Mitek's record second quarter financial performance reflects the team's commitment to helping our customers and partners accelerate their digital transformation while at the same time mitigating fraud."

Mitek is committed to providing convenience while preventing fraud in the digital world. The Company's technology ensures that more businesses can transact digitally and secure their platforms through easy, fast and secure identity verification. Identity verification has never been more relevant. Almost all aspects of modern life now use digital channels, so the need to establish trust in the digital identities of customers, citizens, partners, and employees is rapidly rising. Mitek also remains the clear market leader in remote check deposit solutions, with thousands of financial organizations using its solutions, and approximately five billion transactions processed.

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 800-437-2398 (US and Canada) or +1 323-289-6576 (International) and give the participant passcode 6765079.

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. To access the call replay dial-in information, please click here.

About Mitek

Mitek (NASDAQ: MITK) is a global leader in mobile capture and digital identity verification built on the latest advancements in computer vision and artificial intelligence. Mitek's identity verification solutions enable organizations to verify an individual's identity during digital transactions to reduce risk and meet regulatory requirements, while increasing revenue from digital channels. More than 7,500 organizations use Mitek to enable trust and convenience for mobile check deposit, new account opening and more. Mitek is based in San Diego, Calif., with offices across the U.S. and Europe. Learn more at www.miteksystems.com. [(MITK-F)]

Follow Mitek on LinkedIn, Twitter 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's or 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, the extent to which the COVID-19 outbreak and measures taken in response thereto impact our business, results of operations and financial condition, a lack of demand for or market acceptance of the company's products, the company's ability to continue to develop, produce and introduce innovative new products in a timely manner or 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, 2020, 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-GAAP financial measures for non-GAAP net income and non-GAAP net income per share that exclude stock compensation expenses, intellectual property litigation costs, acquisition-related costs and expenses, 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 generally accepted accounting principles (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 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) March 31, September 2021 30, 2020ASSETSCurrent 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' EQUITYCurrent 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, none issued and outstandingCommon stock, $0.001 par value, 60,000,000 sharesauthorized, 43,052,478 and 41,779,853 issued and 43 42 outstanding, as of March 31, 2021 and September 30,2020, respectivelyAdditional 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

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,

2021

2020

2021

2020

RevenueSoftware and hardware$

13,013

$

11,453

$

25,315

$

22,968

Services and other15,760

11,739

29,433

22,291

Total revenue28,773

23,192

54,748

45,259

Operating costs and expensesCost of revenue-software and hardware670

864

1,915

1,635

Cost of revenue-services and other3,122

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 administrative5,718

5,210

10,776

10,498

Acquisition-related costs and expenses1,659

1,579

3,352

3,187

Restructuring costs-

(114

)

-

(114

)

Total operating costs and expenses26,390

22,128

50,828

43,897

Operating income2,383

1,064

3,920

1,362

Interest expense1,319

-

1,319

-

Other income, net371

32

468

335

Income before income taxes1,435

1,096

3,069

1,697

Income tax benefit (provision)(417

)

(188

)

117

(229

)

Net income$

1,018

$

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-basic43,138

41,022

42,835

40,817

Shares used in calculating net income per share-diluted44,554

42,028

44,367

42,030

MITEK SYSTEMS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(amounts in thousands except per share data)

Three Months Ended Six Months Ended March 31, March 31,

2021 2020 2021 2020

RevenueSoftware 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 expensesCost of revenue-software and 670 864 1,915 1,635 hardwareCost of revenue-services and 3,122 2,322 6,015 4,484 otherSelling 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 1,659 1,579 3,352 3,187 expensesRestructuring costs - (114 ) - (114 )

Total operating costs and 26,390 22,128 50,828 43,897 expensesOperating income 2,383 1,064 3,920 1,362

Interest expense 1,319 - 1,319 -

Other income, net 371 32 468 335

Income before income taxes 1,435 1,096 3,069 1,697

Income tax benefit (provision) (417 ) (188 ) 117 (229 )

Net income $ 1,018 $ 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 43,138 41,022 42,835 40,817 income per share-basicShares used in calculating net 44,554 42,028 44,367 42,030 income per share-diluted(1)

March 31, 2020 consolidated statements of operations reflect reclassifications to conform to the current year presentation.

(1) March 31, 2020 consolidated statements of operations reflect reclassifications to conform to the current year presentation.

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,

2021

2020

2021

2020

Net income$

1,018

$

908

$

3,186

$

1,468

Non-GAAP adjustments:Acquisition-related costs and expenses1,659

1,579

3,352

3,187

Intellectual property litigation costs275

561

517

1,034

Stock compensation expense2,968

2,308

5,715

4,611

Restructuring costs-

(114

)

-

(114

)

Amortization of debt discount and issuance costs1,147

-

1,147

-

Income tax effect of pre-tax adjustments(1,391

)

(997

)

(2,468

)

(2,005

)

Cash tax difference(1)1,621

1,184

2,006

2,234

Non-GAAP net income$

7,297

$

5,429

$

13,455

$

10,415

Non-GAAP income per share-basic$

0.17

$

0.13

$

0.31

$

0.26

Non-GAAP income per share-diluted$

0.16

$

0.13

$

0.30

$

0.25

Shares used in calculating non-GAAP net income per share-basic43,138

41,022

42,835

40,817

Shares used in calculating non-GAAP net income per share-diluted44,554

42,028

44,367

42,030

MITEK SYSTEMS, INC.NON-GAAP NET INCOME RECONCILIATION(Unaudited)(amounts in thousands except per share data) Three Months Ended Six Months Ended March March 31, 31,

2021 2020 2021 2020

Net income $ 1,018 $ 908 $ 3,186 $ 1,468

Non-GAAP adjustments:Acquisition-related costs and 1,659 1,579 3,352 3,187 expensesIntellectual property 275 561 517 1,034 litigation costsStock compensation expense 2,968 2,308 5,715 4,611

Restructuring costs - (114 ) - (114 )

Amortization of debt discount 1,147 - 1,147 - and issuance costsIncome tax effect of pre-tax (1,391 ) (997 ) (2,468 ) (2,005 )adjustmentsCash tax difference^(1) 1,621 1,184 2,006 2,234

Non-GAAP net income $ 7,297 $ 5,429 $ 13,455 $ 10,415

Non-GAAP income per $ 0.17 $ 0.13 $ 0.31 $ 0.26 share-basicNon-GAAP income per $ 0.16 $ 0.13 $ 0.30 $ 0.25 share-dilutedShares used in calculating 43,138 41,022 42,835 40,817 non-GAAP net income pershare-basicShares used in calculating 44,554 42,028 44,367 42,030 non-GAAP net income pershare-diluted(1)

The company's non-GAAP net income is calculated using a cash tax rate of 3% and 0% in fiscal years 2021 and 2020, respectively. 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 for the three months ended March 31, 2021 and 2020 was 29% and 17%, respectively. The company's effective tax rate used for the purposes of calculating GAAP net income for the six months ended March 31, 2021 and 2020 was negative 4% and 13%, respectively. View source version on businesswire.com: https://www.businesswire.com/news/home/20210429006082/en/

CONTACT: Todd Kehrli or Jim Byers MKR Group, Inc. mitk@mkr-group.com