Core Insights - Mitek Systems reported revenue of $45.73 million for the quarter ended June 2025, reflecting a 1.7% increase year-over-year and a 3.7% surprise over the Zacks Consensus Estimate of $44.1 million [1] - The company's EPS was $0.22, down from $0.25 in the same quarter last year, with a notable EPS surprise of 22.22% compared to the consensus estimate of $0.18 [1] Revenue Breakdown - Software and hardware revenue was $19.51 million, which is a 13.9% decrease year-over-year and below the average estimate of $20.54 million from three analysts [4] - Service and other revenue reached $26.22 million, exceeding the estimated $22.95 million and representing a 17.5% increase compared to the previous year [4] - Non-GAAP gross profit for services and other was $19.43 million, surpassing the average estimate of $18.95 million [4] - Non-GAAP gross profit for software and hardware was $19.45 million, also exceeding the average estimate of $18.29 million [4] Stock Performance - Mitek Systems' shares have declined by 10.2% over the past month, contrasting with a 1.2% increase in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - Mitek Systems reported quarterly earnings of $0.22 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, but down from $0.25 per share a year ago, resulting in an earnings surprise of +22.22% [1] - The company achieved revenues of $45.73 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.70% and showing an increase from $44.98 million year-over-year [2] - Mitek Systems has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of Mitek Systems' stock price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $42.75 million, and for the current fiscal year, it is $0.84 on revenues of $176.04 million [7] Industry Context - The Computer - Optical Imaging industry, to which Mitek Systems belongs, is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Mitek Systems' performance [5]

Financial Data and Key Metrics Changes - Total revenue for Q3 was $45.7 million, up 2% year over year, driven primarily by identity products which grew 24% year over year [24][27] - Non-GAAP gross margin for the quarter was 85%, about 100 basis points less than a year ago due to a slight mix shift away from higher margin deposit products [24] - Free cash flow for the last twelve months was $55.8 million, representing a 99% conversion rate [32] Business Line Data and Key Metrics Changes - Identity revenue reached $75 million, up 13% year over year, with SaaS revenue growing 19% [12][24] - Deposits product revenue was $26.2 million, with trailing twelve month license revenue totaling $69.1 million, reflecting resilience despite overall check volume declines [26][27] - Check Fraud Defender's annual contract value reached approximately $13.1 million, up 56% year over year [16] Market Data and Key Metrics Changes - SaaS revenue now represents over 41% of trailing twelve month revenue, up from the previous quarter [19][29] - The fraud prevention consortium now encompasses approximately a quarter of all U.S. checking accounts, around 100 million accounts [8][18] Company Strategy and Development Direction - The company is focused on four strategic pillars: strengthening the foundation, scaling identity, expanding fraud solutions, and driving operational excellence [9][19] - The goal is to unify the platform that integrates identity, authentication, and fraud detection, positioning the company for scalable, durable growth [35][73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in approaching a fulcrum point for durable profitability in the identity product portfolio [6][12] - The company anticipates continued execution in 2026, focusing on unifying the platform and strengthening the foundation [38][39] Other Important Information - The company has launched efficiency initiatives, including vendor audits and renegotiation of contracts, to improve operational efficiency [20] - The company ended Q3 with over $175 million in cash and investments, maintaining a healthy net cash position [32] Q&A Session Summary Question: How is the company thinking about returning to double-digit growth in 2026? - Management indicated that 2026 will focus on unifying the platform and strengthening the foundation, with anticipated revenue growth from SaaS solutions [38] Question: What is the outlook for deposit software revenue, which is down 20% year over year? - Management noted stability in transaction volumes and successful offsetting of revenue declines with increases in average selling prices [40][41] Question: How is the pipeline looking for Check Fraud Defender? - Management reported excellent ongoing dialogues with multiple partners and optimism about converting pilot phases into contracts [44][46] Question: What are the most exciting developments for the rest of fiscal year 2025 and heading into 2026? - Management expressed enthusiasm about executing on outlined goals, stability in mobile deposit business, and growth potential in fraud and identity solutions [49][50] Question: Can you provide an update on the larger IDR and D deals? - Management stated that some larger deals are still in progress, with ongoing focus on closing those deals [57] Question: How does the company plan to allocate cash and cash flow going forward? - Management emphasized a balanced approach between investing in the business and returning capital to shareholders, with a focus on organic growth [81][84] Question: Is there potential for further margin improvements from automation? - Management confirmed a 200 basis points year-over-year improvement in services gross margin and indicated room for further automation-driven improvements [86]

Financial Performance - Q3 FY25 - Total revenue reached $46 million, a 2% increase compared to Q3 FY24[31] - Identity revenue grew significantly by 24% to $20 million[31] - Deposits revenue experienced a decrease of 10%, totaling $26 million[31] - SaaS revenue showed strong growth, increasing by 23% to $19 million[31] - Adjusted EBITDA increased by 8% to $13 million, with an adjusted EBITDA margin of 28.4%, a 160 bps increase[31] - Free Cash Flow surged by 69% to $21 million[31] Key Metrics - LTM SaaS Revenue increased by 21% year-over-year, reaching $74 million, representing 41% of total LTM revenue, up 470 bps[33] - LTM Adjusted EBITDA increased significantly by 53% to $57 million[33] - LTM Free Cash Flow showed substantial growth, increasing by 345% to $56 million[33] - Free Cash Flow Conversion reached 99%, a significant increase of 6490 bps[33] Financial Outlook for FY25 - The company projects total revenue between $174 million and $177 million for FY25[56] - The company anticipates an adjusted EBITDA margin between 28% and 29% for FY25[60]

[Executive Summary & Business Overview](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Overview) [Company Overview](index=1&type=section&id=Company%20Overview) Mitek Systems, Inc. is a global leader in digital identity verification and fraud prevention, offering solutions that safeguard critical digital interactions from account opening to authentication and deposit - Mitek Systems, Inc. is a **global leader** in digital identity verification and fraud prevention[1](index=1&type=chunk) - The company's technology safeguards critical digital interactions, helping businesses verify identities, prevent fraud, and deliver secure digital experiences[7](index=7&type=chunk) - Over **7,000 organizations** rely on Mitek to protect customer connections and manage emerging risks[7](index=7&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) Mitek's CEO, Ed West, reported a solid third quarter with **accelerating SaaS revenue growth of 23% year-over-year**, indicating strong demand for identity and fraud solutions - **SaaS revenue growth accelerated to 23% year-over-year**, demonstrating growing demand for identity and fraud solutions[2](index=2&type=chunk) - **Core Deposits software products provide stability**, supported by resilient transaction volumes and strong free cash flow generation[2](index=2&type=chunk) - The company is executing a **strategic shift to SaaS**, streamlining operations, and aligning product investments and go-to-market strategy around a unified, integrated platform for durable, profitable growth[2](index=2&type=chunk) [Fiscal 2025 Third Quarter Financial Highlights](index=1&type=section&id=Fiscal%202025%20Third%20Quarter%20Financial%20Highlights) [GAAP Financial Highlights](index=1&type=section&id=GAAP%20Financial%20Highlights) Mitek