Financial Data and Key Metrics Changes - Top line revenue for fiscal Q1 2024 was $36.9 million, a decrease of 19% year-over-year, primarily due to a large multi-year mobile check deposit reorder that impacted revenue recognition [13] - Software and hardware revenue declined 39% to $16 million, while services and other revenue grew 8% to $20.9 million, driven by strong growth in SaaS revenue [13][14] - GAAP net loss for fiscal Q1 2024 was $5.8 million, compared to net income of $4.7 million in the prior fiscal year, while non-GAAP net income was $6.3 million, down from $14.3 million [15][16] Business Line Data and Key Metrics Changes - Deposits revenue declined 30% year-over-year to $21.1 million, but would have grown about 4% when adjusting for the multi-year contract [34] - Identity revenue grew 3% year-over-year to $15.8 million, driven by SaaS products, despite some pressure from legacy products and market commoditization [14] Market Data and Key Metrics Changes - The demand for biometric authentication technology is increasing due to the rise in fraud, with check fraud losses in the Americas exceeding $20 billion in 2023 [7][10] - The Check Fraud Defender product is gaining traction, with over 20 customers contracted by the end of the March quarter, targeting over 50 by the end of fiscal 2024 [8][9] Company Strategy and Development Direction - The company aims to leverage AI-powered data solutions to address the growing fraud management needs in various markets, with a focus on regulated businesses [5][6] - Mitek is positioned to expand its revenue and profitability by providing advanced machine learning and AI solutions to combat fraud while enhancing customer trust [11] Management's Comments on Operating Environment and Future Outlook - Management expects growth to accelerate in the second half of fiscal 2024, driven by new products like Check Fraud Defender and improvements in identity verification solutions [6][20] - The company anticipates reaching standalone profitability in its Identity business by the fourth fiscal quarter [36] Other Important Information - The company has improved its financial controls and reporting, allowing it to maintain timely SEC filings [32] - The total gross margin for fiscal Q1 2024 was 85%, down from 89% in the previous year, due to a shift in product mix [35] Q&A Session Summary Question: Can you walk us through the building blocks that give you confidence in the full-year guidance? - Management highlighted the importance of looking at business performance over a longer time span and noted that new products like Check Fraud Defender are expected to drive growth in the second half of the fiscal year [19][20] Question: Can you provide more detail on the Check Fraud Defender deals and sales cycles? - Management explained that the Check Fraud Defender was co-created with a top bank, and initial sales cycles were over 12 months, but they are now seeing quicker cycles with contracted customers [22] Question: What is the expected growth mix for mobile check deposits? - Management refrained from providing specific breakdowns but indicated that growth would come from both price increases and transaction volume [27][28] Question: What are the expectations for the ID business moving towards breakeven? - Management did not provide specific guidance for fiscal 2025 but indicated that there would not be material changes to past performance [70] Question: How is the company thinking about capital allocation moving forward? - Management stated that they are reviewing capital allocation regularly and will provide updates after filing the Q2 report [42]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 001-35231 MITEK SYSTEMS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) ...

[Executive Summary & Fiscal 2023 Performance](index=1&type=section&id=Executive%20Summary%20%26%20Fiscal%202023%20Performance) Mitek Systems achieved record revenue and profitability in fiscal 2023, driven by innovation and strong growth in Deposit and Identity revenues [Fiscal 2023 Full Year Financial Highlights](index=1&type=section&id=Fiscal%202023%20Full%20Year%20Financial%20Highlights) Mitek Systems achieved record revenue and profitability in fiscal year 2023, with total revenue increasing 19% year-over-year to $172.6 million. Both GAAP and Non-GAAP operating and net income saw significant growth, alongside a 50% increase in cash flow from operations | Metric | FY2023 Value | YoY Change | Operating Margin | Diluted EPS | Cash Flow | Total Cash & Investments | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $172.6 million | +19% | - | - | - | - | | **GAAP Operating Income** | $15.6 million | +28% | 9% | - | - | - | | **GAAP Net Income** | $8.0 million | +117% | - | $0.17 | - | - | | **Non-GAAP Operating Income** | $53.2 million | +20% | 31% | - | - | - | | **Non-GAAP Net Income** | $44.4 million | +10% | - | $0.95 | - | - | | **Cash Flow from Operations** | $31.6 million | +50% | - | - | $31.6 million | - | | **Total Cash and