Mitek Delivers 21% Year Over Year Revenue Growth and Transformative Acquisition of Orchestration Provider During the Quarter

Rhea-AI Summary

Mitek Systems, Inc. (NASDAQ: MITK) reported a 21% year-over-year revenue increase to $34.7 million for Q2 fiscal 2022, concluding March 31, 2022. The company achieved an 88% rise in GAAP net income, reaching $1.9 million ($0.04 per diluted share), while non-GAAP net income grew 49% to $10.8 million ($0.24 per diluted share). In March, Mitek acquired HooYu, the UK’s leading KYC technology provider, enhancing its digital identity services and fraud prevention capabilities. Total cash and investments stood at $93.4 million, affirming Mitek's robust financial position.

Positive

• 21% year-over-year revenue growth to $34.7 million.
• 88% increase in GAAP net income to $1.9 million.
• 49% rise in non-GAAP net income to $10.8 million.
• Acquisition of HooYu expands digital identity offerings.
• Strong cash flow from operations at $7.4 million.

Negative

• None.

Mitek Adds End-to-End KYC Platform to Industry Leading Biometrics to Create Comprehensive Identity Provider

SAN DIEGO--(BUSINESS WIRE)-- Mitek Systems, Inc. (NASDAQ: MITK, www.miteksystems.com, “Mitek” or the “Company”), a global leader in digital identity (ID) and fraud prevention solutions, today reported financial results for its second quarter of fiscal 2022 ended March 31, 2022. Total revenue increased 21% year over year as commerce continues its rapid shift to digital channels.

Mitek capped the quarter with the March acquisition of HooYu, the United Kingdom’s leading Know Your Customer (KYC) technology pioneer. The acquisition allows Mitek to offer customers a powerful end-to-end, easy-to-use platform capable of managing the entire customer identity journey, including account opening, workflow, case management, analytics and re-verification/authentication.

Fiscal Second Quarter 2022 Financial Highlights

• Total revenue increased 21% year over year to $34.7 million in a record second quarter.
• GAAP net income increased 88% year over year to $1.9 million, or $0.04 per diluted share.
• Non-GAAP net income increased 49% year over year to $10.8 million, or $0.24 per diluted share.
• Cash flow from operations was $7.4 million.
• Total cash and investments were $93.4 million at the end of the quarter.

“Digital identity verification has moved beyond just being an enabler of digital commerce, it now serves as an integral element of most organizations’ technology stack,” said CEO Max Carnecchia. “We believe the next decade of fraud prevention will be defined by an organization’s approach to the lifecycle of identity and access management capabilities. With our acquisition of HooYu, Mitek is significantly expanding access to these services through our low code no code orchestration platform.”

“Our acquisition of HooYu continues to expand our digital identity offering allowing for a more seamless and complete customer identification experience at scale while also significantly bolstering our fraud prevention capabilities,” added CFO Frank Teruel. “We are excited about the opportunity to bring these capabilities to more use cases and industries helping them increase customer acceptance while reducing fraud and operational costs.”

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 888-204-4368 (US and Canada) or +1 323-994-2093 (International) and give the participant passcode 5221376.

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 Systems, Inc.

Mitek (NASDAQ: MITK) is a global leader in digital identity and fraud prevention solutions built on the latest advancements in computer vision and artificial intelligence. Mitek’s digital identity 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 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, the extent to which the COVID-19 outbreak and measures taken in response thereto impact its business, results of operations and financial condition, 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, 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, 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 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 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)
	March 31, 2022				September 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	23,984			$	30,312
Short-term investments		37,910				149,057
Accounts receivable, net		23,858				16,602
Contract assets		4,503				4,080
Prepaid expenses		2,409				1,920
Other current assets		1,849				2,085
Total current assets		94,513				204,056
Long-term investments		31,493				48,051
Property and equipment, net		3,938				3,671
Right-of-use assets		6,098				7,056
Goodwill and intangible assets		233,253				91,830
Deferred income tax assets		16,479				10,511
Convertible senior notes hedge		—				48,208
Other non-current assets		5,292				6,310
Total assets	$	391,066			$	419,693
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,359			$	2,507
Accrued payroll and related taxes		8,271				11,776
Deferred revenue, current portion		9,700				10,381
Lease liabilities, current portion		1,944				1,943
Acquisition-related contingent consideration		10,790				11,050
Other current liabilities		3,469				1,552
Total current liabilities		39,533				39,209
Convertible senior notes		124,370				120,918
Embedded conversion derivative		—				48,208
Deferred revenue, non-current portion		1,053				955
Lease liabilities, non-current portion		5,485				6,588
Deferred income tax liabilities		22,100				4,117
Other non-current liabilities		6,250				6,868
Total liabilities		198,791				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, 44,344,361 and 44,168,745 issued and outstanding, as of March 31, 2022 and September 30, 2021, respectively		44				44
Additional paid-in capital		213,398				199,935
Accumulated other comprehensive loss		(5,170	)			(943	)
Accumulated deficit		(15,997	)			(6,066	)
Treasury stock, at cost, no shares and 7,773 shares as of March 31, 2022 and September 30, 2021, respectively		—				(140	)
Total stockholders’ equity		192,275				192,830
Total liabilities and stockholders’ equity	$	391,066			$	419,693