reported a **2% year-over-year increase** in total revenue and a significant improvement in GAAP net income for Q3 Fiscal 2025, driven by strong SaaS revenue growth Fiscal 2025 Third Quarter GAAP Financial Highlights | Metric | Q3 FY2025 (Millions) | Q3 FY2024 (Millions) | YoY Change | Notes | | :--------------------------- | :------------------- | :------------------- | :--------- | :---- | | Total Revenue | $45.7 | $45.0 | +2% | | | SaaS Revenue | $19.3 | $15.7 | +23% | | | Gross Profit | $35.5 | $35.2 | +1% | | | GAAP Gross Profit Margin | 77.7% | 78.3% | -0.6 pp | | | GAAP Net Income | $2.4 | $0.2 | +$2.2 | | | GAAP Net Income per Diluted Share | $0.05 | $0.00 | +$0.05 | | | Total Cash and Investments (as of June 30, 2025) | $175.4 | $141.8 (Sept 30, 2024) | +$33.6 | | [Non-GAAP Financial Highlights](index=1&type=section&id=Non-GAAP%20Financial%20Highlights) In Q3 Fiscal 2025, Mitek's non-GAAP gross profit increased slightly, while the margin saw a minor decrease Fiscal 2025 Third Quarter Non-GAAP Financial Highlights | Metric | Q3 FY2025 (Millions) | Q3 FY2024 (Millions) | YoY Change | Notes | | :--------------------------- | :------------------- | :------------------- | :--------- | :---- | | Non-GAAP Gross Profit | $38.9 | $38.7 | +1% | | | Non-GAAP Gross Profit Margin | 85.0% | 86.0% | -1.0 pp | | | Adjusted EBITDA | $13.1 | $12.1 | +$1.0 | | | Adjusted EBITDA Margin | 28.6% | 26.9% | +1.7 pp | | | Non-GAAP Net Income | $10.2 | $12.0 | -$1.8 | | | Non-GAAP Net Income per Diluted Share | $0.22 | $0.25 | -$0.03 | | | Free Cash Flow (9 months ended June 30, 2025) | $35.0 | $9.4 | +$25.6 | | | Free Cash Flow (12 months ended June 30, 2025) | $55.8 | $12.5 | +$43.3 | | [Fiscal 2025 Full Year Guidance](index=1&type=section&id=Fiscal%202025%20Full%20Year%20Guidance) Mitek has updated its full-year fiscal 2025 guidance, tightening the revenue range and raising the midpoint of its adjusted EBITDA margin guidance, reflecting improved outlook Fiscal 2025 Full Year Guidance Update | Metric | Updated Guidance | Prior Guidance | Notes | | :-------------------- | :--------------- | :------------- | :---- | | Total Revenue | $174M - $177M | $170M - $180M | Tightened range, implies Q4 revenue of $39M - $42M | | Adjusted EBITDA Margin | 28% - 29% | 26% - 29% | Midpoint raised | [Non-GAAP Financial Measures Explanation](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) [Non-GAAP Measures Definition and Rationale](index=3&type=section&id=Non-GAAP%20Measures%20Definition%20and%20Rationale) Mitek uses various non-GAAP financial measures, such as non-GAAP gross profit, net income, and adjusted EBITDA, to supplement GAAP statements - Non-GAAP measures exclude items such as amortization of acquisition-related intangibles, litigation costs, executive transition costs, stock-based compensation, non-recurring audit fees, enterprise risk costs, and restructuring costs[12](index=12&type=chunk) - Management believes these non-GAAP measures provide a **useful measure of operating results**, a **meaningful comparison with historical results and peers**, and **insight into ongoing operating performance**[12](index=12&type=chunk) - The company encourages investors to review related GAAP financial measures and reconciliations, not relying on any single financial measure[15](index=15&type=chunk) [Free Cash Flow Definition](index=3&type=section&id=Free%20Cash%20Flow%20Definition) Free cash flow is defined as net cash provided by operating activities less cash used for purchases of property and equipment - Free cash flow is defined as net cash provided by operating activities, less cash used for purchases of property and equipment[14](index=14&type=chunk) - It is considered a **useful liquidity measure**, reflecting the **ability to generate cash in excess of capital investments** for balance sheet strength and business investment[14](index=14&type=chunk) [Consolidated Financial Statements (GAAP)](index=4&type=section&id=Consolidated%20Financial%20Statements%20(GAAP)) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, Mitek reported a **2% increase in total revenue**, driven by growth in services Consolidated Statements of Operations (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Software and hardware revenue | $19,507 | $22,662 | -14.0% | | Services and other revenue | $26,222 | $22,314 | +17.5% | | **Total revenue** | **$45,729** | **$44,976** | **+1.7%** | | Total operating costs and expenses | $41,920 | $44,242 | -5.2% | | **Operating income (loss)** | **$3,809** | **$734** | **+419.0%** | | Income (loss) before income taxes | $3,145 | $(159) | N/A | | **Net income (loss)** | **$2,396** | **$216** | **+1009.3%** | | Net income (loss) per share—diluted | $0.05 | $0.00 | N/A | Consolidated Statements of Operations (Nine Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :---------- | :---------- | :--------- | | Software and hardware revenue | $58,192 | $63,531 | -8.4% | | Services and other revenue | $76,720 | $65,330 | +17.4% | | **Total revenue** | **$134,912** | **$128,861** | **+4.7%** | | Total operating costs and expenses | $122,812 | $134,345 | -8.6% | | **Operating income (loss)** | **$12,100** | **$(5,484)** | N/A | | Income (loss) before income taxes | $8,304 | $(8,111)$ | N/A | | **Net income (loss)** | **$6,936** | **$(5,295)** | N/A | | Net income (loss) per share—diluted | $0.15 | $(0.11)$ | N/A | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Mitek's total assets increased, primarily driven by a significant rise in cash and cash equivalents Consolidated Balance Sheets (as of June 30, 2025 vs. September 30, 2024) | Metric (in thousands) | June 30, 2025 | Sept 30, 2024 | Change | | :-------------------- | :------------ | :------------ | :----- | | Cash and cash equivalents | $127,124 | $93,456 | +$33,668 | | Total current assets | $225,861 | $185,051 | +$40,810 | | Total assets | $446,715 | $413,753 | +$32,962 | | Convertible senior notes (current portion) | $150,004 | $0 | +$150,004 | | Total current liabilities | $198,804 | $42,147 | +$156,657 | | Total liabilities | $209,123 | $198,952 | +$10,171 | | Total stockholders' equity | $237,592 | $214,801 | +$22,791 | [Disaggregation of Revenue by Product and Type](index=6&type=section&id=Disaggregation%20of%20Revenue%20by%20Product%20and%20Type) Mitek's revenue is disaggregated into Deposits and Identity segments, further broken down by software, hardware, and services (SaaS, maintenance, professional services) [Deposits Revenue](index=6&type=section&id=Deposits%20Revenue) Deposits revenue experienced a decline in software but saw growth in services, particularly SaaS, for both the three and nine months ended June 30, 2025 Deposits Revenue (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Software | $17,529 | $21,793 | -19.6% | | Deposits services SaaS | $2,627 | $1,700 | +54.5% | | Total deposits services | $8,693 | $7,493 | +16.0% | | **Total deposits revenue** | **$26,222** | **$29,286** | **-10.5%** | Deposits Revenue (Nine Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Software | $53,326 | $58,335 | -8.6% | | Deposits services SaaS | $7,384 | $4,607 | +60.3% | | Total deposits services | $25,870 | $21,539 | +20.1% | | **Total deposits revenue** | **$79,196** | **$79,874** | **-0.9%** | [Identity Revenue](index=6&type=section&id=Identity%20Revenue) The Identity segment demonstrated strong growth, particularly in SaaS services, for both the three and nine months ended June 30, 2025, offsetting a decline in hardware revenue Identity Revenue (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Identity software | $1,978 | $756 | +161.6% | | Identity hardware | $0 | $113 | -100.0% | | Identity services SaaS | $16,632 | $13,964 | +19.1% | | **Total identity revenue** | **$19,507** | **$15,690** | **+24.9%** | Identity Revenue (Nine Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Identity software | $4,866 | $5,063 | -3.9% | | Identity hardware | $0 | $133 | -100.0% | | Identity services SaaS | $48,299 | $40,994 | +17.8% | | **Total identity revenue** | **$55,716** | **$48,987** | **+13.7%** | [Consolidated Revenue by Type](index=6&type=section&id=Consolidated%20Revenue%20by%20Type) Consolidated SaaS revenue showed robust growth, contributing significantly to the overall services revenue increase, while total software and hardware revenue declined Consolidated Revenue by Type (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Total software and hardware | $19,507 | $22,662 | -14.0% | | Total services SaaS | $19,259 | $15,664 | +22.9% | | Total services | $26,222 | $22,314 | +17.5% | | **Total revenue** | **$45,729** | **$44,976** | **+1.7%** | Consolidated Revenue by Type (Nine Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :---------- | :---------- | :--------- | | Total software and hardware | $58,192 | $63,531 | -8.4% | | Total services SaaS | $55,683 | $45,601 | +22.1% | | Total services | $76,720 | $65,330 | +17.4% | | **Total revenue** | **$134,912** | **$128,861** | **+4.7%** | [Non-GAAP Reconciliations](index=7&type=section&id=Non-GAAP%20Reconciliations) [Non-GAAP Gross Profit Reconciliation](index=7&type=section&id=Non-GAAP%20Gross%20Profit%20Reconciliation) Mitek's non-GAAP gross profit for software and hardware remained high, while services and other non-GAAP gross profit and margin significantly improved, contributing to a stable consolidated non-GAAP gross profit Non-GAAP Gross Profit (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Non-GAAP gross profit for software and hardware | $19,454 | $22,608 | -13.9% | | Non-GAAP gross margin for software and hardware | 99.7% | 99.8% | -0.1 pp | | Non-GAAP gross profit for services and other | $19,434 | $16,080 | +20.9% | | Non-GAAP gross margin for services and other | 74.1% | 72.1% | +2.0 pp | | **Non-GAAP gross profit (Consolidated)** | **$38,888** | **$38,688** | **+0.5%** | | **Non-GAAP gross margin (Consolidated)** | **85.0%** | **86.0%** | **-1.0 pp** | Non-GAAP Gross Profit (Nine Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :---------- | :---------- | :--------- | | Non-GAAP gross profit for software and hardware | $58,056 | $63,408 | -8.4% | | Non-GAAP gross margin for software and hardware | 99.8% | 99.8% | 0.0 pp | | Non-GAAP gross profit for services and other | $57,863 | $47,669 | +21.4% | | Non-GAAP gross margin for services and other | 75.4% | 73.0% | +2.4 pp | | **Non-GAAP gross profit (Consolidated)** | **$115,919** | **$111,077** | **+4.4%** | | **Non-GAAP gross margin (Consolidated)** | **85.9%** | **86.2%** | **-0.3 pp** | [Non-GAAP Operating Expense Reconciliation](index=8&type=section&id=Non-GAAP%20Operating%20Expense%20Reconciliation) Mitek's non-GAAP operating expenses decreased across selling and marketing, research and development, and general and administrative categories for the nine months ended June 30, 2025, reflecting efforts to streamline operations and reduce non-recurring costs Non-GAAP Operating Expense (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Non-GAAP selling and marketing | $10,177 | $9,536 | +6.7% | | Non-GAAP research and development | $7,673 | $8,638 | -11.2% | | Non-GAAP general and administrative | $8,403 | $8,939 | -6.0% | | **Total Non-GAAP operating expense** | **$26,253** | **$27,113** | **-3.1%** | Non-GAAP Operating Expense (Nine Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :---------- | :---------- | :--------- | | Non-GAAP selling and marketing | $28,403 | $28,652 | -0.9% | | Non-GAAP research and development | $23,300 | $24,818 | -6.1% | | Non-GAAP general and administrative | $24,308 | $27,663 | -12.1% | | **Total Non-GAAP operating expense** | **$76,011** | **$81,133** | **-6.4%** | [GAAP Net Income to Adjusted EBITDA Reconciliation](index=9&type=section&id=GAAP%20Net%20Income%20to%20Adjusted%20EBITDA%20Reconciliation) Mitek's Adjusted EBITDA and Adjusted EBITDA margin significantly improved for both the three and nine months ended June 30, 2025, reflecting stronger operational performance after non-GAAP adjustments Adjusted EBITDA Reconciliation (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | GAAP net income (loss) | $2,396 | $216 | +1009.3% | | GAAP operating income (loss) | $3,809 | $734 | +419.0% | | **Adjusted EBITDA** | **$13,067** | **$12,114** | **+7.9%** | | **Adjusted EBITDA margin** | **28.6%** | **26.9%** | **+1.7 pp** | Adjusted EBITDA Reconciliation (Nine Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :---------- | :---------- | :--------- | | GAAP net income (loss) | $6,936 | $(5,295)$ | N/A | | GAAP operating income (loss) | $12,100 | $(5,484)$ | N/A | | **Adjusted EBITDA** | **$41,079** | **$31,324** | **+31.1%** | | **Adjusted EBITDA margin** | **30.4%** | **24.3%** | **+6.1 pp** | [Non-GAAP Net Income Reconciliation](index=10&type=section&id=Non-GAAP%20Net%20Income%20Reconciliation) Mitek's non-GAAP net income for the three months ended June 30, 2025, decreased slightly year-over-year, while for the nine months, it showed a healthy increase, reflecting the impact of various non-GAAP adjustments Non-GAAP Net Income (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Net income (loss) | $2,396 | $216 | +1009.3% | | **Non-GAAP net income** | **$10,178** | **$11,997** | **-15.2%** | | Non-GAAP net income per share—diluted | $0.22 | $0.25 | -12.0% | Non-GAAP Net Income (Nine Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :---------- | :---------- | :--------- | | Net income (loss) | $6,936 | $(5,295)$ | N/A | | **Non-GAAP net income** | **$33,556** | **$29,855** | **+12.4%** | | Non-GAAP net income per share—diluted | $0.72 | $0.62 | +16.1% | [Non-GAAP Free Cash Flow Reconciliation](index=11&type=section&id=Non-GAAP%20Free%20Cash%20Flow%20Reconciliation) Mitek demonstrated strong free cash flow generation, with a significant increase for the twelve months ended June 30, 2025, compared to the prior year, indicating improved liquidity Non-GAAP Free Cash Flow (Twelve Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | YoY Change | | :-------------------- | :-------- | :-------- | :--------- | | Net cash provided by (used in) operating activities | $56,981 | $14,059 | +305.3% | | Purchases of property and equipment, net | $(1,179)$ | $(1,533)$ | -23.1% | | **Free Cash Flow** | **$55,802** | **$12,526** | **+345.5%** | [Stock-Based Compensation Expense](index=11&type=section&id=Stock-Based%20Compensation%20Expense) Total stock-based compensation expense increased for both the three and nine months ended June 30, 2025, with general and administrative expenses accounting for the largest portion Stock-Based Compensation Expense (Three Months Ended June 30) | Category (in thousands) | 2025 | 2024 | YoY Change | | :---------------------- | :------ | :------ | :--------- | | Cost of revenue | $181 | $194 | -6.8% | | Selling and marketing | $950 | $818 | +16.1% | | Research and development | $1,287 | $1,344 | -4.2% | | General and administrative | $2,004 | $1,229 | +63.1% | | **Total stock-based compensation expense** | **$4,422** | **$3,585** | **+23.3%** | Stock-Based Compensation Expense (Nine Months Ended June 30) | Category (in thousands) | 2025 | 2024 | YoY Change | | :---------------------- | :------- | :------- | :--------- | | Cost of revenue | $504 | $447 | +12.8% | | Selling and marketing | $2,959 | $2,579 | +14.7% | | Research and development | $3,749 | $3,751 | -0.1% | | General and administrative | $6,027 | $4,124 | +46.1% | | **Total stock-based compensation expense** | **$13,239** | **$10,901** | **+21.4%** | [Additional Information](index=2&type=section&id=Additional%20Information) [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) Mitek management hosted a conference call and live webcast on August 7, 2025, to discuss the fiscal 2025 third-quarter financial results, with replay and archived webcast options available - A conference call and live webcast were held on **August 7, 2025**, at **2 p.m. PT (5 p.m. ET)** to discuss financial results[6](index=6&type=chunk) - Replay and archived webcast options are available for investors[6](index=6&type=chunk) [Notice Regarding Forward-Looking Statements](index=2&type=section&id=Notice%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements, including fiscal 2025 guidance, which are subject to various risks and uncertainties such as global economic conditions, market acceptance of products, ability to innovate, and litigation outcomes - Statements regarding **fiscal 2025 guidance** and future expectations are **forward-looking statements**[8](index=8&type=chunk) - These statements are **subject to risks** including global economic conditions, product demand, innovation, market growth, revenue variations, profitability, growth initiatives, and litigation[8](index=8&type=chunk) - Investors are cautioned **not to place undue reliance** on **forward-looking statements**, and the company **disclaims any obligation to update them**, except as required by law[9](index=9&type=chunk) [Investor