Investments (as of Sep 30, 2023)** | $134.9 million | +34% | - | - | - | $134.9 million | [Fiscal Fourth Quarter 2023 Financial Highlights](index=1&type=section&id=Fiscal%20Fourth%20Quarter%202023%20Financial%20Highlights) The fourth quarter of fiscal 2023 saw a 5% year-over-year decrease in total revenue to $37.7 million. The company reported GAAP operating and net losses, and a significant decline in Non-GAAP operating and net income compared to the prior year quarter | Metric | Q4 FY2023 Value | YoY Change | Operating Margin | Diluted EPS | Cash Flow | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $37.7 million | -5% | - | - | - | | **GAAP Operating Income (Loss)** | ($3.3 million) | N/A (vs $3.8M income) | -9% | - | - | | **GAAP Net Income (Loss)** | ($1.4 million) | N/A (vs $0.4M income) | - | ($0.03) | - | | **Non-GAAP Operating Income** | $5.3 million | N/A (vs $11.8M income) | 14% | - | - | | **Non-GAAP Net Income** | $6.9 million | -30% | - | $0.15 | - | | **Cash Flow from Operations** | $3.5 million | -32% | - | - | $3.5 million | [CEO's Comments](index=1&type=section&id=Mitek%20CEO%20Max%20Carnecchia's%20Comments) CEO Max Carnecchia highlighted record revenue and profitability in fiscal 2023, driven by innovation. He noted strong growth in both Deposit (20% up) and Identity (17% up) revenues, a net revenue retention rate of approximately 117%, and the establishment of new growth drivers leveraging advanced AI and machine learning - **Record revenue and profitability** achieved in fiscal 2023, driven by innovation[4](index=4&type=chunk) - Deposit revenue increased **20% year over year**, and Identity revenue increased **17% year over year**[4](index=4&type=chunk) - Net revenue retention rate was approximately **117%** for the fiscal year, indicating strong customer value and success[4](index=4&type=chunk) - New growth drivers are in place, including Check Fraud Defender, MiVIP, MiPass, and ID R&D products, leveraging advanced AI and machine learning[4](index=4&type=chunk) [Fiscal 2024 Guidance](index=1&type=section&id=Fiscal%202024%20Guidance) Mitek reiterated its fiscal year 2024 guidance, expecting full-year revenue between $180.0 million and $185.0 million, representing a 6% growth rate at the midpoint. Adjusting for a unique multi-year contract recognized in FY2023, the underlying growth rate for FY2024 would be approximately 12.0%. The company also projects a non-GAAP operating margin of 30.0% to 31.0% | Metric | FY2024 Guidance | | :--- | :--- | | **Full-year Revenue** | $180.0 million to $185.0 million | | **Growth Rate (midpoint)** | 6% | | **Adjusted Growth Rate (midpoint, excluding unique contract)** | Approximately 12.0% | | **Non-GAAP Operating Margin** | 30.0% to 31.0% | - A large multi-year mobile deposit reorder contract in fiscal 2023 led to the recognition of approximately **$7.0 million in additional license revenue** relating to future years, impacting the reported FY2023 revenue and the direct YoY comparison for FY2024[5](index=5&type=chunk)[7](index=7&type=chunk) [Company Overview & Disclosures](index=2&type=section&id=Company%20Overview%20%26%20Disclosures) Mitek Systems, a leader in digital access and identity verification, outlines its business, financial reporting practices, and key performance metrics [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) Mitek management hosted a conference call and live webcast on March 19, 2024, at 2:00 p.m. Pacific Time to discuss the financial results for Q4 and full fiscal year 2023. Details for accessing the live call, webcast, and phone replay were provided - Conference call and live webcast held on **March 19, 2024, at 2:00 p.m. Pacific Time** to discuss Q4 and FY2023 financial results[8](index=8&type=chunk) [About Mitek Systems, Inc.](index=2&type=section&id=About%20Mitek%20Systems%2C%20Inc.) Mitek Systems, Inc. is a global leader in digital access, specializing in advanced identity verification technologies and fraud prevention. The company's solutions are trusted by 99% of U.S. banks for mobile check deposits and 7,900 large organizations worldwide, aiming to enhance trust and convenience in digital interactions - Mitek is a global leader in digital access, providing advanced identity verification technologies and a global platform for faster and more secure digital access[9](index=9&type=chunk) - Trusted by **99% of U.S. banks** for mobile check deposits and **7,900 of the world's largest organizations**[9](index=9&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Notice%20Regarding%20Forward-Looking%20Statements) The news release contains forward-looking statements regarding future intentions, beliefs, expectations, and predictions, including fiscal 2024 guidance and the use of AI/machine learning. These statements are subject to various risks and uncertainties, such as global economic conditions, market demand, integration of acquisitions (e.g., HooYu Ltd.), product development, and litigation outcomes. Readers are cautioned not to place undue reliance