Mitek Reports Fiscal 2024 First Quarter Financial Results and Provides Preliminary Second Quarter Revenue Results
- Mitek reported a total revenue of $36.9 million for the first quarter of fiscal 2024, a decrease from $45.7 million a year ago.
- The GAAP operating loss for the first quarter was $6.9 million, resulting in a negative operating margin of 19%, compared to a GAAP operating income of $8.4 million and an operating margin of 18% in the previous year.
- Non-GAAP operating income for the first quarter was $5.6 million with a non-GAAP operating margin of 15%, down from $18.4 million and a margin of 40% in the same period last year.
- The company reported a non-GAAP net income of $6.3 million for the first quarter, a decrease from $14.3 million in the previous year.
- Cash flow from operations was negative $9.5 million, impacted by cash taxes paid for FY2023 and the final ID R&D earnout payment.
- Total cash and investments decreased to $123.9 million at December 31, 2023, from $134.9 million on September 30, 2023.
- Mitek expects second quarter revenue to be in the range of $46 million to $47 million.
- The company's independent auditor has not reviewed or audited the preliminary estimated financial results.
- Actual results may differ from the preliminary financial results, and the company has not completed its review of these results for the fiscal quarter ended March 31, 2024.
- None.
Insights
Reviewing the fiscal 2024 first quarter financial results of Mitek Systems reveals a significant decline in revenue and profitability from the comparable quarter a year ago. The reported total revenue dropped over 19% from $45.7 million to $36.9 million. This dip, alongside a transition from a GAAP operating income of $8.4 million to a GAAP operating loss of $6.9 million, reflects a shift to a negative operating margin of 19%, suggesting substantial pressure on the company's cost structure or potential changes in the competitive landscape.
Examining the non-GAAP metrics, which exclude certain non-recurring items, the picture does not improve much. The non-GAAP operating margin has decreased from 40% to 15% and non-GAAP net income has more than halved, from $14.3 million to $6.3 million. Such a stark contrast year-over-year raises concerns about Mitek's ability to manage expenses or maintain pricing power in its market.
Furthermore, the negative cash flow from operations, primarily driven by cash taxes and earnout payments, is another red flag. A decline in cash reserves from $134.9 million to $123.9 million in just one quarter could limit Mitek’s ability to invest in growth opportunities or withstand prolonged market downturns. Investors should monitor whether these trends are anomalous or indicative of deeper issues within the company or industry.
The preliminary second quarter revenue outlook provided by Mitek, forecasting between $46 million to $47 million, suggests a potential rebound. However, this positive outlook is tempered by the fact that these figures have not been reviewed or audited by the company's independent auditor. From a market perspective, fluctuations in estimates can introduce uncertainty and risk for investors, especially when such estimates are not backed by external verification.
Another concern arises from the management's comment regarding a large one-time mobile deposit reorder in the previous year, which indicates that part of the prior success was not due to recurring revenue streams. This underscores the importance for Mitek to diversify and stabilize its revenue sources to ensure sustainable long-term growth. If the company fails to do so, it may face more volatility and scrutiny from the market.
It's vital for stakeholders to consider both the short-term potential revenue rebound and the longer-term need for a stable and predictable business model. In the fast-evolving digital identity and fraud prevention industry, Mitek must demonstrate strategic adaptability to uphold investor confidence.
It is worth noting the company's acknowledgment that the preliminary financial results for the second quarter have not been subjected to formal review or audit. This lack of external validation can pose legal and financial risks, as any material discrepancies found later could lead to legal consequences, including litigation or regulatory scrutiny. Companies in the public domain are expected to maintain transparency and accuracy in their financial reporting and any deviation from these expectations could impact their reputation and trust among stakeholders.
Moreover, the completion of the final ID R&D earnout payment, as mentioned in the cash flow statement, indicates that Mitek has settled its acquisition-related obligations. While this may resolve certain legal contingencies, it is important for Mitek to thoroughly review its preliminary results and clarify any risks or uncertainties that could affect the financials to maintain compliance with legal and financial regulations.
Company Reiterates Guidance for Fiscal 2024
Fiscal 2024 First Quarter Financial Results
-
Total revenue was
$36.9 million $45.7 million -
GAAP operating loss was
$6.9 million 19% , compared to GAAP operating income of$8.4 million 18% a year ago. -
GAAP net loss was
$5.8 million $0.13 $4.7 million $0.10 -
Non-GAAP operating income was
$5.6 million 15% , compared to non-GAAP operating income of$18.4 million 40% last year. -
Non-GAAP net income was
$6.3 million $0.14 $14.3 million $0.31 -
Cash flow from operations was a negative
$9.5 million $7.8 million $4.6 million -
Total cash and investments was
$123.9 million $134.9 million
Preliminary Fiscal 2024 Second Quarter Revenue Results
-
Mitek expects fiscal second quarter revenue to be in the range of
$46 million $47 million
The Company’s independent auditor has not reviewed or audited these preliminary estimated financial results. The Company’s actual results may differ materially from these preliminary financial results, and may be outside the estimated ranges. This preliminary financial data has been prepared by and is the responsibility of the Company. The Company has not fully completed its review of these preliminary financial results for the fiscal quarter ended March 31, 2024.