Contacts](index=2&type=section&id=Investor%20Contacts) Investor relations inquiries can be directed to Ryan Flanagan of ICR Mitek or Michael Holder, VP of Finance and Investor Relations at Mitek Systems - Investor contacts are Ryan Flanagan (ICR Mitek) and Michael Holder (Mitek Systems VP, Finance and Investor Relations)[10](index=10&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Mitek Systems, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter and nine months ended June 30, 2025 [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) This section presents Mitek Systems, Inc.'s unaudited condensed consolidated financial statements for the quarter and nine months ended June 30, 2025, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes on accounting policies, revenue recognition, investments, debt, and other financial disclosures [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and September 30, 2024 Condensed Consolidated Balance Sheets (Amounts in thousands) | Metric | June 30, 2025 (Unaudited) | September 30, 2024 | | :-------------------------------- | :------------------------ | :------------------- | | Cash and cash equivalents | $127,124 | $93,456 | | Total current assets | $225,861 | $185,051 | | Total assets | $446,715 | $413,753 | | Total current liabilities | $198,804 | $42,147 | | Convertible senior notes (current) | $150,004 | — | | Total liabilities | $209,123 | $198,952 | | Total stockholders' equity | $237,592 | $214,801 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) This section outlines the company's financial performance, including revenue, operating income, net income, and comprehensive income for the three and nine months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (Amounts in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total revenue | $45,729 | $44,976 | $134,912 | $128,861 | | Operating income (loss) | $3,809 | $734 | $12,100 | $(5,484) | | Net income (loss) | $2,396 | $216 | $6,936 | $(5,295) | | Net income (loss) per share—basic | $0.05 | $0.00 | $0.15 | $(0.11) | | Net income (loss) per share—diluted | $0.05 | $0.00 | $0.15 | $(0.11) | | Comprehensive income (loss) | $12,688 | $(59) | $11,578 | $(932) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section details changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit, for the periods presented Stockholders' Equity Changes (Amounts in thousands) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :------------ | :----------------- | | Common Stock (shares) | 45,622 | 44,999 | | Additional Paid-In Capital | $261,796 | $247,326 | | Accumulated Other Comprehensive Income (Loss) | $2,340 | $(2,302) | | Accumulated Deficit | $(26,590) | $(30,268) | | Total Stockholders' Equity | $237,592 | $214,801 | - Stock-based compensation expense for the nine months ended June 30, 2025, was **$13.2 million**, up from **$10.9 million** in the prior year period[19](index=19&type=chunk) - The Company repurchased and retired **$3.3 million** (**369,978 shares**) of common stock during the nine months ended June 30, 2025, compared to **$10.0 million** (**819,623 shares**) in the same period of 2024[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (Amounts in thousands) | Cash Flow Activity | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by (used in) operating activities | $35,879 | $10,586 | | Net cash provided by (used in) investing activities | $(188) | $27,832 | | Net cash provided by (used in) financing activities | $(3,095) | $(12,871) | | Net increase in cash and cash equivalents | $33,668 | $25,438 | | Cash and cash equivalents at end of period | $127,124 | $84,351 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, revenue, investments, and debt [1. Nature of Operations and Summary of Significant Accounting Policies](index=8&type=section&id=1.%20NATURE%20OF%20OPERATIONS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section describes Mitek's business, its core products, and the significant accounting policies applied in preparing the financial statements - Mitek Systems, Inc. specializes in mobile image capture and provides solutions for fraud prevention, digital identity verification, and cybersecurity, leveraging AI, computer vision, and biometrics[24](index=24&type=chunk) - The company's Mobile Check Deposit product processes approximately **1.2 billion transactions annually**, serving over **7,900 financial services organizations**, fintech brands, telecommunications companies, and marketplace brands globally[25](index=25&type=chunk)[26](index=26&type=chunk) Potentially Dilutive Common Shares Excluded from EPS Calculation (Amounts in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Stock options | 352 | 298 | 361 | 523 | | RSUs | 2,458 | 1,731 | 2,077 | 2,315 | | Convertible senior notes | 7,448 | 7,448 | 7,448 | 7,448 | | Total potentially dilutive common shares outstanding | 20,135 | 18,662 | 19,257 | 19,034 | - One customer accounted for **13% of total revenue** (**$6.1 million**) for the three months ended June 30, 2025, and **17%** (**$22.6 million**) for the nine months ended June 30, 2025[36](index=36&type=chunk) - Approximately **79%** of the Company's total long-term assets as of June 30, 2025, are associated with international subsidiaries[37](index=37&type=chunk) - The Company is evaluating the impact of recently issued accounting pronouncements, including ASU 2024-03 (Expense Disaggregation), ASU 2023-09 (Income Tax Disclosures), and ASU 2023-07 (Segment Reporting), with ASU 2023-07 expected to be adopted in Q4 fiscal 2025 without material financial statement impact[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) [2. Revenue Recognition](index=10&type=section&id=2.%20REVENUE%20RECOGNITION) This section details the company's revenue streams, recognition policies for software, hardware, and services, and disaggregated revenue by product category and geography - Revenue is generated from software and hardware sales (on-premise licenses, phased-out appliance products) and services and other (SaaS products, maintenance, consulting); SaaS revenue is recognized based on usage or ratably over the contract term[46](index=46&type=chunk)[47](index=47&type=chunk) Revenue Disaggregated by Major Product Category (Amounts in thousands) | Product Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Deposits software and hardware | $17,529 | $21,793 | $53,326 | $58,335 | | Deposits services and other | $8,693 | $7,493 | $25,870 | $21,539 | | **Total Deposits revenue** | **$26,222** | **$29,286** | **$79,196** | **$79,874** | | Identity verification software and hardware | $1,978 | $869 | $4,866 | $5,196 | | Identity verification services and other | $17,529 | $14,821 | $50,850 | $43,791 | | **Total Identity verification revenue** | **$19,507** | **$15,690** | **$55,716** | **$48,987** | | **Total revenue** | **$45,729** | **$44,976** | **$134,912** | **$128,861** | Total Revenue by Geographic Location (Amounts in thousands) | Geographic Location | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | United States | $35,354 | $35,902 | $103,430 | $102,193 | | United Kingdom | $5,669 | * | $15,442 | $12,587 | | All other countries | $4,706 | $9,074 | $16,040 | $14,081 | | **Total revenue** | **$45,729** | **$44,976** | **$134,912** | **$128,861** | *Revenues from the United Kingdom were not greater than 10% of the Company's total revenue for this period. Contract Balances (Amounts in thousands) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :------------ | :----------------- | | Accounts receivable, net | $40,207 | $31,682 | | Contract assets, current | $12,180 | $15,818 | | Contract liabilities (deferred revenue), current | $25,925 | $21,231 | Remaining Performance Obligation (Amounts in thousands) | Metric | June 30, 2025 | | :---------- | :------------ | | Current | $60,983 | | Non-current | $19,656 | | **Total** | **$80,639** | [3. Investments](index=13&type=section&id=3.%20INVESTMENTS) This section provides details on the company's investment portfolio, primarily available-for-sale securities, and their fair market values and maturity profiles Available-for-Sale Securities (Amounts in thousands) | Security Type | June 30, 2025 Fair Market Value | September 30, 2024 Fair Market Value | | :-------------------------------- | :-------------------------------- | :----------------------------------- | | U.S. Government and agency securities, short-term | $1,488 | $3,836 (U.S. Treasury) | | Commercial paper, short-term | $17,274 | $15,984 | | Corporate debt securities, short-term | $21,185 | $17,064 | | U.S. Government and agency securities, long-term | $499 | — | | Corporate debt securities, long-term | $7,805 | $11,410 | | **Total** | **$48,251** | **$48,294** | - As of June 30, 2025, **$39.9 million** of investments mature within one year, and **$8.3 million** mature beyond one year to five years[61](index=61&type=chunk) [4. Fair Value Measurement](index=13&type=section&id=4.