on these statements, and the company disclaims any obligation to update them - Statements regarding fiscal 2024 guidance, leveraging AI/machine learning, and enhancing digital trust are forward-looking[10](index=10&type=chunk) - Risks and uncertainties include global economic conditions, market acceptance, acquisition integration (HooYu Ltd.), product development, and litigation[10](index=10&type=chunk)[11](index=11&type=chunk) - The company disclaims any intention or obligation to update forward-looking statements, except as required by applicable securities laws[11](index=11&type=chunk)[12](index=12&type=chunk) [Note Regarding Use of Non-GAAP Financial Measures](index=3&type=section&id=Note%20Regarding%20Use%20of%20Non-GAAP%20Financial%20Measures) Mitek uses non-GAAP financial measures (e.g., non-GAAP net income and operating income) to supplement GAAP statements, believing they offer a useful measure of operating results, historical comparisons, and insight into ongoing performance. These measures exclude items like amortization, acquisition-related costs, stock compensation, and non-recurring audit fees. The company notes it cannot reconcile its forward outlook for non-GAAP operating margin to GAAP due to the unreasonable effort required to quantify certain exclusions like share-based compensation and foreign currency fluctuations - Non-GAAP financial measures are used to supplement GAAP statements, providing a useful measure of operating results and a meaningful comparison with historical results and other companies[12](index=12&type=chunk) - Non-GAAP adjustments exclude items such as amortization and acquisition-related costs, intellectual property litigation costs, executive transition costs, stock compensation expense, non-recurring audit fees, restructuring costs, amortization of debt discount and issuance costs, income tax effect of pre-tax adjustments, and cash tax difference[12](index=12&type=chunk) - The company has not provided a reconciliation of its forward outlook for non-GAAP operating margin to GAAP due to the unreasonable efforts exception, citing difficulties in quantifying share-based compensation and predicting foreign currency fluctuations[13](index=13&type=chunk) [Key Business Metrics](index=3&type=section&id=Key%20Business%20Metrics) Mitek monitors net revenue retention as a key business metric to evaluate performance, identify trends, and inform strategic decisions. This rate is calculated by dividing total revenue (including expansion revenue, less churn) in the second year of a trailing 12-month measurement period by the revenue in the first year, excluding revenue from newly acquired customers in the second year - Net revenue retention is monitored to evaluate business, identify trends, formulate plans, and make strategic decisions[14](index=14&type=chunk) - Net revenue retention is calculated by taking total revenue (including expansion, less churn) in the second year of a trailing 12-month period and dividing it by revenue in the first year, excluding new customer revenue from the second year[15](index=15&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) Mitek's fiscal 2023 consolidated financial statements reflect increased assets, equity, and significant growth in operating income, net income, and cash flow [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2023, Mitek's total assets increased to $405.4 million from $364.5 million in the prior year. This was primarily driven by an increase in cash and cash equivalents and short-term investments. Total liabilities also increased slightly to $200.2 million, while total stockholders' equity grew to $205.2 million | Metric | Sep 30, 2023 (in thousands) | Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | $405,375 | $364,479 | | **Total Liabilities** | $200,187 | $193,500 | | **Total Stockholders' Equity** | $205,188 | $170,979 | | Cash and cash equivalents | $58,913 | $32,059 | | Short-term investments | $74,700 | $58,268 | | Accounts receivable, net | $32,132 | $35,922 | | Convertible senior notes | $135,516 | $127,970 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) For the twelve months ended September 30, 2023, total revenue increased to $172.6 million from $144.8 million in the prior year. Operating income grew to $15.6 million, and net income more than doubled to $8.0 million. In Q4 2023, however, the company reported a total revenue decrease and a GAAP operating loss and net loss | Metric | 12 Months Ended Sep 30, 2023 (in thousands) | 12 Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Revenue** | $172,552 | $144,804 | | **Operating Income** | $15,564 | $12,200 | | **Net Income** | $8,027 | $3,694 | | Net income per share—diluted | $0.17 | $0.08 | | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Revenue** | $37,656 | $39,626 | | **Operating Income (Loss)** | ($3,287) | $3,799 | | **Net Income (Loss)** | ($1,444) | $351 | | Net income per share—diluted | ($0.03) | $0.01 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the twelve