Mitek CEO Max Carnecchia’s Comments
"As previously discussed, in the first quarter of last year we had a large one-time multi-year mobile deposit reorder that pulled forward about
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 in the range of
$180.0 million $185.0 million 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 $7 million $2.7 million 12.0% at the revised midpoint. -
Mitek expects its non-GAAP operating margin for fiscal 2024 to be between
30.0% and31.0% .
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 the fourth quarter and fiscal year ending September 30, 2023. To access the live call, dial 877-270-2148 (US and
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
Follow Mitek on LinkedIn, X 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 select preliminary revenue results for the second quarter ended March 31, 2024, the Company’s fiscal 2024 guidance, its expectation regarding timing of revenue growth, its intent to use its growth drivers in place that leverage advanced AI and machine learning to meet evolving customer needs and its intent to enhance trust and convenience in digital interactions, 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
Note Regarding Use of Non-GAAP Financial Measures
This news release contains non-
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. |
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CONSOLIDATED BALANCE SHEETS |
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(Unaudited) |
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(amounts in thousands except share data) |
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December 31, 2023 |
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September 30, 2023 |
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ASSETS |
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Current assets: |
|
|
|
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Cash and cash equivalents |
$ |
64,538 |
|
|
$ |
58,913 |
|
Short-term investments |
|
59,373 |
|
|
|
74,700 |
|
Accounts receivable, net |
|
35,267 |
|
|
|
32,132 |
|
Contract assets, current portion |
|
17,305 |
|
|
|
18,355 |
|
Prepaid expenses |
|
6,908 |
|
|
|
3,513 |
|
Other current assets |
|
2,573 |
|
|
|
2,396 |
|
Total current assets |
|
185,964 |
|
|
|
190,009 |
|
Long-term investments |
|
— |
|
|
|
1,304 |
|
Property and equipment, net |
|
2,695 |
|
|
|
2,829 |
|
Right-of-use assets |
|
3,837 |
|
|
|
4,140 |
|
Goodwill and intangible assets |
|
190,837 |
|
|
|
188,222 |
|
Deferred income tax assets |
|
13,388 |
|
|
|
11,645 |
|
Contract assets, non-current portion |
|
7,216 |
|
|
|
5,579 |
|
Other non-current assets |
|
1,453 |
|
|
|
1,647 |
|
Total assets |
|
405,390 |
|
|
|
405,375 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
|
10,169 |
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|
|
7,589 |
|
Accrued payroll and related taxes |
|
7,063 |
|
|
|
10,554 |
|
Accrued interest payable |
|
598 |
|
|
|
305 |
|
Income tax payables |
|
51 |
|
|
|
4,329 |
|
Deferred revenue, current portion |
|
18,330 |
|
|
|
17,360 |
|
Lease liabilities, current portion |
|
1,569 |
|
|
|
1,902 |
|
Acquisition-related contingent consideration |
|
— |
|
|
|
7,976 |
|
Other current liabilities |
|
1,820 |
|
|
|
1,482 |
|
Total current liabilities |
|
39,600 |
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|
|
51,497 |
|
Convertible senior notes |
|
137,486 |
|
|
|
135,516 |
|
Deferred revenue, non-current portion |
|
1,051 |
|
|
|
957 |
|
Lease liabilities, non-current portion |
|
2,792 |
|
|
|
2,867 |
|
Deferred income tax liabilities, non-current portion |
|
6,757 |
|
|
|
6,476 |
|
Other non-current liabilities |
|
3,906 |
|
|
|
2,874 |
|
Total liabilities |
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191,592 |
|
|
|
200,187 |
|
Stockholders’ equity: |
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Preferred stock, |
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— |
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— |
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Common stock, |
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47 |
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46 |
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Additional paid-in capital |
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236,447 |
|
|
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228,691 |
|
Accumulated other comprehensive loss |
|
(7,591 |
) |
|
|
(14,237 |
) |
Accumulated deficit |
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(15,105 |
) |
|
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(9,312 |
) |
Total stockholders’ equity |
|
213,798 |
|
|
|
205,188 |
|
Total liabilities and stockholders’ equity |
$ |
405,390 |
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$ |
405,375 |
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MITEK SYSTEMS, INC. |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Unaudited) |
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(amounts in thousands except per share data) |
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Three Months Ended December 31, |
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2023 |
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2022 |
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Revenue |
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Software and hardware |
$ |
15,980 |
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|
$ |
26,376 |
|
Services and other |
|
20,937 |
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|
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19,327 |
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Total revenue |
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