%20FAIR%20VALUE%20MEASUREMENT) This section explains the company's methodology for fair value measurements, utilizing a three-tier hierarchy based on observable market inputs - The Company uses a three-tier fair value hierarchy (Level 1, 2, 3) for valuation; all investments are valued using **Level 2 inputs**, based on observable market-based inputs other than quoted prices in active markets[62](index=62&type=chunk)[63](index=63&type=chunk) [5. Goodwill and Intangible Assets](index=14&type=section&id=5.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) This section details the company's goodwill balance, intangible assets, and their amortization schedules, including the impact of foreign currency effects Goodwill Balance (Amounts in thousands) | Metric | Amount | | :-------------------------- | :----- | | Balance at September 30, 2024 | $131,574 | | Foreign currency effect on goodwill | $3,109 | | **Balance at June 30, 2025** | **$134,683** | Intangible Assets, Net (Amounts in thousands) | Intangible Asset | June 30, 2025 Net | September 30, 2024 Net | | :----------------------- | :---------------- | :--------------------- | | Completed technologies | $39,756 | $48,331 | | Customer relationships | $1,795 | $2,517 | | Trade names | $2,257 | $3,192 | | Covenants not to compete | — | $97 | | **Total intangible assets** | **$43,808** | **$54,137** | - Amortization expense for acquired intangible assets was **$10.8 million** for the nine months ended June 30, 2025, down from **$11.4 million** in the prior year period[66](index=66&type=chunk) Estimated Future Amortization Expense (Amounts in thousands) | Fiscal Period | Estimated Future Amortization Expense | | :------------ | :------------------------------------ | | Remainder of 2025 | $3,368 | | 2026 | $13,448 | | 2027 | $12,206 | | 2028 | $10,409 | | 2029 | $4,377 | | **Total** | **$43,808** | [6. Stockholders' Equity](index=15&type=section&id=6.%20STOCKHOLDERS%27%20EQUITY) This section provides a breakdown of stock-based compensation, share repurchase programs, and outstanding equity awards, including RSUs and Performance RSUs Stock-Based Compensation Expense (Amounts in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Cost of revenue | $181 | $194 | $504 | $447 | | Selling and marketing | $950 | $818 | $2,959 | $2,579 | | Research and development | $1,287 | $1,344 | $3,749 | $3,751 | | General and administrative | $2,004 | $1,229 | $6,027 | $4,124 | | **Total stock-based compensation expense** | **$4,422** | **$3,585** | **$13,239** | **$10,901** | - As of June 30, 2025, the Company had **$37.2 million** of unrecognized compensation expense, expected to be recognized over a weighted-average period of approximately **2.4 years**[69](index=69&type=chunk) - The 2020 Incentive Plan (A&R 2020 Plan) has **3,298,745 shares** reserved for future grants as of June 30, 2025[70](index=70&type=chunk) - The Employee Stock Purchase Plan (ESPP) has **87,204 shares** reserved for future purchases as of June 30, 2025, with **$0.4 million** in stock-based compensation expense recognized for the nine months ended June 30, 2025[73](index=73&type=chunk)[74](index=74&type=chunk) - As of June 30, 2025, **3,103,440 Restricted Stock Units (RSUs)** were outstanding, with **$22.1 million** of unrecognized compensation expense[80](index=80&type=chunk) - As of June 30, 2025, **2,111,727 Performance Restricted Stock Units (Performance RSUs)** were outstanding, with **$15.1 million** of unrecognized compensation expense[81](index=81&type=chunk)[82](index=82&type=chunk) - The Board authorized a share repurchase program for up to **$50.0 million** of common stock, effective May 16, 2024, and expiring May 16, 2026; the Company repurchased **$3.3 million** (**369,978 shares**) during the nine months ended June 30, 2025[86](index=86&type=chunk)[87](index=87&type=chunk) [7. Income Taxes](index=18&type=section&id=7.%20INCOME%20TAXES) This section presents the company's income tax benefit or provision and effective tax rates, explaining key factors influencing tax rate differences and future tax law changes Income Tax Benefit (Provision) and Effective Tax Rate | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Income tax benefit (provision) | $(749) | $375 | $(1,368) | $2,816 | | Effective tax rate | 24% | 236% | 16% | 35% | - The effective tax rate differences from the U.S. federal statutory rate are primarily due to worldwide income mix, non-deductible executive compensation, stock-based compensation impact, and R&D credits; for the nine months ended June 30, 2025, tax expense was also impacted by the release of a valuation allowance related to a foreign jurisdiction[90](index=90&type=chunk) - The recently signed 'One, Big, Beautiful Bill Act' will introduce tax law changes related to deductions (depreciation, R&D, interest expense) in Q4 fiscal 2025, potentially impacting the allocation between current and deferred tax expense[91](index=91&type=chunk) [8. Debt](index=20&type=section&id=8.%20DEBT) This section details the company's convertible senior notes, including carrying values and maturity, and outlines the new Amended Credit Agreement for future financing Convertible Senior Notes (2026 Notes) Carrying Values (Amounts in thousands) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :------------ | :----------------- | | Principal amount | $155,250 | $155,250 | | Less: unamortized discount and issuance costs, net of amortization | $(5,246) | $(11,649) | | **Carrying amount** | **$150,004** | **$143,601** | - The 2026 Notes, with a principal amount of **$155.3 million** and a **0.75% interest rate**, mature on February 1, 2026; the Company was in compliance with covenants as of June 30, 2025[92](index=92&type=chunk)[93](index=93&type=chunk) - The Company has the option to settle conversions of the 2026 Notes in cash, common stock, or a combination, as sufficient authorized shares are available[96](index=96&type=chunk) - A new Amended Credit Agreement was established on May 7, 2025, providing a delayed draw term loan of up to **$75.0 million** (for 2026 Notes repayment) and a revolving line of credit up to **$25.0 million**, both maturing on May 1, 2030[107](index=107&type=chunk)[108](index=108&type=chunk) - As of June 30, 2025, the Company's net leverage ratio was **1.20 to 1.00**, in compliance with the Amended Credit Agreement's covenant of no more than **2.50 to 1.00**[113](index=113&type=chunk) - The Company has **$2.7 million** outstanding under non-interest-bearing loan agreements with Spanish government agencies, with repayment periods of five to twelve years[114](index=114&type=chunk) [9. Commitments and Contingencies](index=22&type=section&id=9.%20COMMITMENTS%20AND%20CONTINGENCIES) This section addresses the company's potential liabilities from indemnification demands, ongoing legal disputes, and the expected impact on financial condition - The Company faces indemnification demands from customers regarding third-party patent infringement allegations, particularly from non-practicing entities (NPEs); Mitek does not believe it is obligated to indemnify customers in these cases but actively monitors the situation[116](index=116&type=chunk) - In a lawsuit filed by Mitek against UrbanFT, Inc. for delinquent payments, Mitek secured a judgment of **$2.3 million** (including compensatory damages, costs, and attorneys' fees) in June 2022; Mitek also filed a Fraud Conveyance Action against UrbanFT's owner and related entities in August 2023 to collect debts[121](index=121&type=chunk)[122](index=122&type=chunk) - The Company believes the disposition of all legal matters, in aggregate, will not materially affect its financial condition or results of operations[126](index=126&type=chunk) [10. Leases](index=24&type=section&id=10.