months ended September 30, 2023, net cash provided by operating activities significantly increased to $31.6 million from $21.1 million in the prior year. Investing activities resulted in a net cash outflow of $6.8 million, a substantial change from a net inflow of $1.7 million in 2022, primarily due to increased purchases of investments and reduced sales/maturities. Financing activities provided a net cash inflow of $1.7 million, reversing a net outflow in 2022 | Activity | 12 Months Ended Sep 30, 2023 (in thousands) | 12 Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $31,586 | $21,119 | | **Net cash provided by (used in) investing activities** | ($6,784) | $1,700 | | **Net cash provided by (used in) financing activities** | $1,701 | ($21,143) | | Net increase in cash and cash equivalents | $26,854 | $1,747 | | Cash and cash equivalents at end of period | $58,913 | $32,059 | [Disaggregation of Revenue](index=9&type=section&id=Disaggregation%20of%20Revenue) Mitek's total revenue for the twelve months ended September 30, 2023, was $172.6 million. Deposits revenue, comprising software, hardware, services, and other, increased to $104.1 million from $86.6 million in 2022. Identity verification revenue, including software, hardware, services, and other, also grew to $68.4 million from $58.2 million in 2022 | Major Product Category | 12 Months Ended Sep 30, 2023 (in thousands) | 12 Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Deposits revenue** | $104,134 | $86,561 | | Deposits software and hardware | $78,212 | $64,548 | | Deposits services and other | $25,922 | $22,013 | | **Identity verification revenue** | $68,418 | $58,243 | | Identity verification software and hardware | $10,162 | $8,380 | | Identity verification services and other | $58,256 | $49,863 | | **Total revenue** | $172,552 | $144,804 | [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Reconciliations) Mitek reconciles non-GAAP net income and operating income to GAAP, adjusting for non-cash and non-recurring items to clarify underlying performance [Non-GAAP Net Income Reconciliation](index=10&type=section&id=Non-GAAP%20Net%20Income%20Reconciliation) For the twelve months ended September 30, 2023, Non-GAAP net income increased to $44.4 million from $40.5 million in the prior year. This was achieved by adjusting GAAP net income for various non-cash and non-recurring items, including acquisition-related costs, stock compensation expense, and non-recurring audit fees. The company used a cash tax rate of 20% for fiscal 2023 and 5% for fiscal 2022 in its non-GAAP calculations | Metric | 12 Months Ended Sep 30, 2023 (in thousands) | 12 Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Net income (loss) (GAAP)** | $8,027 | $3,694 | | Acquisition-related costs and expenses | $19,046 | $15,533 | | Stock compensation expense | $10,463 | $13,346 | | Non-recurring audit fees | $4,001 | — | | Income tax effect of pre-tax adjustments | ($10,115) | ($9,799) | | Cash tax difference | $1,235 | $7,440 | | **Non-GAAP net income** | $44,365 | $40,513 | | Non-GAAP income per share—diluted | $0.95 | $0.88 | | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Net income (loss) (GAAP)** | ($1,444) | $351 | | **Non-GAAP net income** | $6,919 | $9,886 | | Non-GAAP income per share—diluted | $0.15 | $0.22 | - Non-GAAP net income for fiscal 2023 was calculated using a **cash tax rate of 20%**, compared to **5% in fiscal 2022**[26](index=26&type=chunk) [Non-GAAP Operating Income Reconciliation](index=11&type=section&id=Non-GAAP%20Operating%20Income%20Reconciliation) For the twelve months ended September 30, 2023, Non-GAAP operating income increased to $53.2 million from $44.3 million in the prior year, maintaining a 31% Non-GAAP operating margin. This was reconciled from GAAP operating income by adding back acquisition-related costs, intellectual property litigation costs, executive transition costs, stock compensation expense, non-recurring audit fees, and restructuring costs | Metric | 12 Months Ended Sep 30, 2023 (in thousands) | 12 Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | **GAAP operating income** | $15,564 | $12,200 | | Acquisition-related costs and expenses | $19,046 | $15,533 | | Stock compensation expense | $10,463 | $13,346 | | Non-recurring audit fees | $4,001 | — | | **Non-GAAP operating income** | $53,236 | $44,325 | | Non-GAAP operating margin | 31% | 31% | | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | **GAAP operating income (loss)** | ($3,287) | $3,799 | | **Non-GAAP operating income** | $5,316 | $11,813 | | Non-GAAP operating margin | 14% | 30% |