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,
		2022				2021				2022				2021
Revenue
Software and hardware	$	19,280			$	13,013			$	34,725			$	25,315
Services and other		15,434				15,760				32,461				29,433
Total revenue		34,714				28,773				67,186				54,748
Operating costs and expenses
Cost of revenue—software and hardware		310				670				688				1,915
Cost of revenue—services and other		3,000				3,122				5,978				6,015
Selling and marketing		9,206				8,530				17,644				15,915
Research and development		8,236				6,691				15,842				12,855
General and administrative		6,073				5,718				12,037				10,776
Acquisition-related costs and expenses		3,056				1,659				5,335				3,352
Total operating costs and expenses		29,881				26,390				57,524				50,828
Operating income		4,833				2,383				9,662				3,920
Interest expense		2,040				1,319				4,048				1,319
Other income (expense), net		(231	)			372				(96	)			468
Income before income taxes		2,562				1,436				5,518				3,069
Income tax benefit (provision)		(651	)			(417	)			(483	)			117
Net income	$	1,911			$	1,019			$	5,035			$	3,186
Net income per share—basic	$	0.04			$	0.02			$	0.11			$	0.07
Net income per share—diluted	$	0.04			$	0.02			$	0.11			$	0.07
Shares used in calculating net income per share—basic		44,775				43,138				44,795				42,835
Shares used in calculating net income per share—diluted		46,097				44,554				46,206				44,367

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,
		2022				2021				2022				2021
Net income	$	1,911			$	1,019			$	5,035			$	3,186
Non-GAAP adjustments:
Acquisition-related costs and expenses(2)		3,417				1,659				5,696				3,352
Intellectual property litigation costs		286				275				661				517
Stock compensation expense		3,298				2,968				6,429				5,715
Amortization of debt discount and issuance costs		1,738				1,147				3,453				1,147
Income tax effect of pre-tax adjustments		(2,185	)			(1,391	)			(4,060	)			(2,468	)
Cash tax difference(1)		2,377				1,621				3,793				2,006
Non-GAAP net income		10,842				7,298				21,007				13,455
Non-GAAP income per share—basic	$	0.24			$	0.17			$	0.47			$	0.31
Non-GAAP income per share—diluted	$	0.24			$	0.16			$	0.45			$	0.30
Shares used in calculating non-GAAP net income per share—basic		44,775				43,138				44,795				42,835
Shares used in calculating non-GAAP net income per share—diluted		46,097				44,554				46,206				44,367

(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 for the three months ended March 31, 2022 and 2021 was 25% and 29%, respectively. The Company’s effective tax rate used for the purposes of calculating GAAP net income for the six months ended March 31, 2022 and 2021 was 9% and negative 4%, 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/20220428006229/en/

Investor Contact:

Todd Kehrli or Jim Byers

MKR Group, Inc.

mitk@mkr-group.com

Source: Mitek Systems, Inc.

FAQ

What was Mitek's revenue for Q2 fiscal 2022?

Mitek reported a revenue of $34.7 million for Q2 fiscal 2022.

How much did Mitek's GAAP net income increase in Q2 2022?

GAAP net income increased by 88% to $1.9 million.

What acquisition did Mitek announce in March 2022?

In March 2022, Mitek acquired HooYu, a leading KYC technology provider in the UK.

What impact does the HooYu acquisition have on Mitek?

The acquisition enhances Mitek's identity verification services and fraud prevention capabilities.

What is Mitek's cash position as of the end of Q2 fiscal 2022?

Mitek had total cash and investments of $93.4 million at the end of Q2 fiscal 2022.