%20LEASES) This section outlines the company's operating lease liabilities, right-of-use assets, and associated costs, along with the maturity schedule of lease payments - As of June 30, 2025, the Company had operating right-of-use (ROU) assets of **$2.3 million** and total operating lease liabilities of **$2.7 million**, with a weighted-average remaining lease term of **4.5 years**[128](index=128&type=chunk) - Operating lease costs recognized were **$0.2 million** for the three months and **$0.6 million** for the nine months ended June 30, 2025[129](index=129&type=chunk) Maturities of Operating Lease Liabilities (Amounts in thousands) | Fiscal Period | Operating leases | | :------------ | :--------------- | | 2025 | $215 | | 2026 | $844 | | 2027 | $790 | | 2028 | $479 | | 2029 | $314 | | 2030 and thereafter | $610 | | **Total lease payments** | **$3,252** | | Less: amount representing interest | $(529) | | **Present value of future lease payments** | **$2,723** | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on Mitek's financial condition and results of operations for the three and nine months ended June 30, 2025, highlighting key financial performance, market opportunities, challenges, and liquidity. It also includes forward-looking statements and a discussion of critical accounting estimates [Overview](index=26&type=section&id=Overview) This section introduces Mitek Systems, Inc. as a global provider of mobile image capture, fraud prevention, and digital identity verification solutions - Mitek Systems, Inc. is a global provider of mobile image capture, fraud prevention, digital identity verification, and cybersecurity solutions, utilizing AI, computer vision, and biometrics[134](index=134&type=chunk) - The company's Mobile Check Deposit product facilitates approximately **1.2 billion transactions annually**, serving over **7,900 financial services organizations**, fintech brands, telecommunications companies, and marketplace brands[135](index=135&type=chunk)[136](index=136&type=chunk) [Third Quarter Fiscal 2025 Highlights](index=26&type=section&id=Third%20Quarter%20Fiscal%202025%20Highlights) This section summarizes key financial and operational achievements for the third quarter of fiscal year 2025, including revenue growth, net income, and patent additions - Revenue for Q3 2025 was **$45.7 million**, a **2% increase** compared to **$45.0 million** in Q3 2024[137](index=137&type=chunk) - Net income for Q3 2025 was **$2.4 million** (**$0.05 per diluted share**), up from **$0.2 million** (**$0.00 per diluted share**) in Q3 2024[137](index=137&type=chunk) - Cash provided by operating activities for the nine months ended June 30, 2025, was **$35.9 million**, significantly up from **$10.6 million** in the prior year period[137](index=137&type=chunk) - The Company added new patents, bringing the total to **107 issued patents** as of June 30, 2025, with **21 patent applications** outstanding[137](index=137&type=chunk) [Market Opportunities, Challenges & Risks](index=27&type=section&id=Market%20Opportunities%2C%20Challenges%20%26%20Risks) This section identifies market opportunities in digital transformation and fraud prevention, alongside challenges such as competition, transaction declines, and lengthy sales cycles - Mitek sees market opportunities in digital transformation for financial institutions and fintech, driven by demand for superior digital customer experience, regulatory compliance, and fraud prevention against increasing cyber-attacks[138](index=138&type=chunk) - Challenges include potential adverse effects on pricing or demand from competition, decline in digital transactions, trade disputes, and product obsolescence; the company's revenue concentration in a few technologies makes it vulnerable to market shifts[139](index=139&type=chunk) - Sales and implementation cycles for software and services can be lengthy, potentially impacting business if delayed; revenue recognition for on-premise licenses is upfront, while SaaS is recognized ratably or based on usage[140](index=140&type=chunk)[141](index=141&type=chunk) - To remain competitive, Mitek plans to continue investing in research and development and partnering with other technology providers, leveraging its patented technology and market expertise[143](index=143&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, comparing revenue, expenses, and net income for the three and nine months ended June 30, 2025 and 2024 [Comparison of the Three Months Ended June 30, 2025 and 2024](index=28&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section compares the company's financial results for the three months ended June 30, 2025, against the same period in 2024, detailing revenue and expense changes Key Financial Results (Three Months Ended June 30, 2025 vs. 2024) (Amounts in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Total revenue | $45,729 | $44,976 | $753 | 2% | | Software and hardware revenue | $19,507 | $22,662 | $(3,155) | (14)% | | Services and other revenue | $26,222 | $22,314 | $3,908 | 18% | | Cost of revenue | $7,022 | $6,482 | $540 | 8% | | Selling and marketing expenses | $11,127 | $10,354 | $773 | 7% | | Research and development expenses | $8,960 | $9,982 | $(1,022) | (10)% | | General and administrative expenses | $11,251 | $12,604 | $(1,353) | (11)% | | Amortization and acquisition-related costs | $3,560 | $3,750 | $(190) | (5)% | | Restructuring costs | — | $1,070 | $(1,070) | (100)% | | Interest expense | $2,469 | $2,329 | $140 | 6% | | Other income, net | $1,805 | $1,436 | $369 | 26% | | Income tax benefit (provision) | $(749) | $375 | $(1,124) | nm | | Net income | $2,396 | $216 | $2,180 | nm | - The decrease in software and hardware revenue was primarily due to lower multi-year term license renewals of Mobile Deposit® software, partially offset by increased sales of standalone biometrics products[146](index=146&type=chunk) - The increase in services and other revenue was driven by higher revenue from HooYu, MiVIP, Mobile Verify®, Mobile Deposit®, and Check Fraud Defender products[146](index=146&type=chunk) - General and administrative expenses decreased due to lower executive transition costs, audit, accounting, and tax fees, and third-party professional fees, partially offset by higher personnel-related costs as full-time consultants were replaced with employees[151](index=151&type=chunk) [Comparison of the Nine Months Ended June 30, 2025 and 2024](index=30&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section compares the company's financial results for the nine months ended June 30, 2025, against the same period in 2024, detailing revenue and expense changes Key Financial Results (Nine Months Ended June 30, 2025 vs. 2024) (Amounts in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Total revenue | $134,912 | $128,861 | $6,051 | 5% | | Software and hardware revenue | $58,192 | $63,531 | $(5,339) | (8)% | | Services and other revenue | $76,720 | $65,330 | $11,390 | 17% | | Cost of revenue | $19,497 | $18,231 | $1,266 | 7% | | Selling and marketing expenses | $31,362 | $31,231 | $131 | 0% | | Research and development expenses | $27,049 | $28,569 | $(1,520) | (5)% | | General and administrative expenses | $33,250 | $43,085 | $(9,835) | (23)% | | Amortization and acquisition-related costs | $10,817 | $11,581 | $(764) | (7)% | | Restructuring costs | $837 | $1,648 | $(811) | (49)% | | Interest expense | $7,274 | $6,895 | $379 | 5% | | Other income, net | $3,478 | $4,268 | $(790) | (19)% | | Income tax benefit (provision) | $(1,368) | $2,816 | $(4,184) | (149)% | | Net income (loss) | $6,936 | $(5,295) | $12,231 | nm | - The decrease in software and hardware revenue was primarily due to lower multi-year term license renewals of Mobile Deposit® and decreased sales of legacy identity verification software and hardware products[158](index=158&type=chunk) - The increase in services and other revenue was driven by strong growth in Mobile Verify®, HooYu, MiVIP, Mobile Deposit®, and Check Fraud Defender products[158](index=158&type=chunk) - General and administrative expenses decreased significantly due to lower audit, accounting, and tax fees, reduced third-party and professional fees, and lower executive transition costs[162](index=162&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations, discussing cash flow, investments, debt, and working capital, including the impact of the new credit agreement - Cash and cash equivalents and investments increased by **$33.6 million** (**24%**) to **$175.4 million** at June 30, 2025, from **$141.8 million** at September 30, 2024[168](index=168&type=chunk) Cash Flow Summary (Nine Months Ended June 30) (Amounts in thousands) | Cash Flow Activity | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Cash provided by