Financial Data and Key Metrics Changes - For Q3 2023, Mitek generated revenue of $43.1 million, a 10% increase year-over-year [25][45] - Non-GAAP net income for Q3 was $9.5 million, or $0.20 per diluted share, compared to $10.9 million, or $0.24 per share for the same period last year [30] - Total revenue for the first nine months of fiscal 2023 was $134.9 million, a 28% increase year-over-year [31] Business Line Data and Key Metrics Changes - Deposits revenue increased 13% year-over-year in Q3 to $24.8 million, driven by mobile deposit reorders [57] - Identity revenue grew 6% year-over-year in Q3 to $18.3 million, supported by increases in Identity SaaS revenue and biometric offerings [57] - For the full fiscal year 2023, Deposits revenue is expected to grow over 20% year-over-year, while Identity revenue is projected to grow at least 18% year-over-year [15][22] Market Data and Key Metrics Changes - Mitek's net revenue retention (NRR) rate was over 120% over the trailing 12 months ended June 30, 2023, indicating strong customer retention and value delivery [15] - The Check Fraud Defender product is gaining traction as bank losses from check fraud increase, with one customer reporting a 220% rise in check fraud losses in 2022 [16] Company Strategy and Development Direction - Mitek is focused on enhancing its product offerings in both the Deposits and Identity lines of business, leveraging technologies like MiPass for continuous identity authentication [18][21] - The company aims to drive shareholder value through cash flow management and is not currently pursuing acquisitions [52][93] - Mitek is positioned to capitalize on market opportunities in identity verification and fraud prevention, with a focus on improving operational efficiency [77] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting full fiscal year revenue guidance of 18% growth year-over-year and non-GAAP operating margins of 30% to 31% [15][32] - The company anticipates fluctuations in Identity revenue due to varying transaction volumes but expects mid-teens organic revenue growth in Q4 [22] - Management acknowledged the challenges posed by the macroeconomic environment but remains optimistic about long-term growth prospects [71] Other Important Information - Mitek has successfully updated its internal processes and is now current with SEC filings, which is expected to enhance operational rigor [6][14] - Scott Carter will step down from his executive role effective December 1, 2023, but will remain as Chairman of the Board [24] Q&A Session Summary Question: What is the expected revenue for Q4? - Management indicated that Q4 revenue is expected to be lower due to the timing of mobile deposit reorders, but the full-year growth remains strong [70] Question: How long does it take to implement Check Fraud Defender for large customers? - Implementation can take six to nine months depending on the size of the bank and compliance requirements [106] Question: What are the assumptions for achieving break-even in the Identity business by 2024? - Achieving break-even will depend on scaling revenue and leveraging new products, with expectations for mid to high-teens organic growth [94] Question: Are there any promotional revenues to highlight in the quarter? - There were significant promotions in the first half of the fiscal year that impacted transaction volumes for Identity verifications [91] Question: What is the outlook for mobile deposits versus Check Fraud Defender? - Management believes mobile deposits will continue to be a significant growth driver, but Check Fraud Defender is also gaining traction [88]

[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 for Q2 2023 [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 Q2 2023, including balance sheets, operations, equity, and cash flows, along with notes and details on prior period restatements [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 stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets Summary | Metric | June 30, 2023 (Unaudited) (in thousands) | September 30, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | **Assets** | | | | Cash and cash equivalents | $87,490 | $32,059 | | Short-term investments | $40,651 | $58,268 | | Accounts receivable, net | $37,616 | $27,874 | | Total current assets | $178,232 | $129,096 | | Goodwill | $131,535 | $120,186 | | Total assets | $417,477 | $360,410 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $53,687 | $40,497 | | Convertible senior notes | $133,579 | $127,970 | | Total liabilities | $209,833 | $190,093 | | Total stockholders' equity | $207,644 | $170,317 | | Total liabilities and stockholders' equity | $417,477 | $360,410 | - Total assets increased by **$57.067 million (15.83%)** from September 30, 2022, to June 30, 2023, driven by significant increases in cash and cash equivalents and accounts receivable[10](index=10&type=chunk) - Total liabilities increased by **$19.74 million (10.38%)** over the nine-month period, with current liabilities seeing a notable rise[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Income%20(Loss)) This section outlines the company's financial performance over specific periods, detailing revenue, operating income, net income, and other comprehensive income or loss Condensed Consolidated Statements of Operations Summary | Metric (in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 (As Restated) | Nine Months Ended June 30, 2023 | Nine Months Ended June 30, 2022 (As Restated) | | :-------------------------------------- | :------------------------------- | :--------------------------------------------- | :------------------------------ | :-------------------------------------------- | | Total revenue | $43,070 | $39,195 | $134,896 | $105,178 | | Operating income | $1,792 | $893 | $18,851 | $8,403 | | Net income (loss) | $(428) | $(215) | $9,471 | $3,344 | | Net income (loss) per share—basic | $(0.01) | $(0.00) | $0.21 | $0.07 | | Net income (loss) per share—diluted | $(0.01) | $(0.00) | $0.20 | $0.07 | | Other comprehensive income (loss) | $1,914 | $(12,901) | $28,186 | $(13,569) | - Total revenue increased by **10%** for the three months and **28%** for the nine months ended June 30, 2023, compared to the prior year periods[13](index=13&type=chunk) - Net income for the nine months ended June 30, 2023, significantly increased to **$9.471 million** from **$3.344 million** in the prior year, while the three-month period showed a net loss[13](index=13&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity accounts, including total stockholders' equity, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity Summary | Metric (in thousands) | June 30, 2023 | September 30, 2022 | | :-------------------------------- | :------------ | :----------------- | | Total Stockholders' Equity | $207,644 | $170,317 | | Additional Paid-In Capital | $225,633 | $216,493 | | Accumulated Deficit | $(8,530) | $(18,001) | | Accumulated Other Comprehensive Income (Loss) | $(9,504) | $(28,219) | - Total stockholders' equity increased by **$37.327 million** from September 30, 2022, to June 30, 2023, primarily due to net income and other comprehensive income[19](index=19&type=chunk) - Accumulated deficit improved significantly, decreasing from **$(18.001) million** to **$(8.530) million**, reflecting positive net income over the nine-month period[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 over specific periods Condensed Consolidated Statements of Cash Flows Summary | Metric (in thousands) | Nine Months Ended June 30, 2023 | Nine Months Ended June 30, 2022 (As Restated) | | :------------------------------------ | :------------------------------ | :-------------------------------------------- | | Net cash provided by operating activities | $28,113 | $16,013 | | Net cash provided by (used in) investing activities | $25,621 | $(2,156) | | Net cash provided by (used in) financing activities | $1,315 | $(21,513) | | Net increase (decrease) in cash and cash equivalents | $55,431 | $(8,769) | | Cash and cash equivalents at end of period | $87,490 | $21,543 | - Net cash provided by operating activities increased by **$12.1 million**, from **$16.013 million** in 2022 to **$28.113 million** in 2023[21](index=21&type=chunk) - Investing activities shifted from a net cash outflow of **$2.156 million** in 2022 to a net cash inflow of **$25.621 million** in 2023, primarily due to reduced acquisition spending and net sales of investments[21](index=21&type=chunk) [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, clarifying accounting policies and significant events [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) Mitek Systems, Inc. specializes in mobile image capture and digital identity verification for financial services, with prior interim statements restated due to accounting errors - Mitek Systems, Inc. is a leading innovator in mobile image capture and digital identity verification, serving over **7,900** financial services and fintech clients worldwide[24](index=24&type=chunk) - The company's solutions are embedded in mobile apps and web browsers, focusing on trusted online experiences, fraud detection, and KYC/AML compliance[24](index=24&type=chunk) - Prior interim financial statements for March 31, 2022, and June 30, 2022, were restated due to errors in revenue recognition (multiyear term licenses, SaaS guaranteed minimums/overages, term license cutoff), commission capitalization, lease liability recognition, and misclassification of cloud operations employee costs[27](index=27&type=chunk)[137](index=137&type=chunk) [2. REVENUE RECOGNITION](index=10&type=section&id=2.%20REVENUE%20RECOGNITION) Mitek recognizes revenue from software, hardware, and services, including SaaS, applying judgment in identifying performance obligations and allocating transaction prices - Revenue is disaggregated into 'Deposits' and 'Identity verification' categories, each comprising software/hardware and services/other[49](index=49&type=chunk) Revenue by Major Product Category | Major Product Category (in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 (As Restated) | Nine Months Ended June 30, 2023 | Nine Months Ended June 30, 2022 (As Restated) | | :------------------------------------ | :------------------------------- | :--------------------------------------------- | :------------------------------ | :-------------------------------------------- | | Deposits software and hardware | $18,300 | $16,955 | $64,979 | $46,574 | | Deposits services and other | $6,504 | $5,010 | $18,86