operating activities | $35,879 | $10,586 | | Cash provided by (used in) investing activities | $(188) | $27,832 | | Cash used in financing activities | $(3,095) | $(12,871) | - The increase in cash from operating activities was primarily due to net income, an increase in income taxes payable, and the timing of income tax payments[169](index=169&type=chunk) - Net cash used in investing activities was **$0.2 million**, primarily from net maturities of investments and capital expenditures; this is a decrease in cash inflows of **$28.0 million** compared to the prior year, mainly due to lower net maturities of investments[170](index=170&type=chunk) - Net cash used in financing activities decreased to **$3.1 million**, primarily due to lower common stock repurchases and no acquisition-related contingent consideration payments compared to the prior year[171](index=171&type=chunk) - The 2026 Notes, with a principal amount of **$155.3 million** and a **0.75% interest rate**, mature on February 1, 2026; the Company has a Notes Hedge to reduce potential equity dilution and Warrant Transactions that could cause incremental EPS dilution if the average share price exceeds **$26.53**[172](index=172&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - A new Amended Credit Agreement provides a delayed draw term loan of up to **$75.0 million** and a revolving line of credit up to **$25.0 million**, both maturing on May 1, 2030; no borrowings were outstanding as of June 30, 2025[180](index=180&type=chunk)[181](index=181&type=chunk)[185](index=185&type=chunk) - Working capital decreased to **$27.1 million** at June 30, 2025, from **$142.9 million** at September 30, 2024, primarily due to the reclassification of **$150.0 million** of 2026 Notes to current liabilities[192](index=192&type=chunk) - Management believes current cash, proceeds from the Amended Credit Agreement, and expected cash from operations will be adequate to meet working capital needs for at least the next twelve months[192](index=192&type=chunk) [Changes in Critical Accounting Estimates](index=36&type=section&id=Changes%20in%20Critical%20Accounting%20Estimates) This section confirms that there have been no material changes to the company's critical accounting estimates since its 2024 Annual Report - There have been no material changes to the Company's critical accounting estimates from those disclosed in its 2024 Annual Report[194](index=194&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=36&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section discusses Mitek's exposure to market risks, specifically interest rate risk and foreign currency risk, and assesses the impact of inflation on its financial condition and results of operations [Interest Rates](index=36&type=section&id=Interest%20Rates) This section evaluates the company's exposure to interest rate fluctuations on its investment portfolio and the potential impact on fair value - Mitek's investment portfolio, totaling **$48.3 million** at June 30, 2025, consists of cash equivalents and marketable securities with short maturities (one to 19 months); a hypothetical **100 basis point change** in interest rates would not materially impact the fair value of these investments[196](index=196&type=chunk)[197](index=197&type=chunk) [Foreign Currency Risk](index=36&type=section&id=Foreign%20Currency%20Risk) This section describes the company's exposure to foreign currency exchange rate fluctuations due to international operations in the UK, France, Netherlands, and Spain - The Company has operations in the United Kingdom, France, the Netherlands, and Spain, exposing it to fluctuations in the U.S. dollar, Euro, and British pound sterling exchange rates, which can affect results of operations and cash flows[198](index=198&type=chunk) [Inflation](index=37&type=section&id=Inflation) This section assesses the impact of inflation on the company's business, financial condition, and results of operations for the reported periods - Inflation did not have a material effect on Mitek's business, financial condition, or results of operations during the nine months ended June 30, 2025 or 2024[200](index=200&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=37&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section addresses Mitek's disclosure controls and procedures, noting their ineffectiveness as of June 30, 2025, due to previously reported material weaknesses in internal control over financial reporting. It outlines the ongoing remediation efforts to address these weaknesses [Disclosure Controls and Procedures](index=37&type=section&id=Disclosure%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures, noting their ineffectiveness due to existing material weaknesses - Mitek's disclosure controls and procedures were not effective as of June 30, 2025, due to previously reported material weaknesses that continued to exist[202](index=202&type=chunk) - Despite the material weaknesses, management believes the condensed consolidated financial statements in this Form 10-Q fairly present the Company's financial position, results of operations, and cash flows[203](index=203&type=chunk) [Remediation of Previously Reported Material Weaknesses in Internal Control Over Financial Reporting](index=37&type=section&id=Remediation%20of%20Previously%20Reported%20Material%20Weaknesses%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section details the company's ongoing efforts to remediate identified material weaknesses in internal control over financial reporting, including process improvements and training - Material weaknesses identified include ineffective controls related to the financial statement close process, revenue recognition, risk assessment procedures (including segregation of duties), completeness and accuracy of information used by control owners, and insufficient evidence of management review controls[205](index=205&type=chunk)[206](index=206&type=chunk)[208](index=208&type=chunk) - Remediation efforts include implementing standard templates and a close management tool, conducting training, designing new user roles, documenting completeness and accuracy of inputs, creating cross-functional working groups for contract terms, and implementing systems for order-to-cash management and billing[205](index=205&type=chunk)[206](index=206&type=chunk)[208](index=208&type=chunk) - The Company is committed to remediating these material weaknesses and expects to continue making progress, with ongoing senior management and Audit Committee oversight; full remediation requires completion and effective operation of these steps over a sufficient period[206](index=206&type=chunk) [Changes in Internal Control over Financial Reporting](index=38&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms that no material changes occurred in internal control over financial reporting during the quarter, apart from ongoing remediation efforts - Aside from the remediation efforts for the material weaknesses, there have been no other material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025[207](index=207&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers additional disclosures including legal proceedings, risk factors, equity sales, defaults, and exhibits filed with the Form 10-Q [ITEM 1. LEGAL PROCEEDINGS](index=39&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section incorporates by reference the detailed information on legal proceedings from Note 9 of the condensed consolidated financial statements - Information regarding legal proceedings is incorporated by reference from Note 9 of the notes to the condensed consolidated financial statements[210](index=210&type=chunk) [ITEM 1A. RISK FACTORS](index=39&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers to the comprehensive discussion of risk factors in the Company's 2024 Annual Report, stating that no material changes have occurred since that filing - There have been no material changes in the Company's risk factors from those disclosed in its 2024 Annual Report[211](index=211&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=39&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section reports that there were no unregistered sales of equity securities during the quarter ended June 30, 2025, and provides a summary of common stock repurchases under the authorized program - No unregistered sales of equity securities occurred during the quarter ended June 30, 2025[212](index=212&type=chunk) Summary of Common Stock Purchases (Quarter Ended June 30, 2025) | Period | Total number of shares (or units) purchased | Average price paid per share (or unit) | Total number of shares (or units) purchased as part of publicly announced plans or programs | Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs | | :-------------------------- | :---------------------------------------- | :------------------------------------- | :---------------------------------------------------------------------------------------- | :-------------------------------------------------------------------------------------------------------------------- | | April 1, 2025 — April 30, 2025 | — | $— | — | $22,752,694 | | May 1, 2025 — May 31, 2025 | — | $— | — | $22,752,694 | | June 1, 2025 — June 30, 2025 | — | $— | — | $22,752,694 | - The share repurchase program, authorized for up to **$50.0 million**, was effective May 16, 2024, and expires May 16, 2026; no purchases were made during the three months ended June 30, 2025[212](index=212&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=39&type=section&id=ITEM%203.