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Mitek Systems' unaudited Condensed Consolidated Financial Statements for March 31, 2023, include restated 2022 comparative data Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2023 (in thousands) | September 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$401,966** | **$360,410** | | Total current assets | $160,203 | $129,096 | | Goodwill | $130,148 | $120,186 | | **Total Liabilities** | **$198,936** | **$190,093** | | Total current liabilities | $45,311 | $40,497 | | Convertible senior notes | $131,670 | $127,970 | | **Total Stockholders' Equity** | **$203,030** | **$170,317** | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Mar 31, 2023 (in thousands) | Three Months Ended Mar 31, 2022 (Restated) (in thousands) | Six Months Ended Mar 31, 2023 (in thousands) | Six Months Ended Mar 31, 2022 (Restated) (in thousands) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$46,123** | **$33,510** | **$91,826** | **$65,982** | | Operating Income | $8,686 | $2,680 | $17,059 | $7,509 | | **Net Income** | **$5,169** | **$435** | **$9,899** | **$3,559** | | **Net Income Per Share—Diluted** | **$0.11** | **$0.01** | **$0.22** | **$0.08** | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended Mar 31, 2023 (in thousands) | Six Months Ended Mar 31, 2022 (Restated) (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,561 | $9,686 | | Net cash provided by (used in) investing activities | $37,728 | $(1,743) | | Net cash provided by (used in) financing activities | $1,259 | $(13,736) | | **Net increase (decrease) in cash** | **$50,988** | **$(6,328)** | | **Cash and cash equivalents at end of period** | **$83,047** | **$23,984** | [Note 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) Mitek offers mobile image capture and digital identity verification, with restated March 2022 financials due to accounting errors - The company provides mobile image capture and digital identity verification solutions using AI and machine learning to over **7,800** financial services organizations and fintech brands globally[25](index=25&type=chunk) - Financials for the three and six months ended March 31, 2022, were restated due to errors in revenue recognition for multiyear licenses and SaaS products, capitalization of certain commissions, and accounting for the HooYu acquisition[28](index=28&type=chunk) [Note 2. Revenue Recognition](index=10&type=section&id=2.%20REVENUE%20RECOGNITION) Revenue disaggregated: Deposits **$59.0 million**, Identity Verification **$32.8 million** for six months ended March 31, 2023 Disaggregation of Revenue by Major Product Category (in thousands) | Product Category | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 (Restated) | Six Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2022 (Restated) | | :--- | :--- | :--- | :--- | :--- | | Deposits revenue | $28,760 | $21,228 | $59,041 | $40,279 | | Identity verification revenue | $17,363 | $12,282 | $32,785 | $25,703 | | **Total revenue** | **$46,123** | **$33,510** | **$91,826** | **$65,982** | - As of March 31, 2023, the company had current contract assets of **$8.8 million** and current contract liabilities (deferred revenue) of **$12.0 million**[51](index=51&type=chunk) [Note 3. Business Combinations](index=13&type=section&id=3.%20BUSINESS%20COMBINATIONS) HooYu Ltd acquisition for **$129.1 million** in March 2022 contributed **$6.0 million** revenue and **$7.8 million** net loss in six months - The company completed the acquisition of HooYu Ltd on March 23, 2022, for **$129.1 million** to enhance its Know Your Customer (KYC) technology offerings[54](index=54&type=chunk) HooYu Acquisition - Fair Value of Assets Acquired and Liabilities Assumed (in thousands) | Account | Amount | | :--- | :--- | | Intangible assets | $73,100 | | Goodwill | $74,206 | | Other net assets | $(19,304) | | **Net assets acquired** | **$127,902** | - For the six months ended March 31, 2023, HooYu contributed **$6.0 million** in revenue and a net loss of **$7.8 million**[57](index=57&type=chunk) [Note 4. Restructuring](index=15&type=section&id=4.%20RESTRUCTURING) June 2022 restructuring incurred **$2.0 million** additional costs and **$2.9 million** payments, resulting in zero accrual by March 31, 2023 Restructuring Accrual Activity (in thousands) | Description | Amount | | :--- | :--- | | Balance at September 30, 2022 | $901 | | Additional costs incurred | $1,986 | | Payments | $(2,942) | | Foreign currency effect | $55 | | **Balance at March 31, 2023** | **$0** | [Note 5. Investments](index=15&type=section&id=5.