%2E%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[213](index=213&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=39&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that there are no mine safety disclosures to report - There are no mine safety disclosures[214](index=214&type=chunk) [ITEM 5. OTHER INFORMATION](index=39&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section states that there is no other information to report - There is no other information to report[215](index=215&type=chunk) [ITEM 6. EXHIBITS](index=40&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including organizational documents, employment agreements, debt agreements, and certifications - The exhibits include the Restated Certificate of Incorporation, Third Amended and Restated Bylaws, Executive Employment Agreement for Garrett Gafke, Inducement Restricted Stock Unit Award Agreements, and the First Amendment to Loan and Security Agreement[216](index=216&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002 are filed herewith[216](index=216&type=chunk) [Signatures](index=42&type=section&id=Signatures) This section contains the required signatures of the registrant's principal executive officer and principal financial and accounting officer, certifying the filing of the report - The report is signed by Edward H. West, Chief Executive Officer, and David Lyle, Chief Financial Officer, on August 7, 2025[221](index=221&type=chunk)[222](index=222&type=chunk)

Mitek Systems (MITK) FY Conference Summary Company Overview - Mitek Systems is a fraud solutions provider focused on securing digital transactions and interactions, particularly in the financial sector [6][9] - The company has over 7,000 customers globally, primarily financial institutions, and generated approximately $177 million in revenue over the last twelve months [7][8] - Mitek has a net debt position of about $5 million and over half of its revenue is recurring [8][12] Market Opportunity - The company is well-positioned to capitalize on the increasing fraud, especially in digital transactions, driven by generative AI [9][19] - The total addressable market (TAM) for fraud solutions, particularly in biometrics and verification, is significant, with Mitek's current revenue being a small fraction of this potential [21] Business Segments - Mitek operates primarily in two segments: deposits and identity verification [14][18] - **Deposits**: This segment is the majority of revenue, with a strong cash flow and a market share of over 98% in mobile deposit technology [14][15] - **Identity Verification**: This segment has evolved to include a broader orchestration platform (MyVIP) that integrates various verification signals beyond just document verification [18][55] Financial Performance and Goals - The company aims for durable double-digit organic growth and to increase SaaS revenue to over 50% of total revenue [11][12][23] - Mitek's EBITDA for the last twelve months was approximately $56 million, with free cash flow of about $47 million [24] - The company is focused on improving margins, targeting over 30% EBITDA margins in the future [58] Challenges and Strategic Focus - Mitek has faced challenges with financial statements and material weaknesses, but these issues are being addressed [22][26] - The company is focused on integrating solutions from recent acquisitions and driving down unit costs [11][12] - Long sales cycles with large financial institutions present challenges, but successful relationships can lead to long-term growth [27][29] Fraud Solutions and Market Dynamics - Check fraud in the U.S. is a multi-billion dollar issue, and Mitek's solutions are designed to mitigate this risk [40] - The company is expanding its fraud solutions beyond checks to include other payment types, leveraging existing relationships with financial institutions [41][42] Partner Ecosystem - Mitek has established strong relationships with major processors and is exploring partnerships for its fraud solutions [50][51] - The company is in early stages of developing partnerships for its identity verification and authentication solutions [51] Capital Allocation - Mitek has a balanced approach to capital allocation, focusing on organic growth and a share repurchase program with $50 million authorized [60][61] - The company is not currently focused on acquisitions as it aims to stabilize and grow its existing operations [61] Conclusion - Mitek Systems is strategically positioned to address the growing challenges of fraud in digital transactions, with a strong focus on organic growth, improving margins, and leveraging its existing customer base to expand into new areas of fraud prevention and identity verification [9][12][19][24]

Group 1 - Mitek Systems, Inc. (MITK) is experiencing significant activity in the options market, particularly with the Dec 19, 2025 $2.50 Call showing high implied volatility, indicating potential for a major price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that investors anticipate a significant event that could lead to a rally or sell-off [2] - Mitek Systems holds a Zacks Rank 3 (Hold) in the Computer - Optical Imaging industry, which is in the top 38% of the Zacks Industry Rank, but analysts have lowered earnings estimates from 23 cents to 18 cents per share over the last 60 days [3] Group 2 - The high implied volatility for Mitek Systems may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to benefit from time decay [4]

Group 1 - Mitek Systems reported $51.93 million in revenue for the quarter ended March 2025, a year-over-year increase of 10.6% [1] - The EPS for the same period was $0.36, compared to $0.24 a year ago, representing a surprise of +38.46% over the consensus estimate of $0.26 [1] - The reported revenue exceeded the Zacks Consensus Estimate of $47.85 million by +8.52% [1] Group 2 - Revenue from software and hardware was $26.70 million, surpassing the average estimate of $23.60 million by three analysts, reflecting a +7.3% change year-over-year [4] - Revenue from services and other was $25.23 million, exceeding the average estimate of $24.18 million, with a +14.3% change compared to the previous year [4] - Non-GAAP gross profit for services and other was $18.88 million, above the average estimate of $17.77 million, while for software and hardware, it was $26.68 million compared to the average estimate of $23.36 million [4] Group 3 - Mitek Systems' shares returned +6% over the past month, while the Zacks S&P 500 composite increased by +11.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

分组1 - Mitek Systems reported quarterly earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of $0.26 per share, and up from $0.24 per share a year ago, representing an earnings surprise of 38.46% [1] - The company achieved revenues of $51.93 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 8.52%, and an increase from $46.97 million year-over-year [2] - Mitek Systems has outperformed consensus EPS estimates three times over the last four quarters [2] 分组2 - The stock has declined approximately 24% since the beginning of the year, compared to a decline of 4.3% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $45.82 million, and for the current fiscal year, it is $0.87 on revenues of $175.77 million [7] - The Computer - Optical Imaging industry, to which Mitek Systems belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]