%20INVESTMENTS) Available-for-sale securities decreased to **$31.5 million** by March 31, 2023, with contingent consideration liability at **$6.1 million** Investments by Security Type (Fair Market Value, in thousands) | Security Type | March 31, 2023 | September 30, 2022 | | :--- | :--- | :--- | | U.S. Treasury | $7,207 | $9,103 | | Commercial paper | $6,084 | $18,022 | | Corporate debt securities | $18,187 | $38,949 | | Foreign government and agency securities | $0 | $2,827 | | **Total** | **$31,478** | **$68,901** | - Acquisition-related contingent consideration, classified as a Level 3 liability, increased from **$5.9 million** at September 30, 2022, to **$6.1 million** at March 31, 2023, due to changes in fair value[62](index=62&type=chunk) [Note 6. Goodwill and Intangible Assets](index=18&type=section&id=6.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill increased to **$130.1 million** from foreign currency effects; net intangible assets decreased to **$73.5 million** due to amortization - The goodwill balance increased by **$10.0 million** during the six months ended March 31, 2023, primarily due to foreign currency effects[63](index=63&type=chunk) Intangible Assets, Net (in thousands) | Category | March 31, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Completed technologies | $63,160 | $63,496 | | Customer relationships | $5,130 | $6,927 | | Trade names | $4,789 | $4,914 | | Covenants not to compete | $371 | $419 | | **Total intangible assets** | **$73,450** | **$75,756** | [Note 7. Stockholders' Equity](index=19&type=section&id=7.%20STOCKHOLDERS'%20EQUITY) Stock-based compensation expense was **$5.1 million** for six months ended March 31, 2023; **$15 million** share repurchase program completed in fiscal 2022 Stock-Based Compensation Expense (in thousands) | Expense Category | Six Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Cost of revenue | $192 | $167 | | Selling and marketing | $1,538 | $2,078 | | Research and development | $1,453 | $1,804 | | General and administrative | $1,963 | $2,380 | | **Total** | **$5,146** | **$6,429** | - The company's share repurchase program was completed in the second quarter of fiscal 2022, with total purchases of **$14.8 million** during the six months ended March 31, 2022[77](index=77&type=chunk) [Note 8. Income Taxes](index=21&type=section&id=8.%20INCOME%20TAXES) Income tax provision for six months ended March 31, 2023, was **$3.7 million** (**27%** effective rate), compared to **-6%** in 2022 Income Tax Provision and Effective Tax Rate | Period | Income Tax Provision/(Benefit) (in thousands) | Effective Tax Rate | | :--- | :--- | :--- | | Three Months Ended Mar 31, 2023 | $1,808 | 26% | | Six Months Ended Mar 31, 2023 | $3,700 | 27% | | Three Months Ended Mar 31, 2022 | $(20) | -5% | | Six Months Ended Mar 31, 2022 | $(200) | -6% | [Note 9. Convertible Senior Notes](index=21&type=section&id=9.%20CONVERTIBLE%20SENIOR%20NOTES) Company holds **$155.3 million** in 0.75% convertible senior notes due 2026 but was non-compliant with covenants due to late SEC filings - The company was not in compliance with covenants for its 2026 Notes due to the failure to timely file its Form 10-K and Form 10-Q reports, resulting in the accrual of additional special interest[81](index=81&type=chunk) Carrying Value of 2026 Notes (in thousands) | Description | March 31, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Principal amount | $155,250 | $155,250 | | Less: unamortized discount and issuance costs | $(23,580) | $(27,280) | | **Carrying amount** | **$131,670** | **$127,970** | - In connection with the notes, the company entered into a Notes Hedge and Warrant Transactions to reduce potential dilution[91](index=91&type=chunk)[92](index=92&type=chunk) [Note 10. Commitments and Contingencies](index=25&type=section&id=10.%20COMMITMENTS%20AND%20CONTINGENCIES) Legal proceedings include customer indemnification demands from USAA patent suits, an Instacart breach of contract lawsuit, and a dismissed BIPA class action - The company has received indemnification demands from customers like PNC Bank and Truist due to patent infringement lawsuits filed by USAA related to mobile deposit technology[99](index=99&type=chunk)[102](index=102&type=chunk)[108](index=108&type=chunk) - The company filed a lawsuit against Instacart for breach of contract, seeking over **$2.0 million** in damages, with Instacart filing a cross-complaint[115](index=115&type=chunk)[118](index=118&type=chunk) - A putative class action lawsuit alleging violations of the Illinois Biometric Information Privacy Act (BIPA) was voluntarily dismissed by the plaintiffs on September 13, 2023[120](index=120&type=chunk)[124](index=124&type=chunk) [Note 11. Leases](index=30&type=section&id=11.%20LEASES) Operating ROU assets were **$4.6 million** and lease liabilities **$5.5 million** as of March 31, 2023, with a **4.6-year** weighted-average term Maturities of Operating Lease Liabilities (in thousands) | Period | Amount | | :--- | :--- | | 2023 - remaining | $1,108 | | 2024 | $1,726 | | 2025 | $638 | | 2026 | $629 | | 2027 | $635 | | 2028 | $425 | | Thereafter | $591 | | **Total lease payments** | **$5,752** | [Note 12. Revenue Concentration](index=30&type=section&id=12.%20REVENUE%20CONCENTRATION) Two customers each accounted for **15%** of total revenue for six months ended March 31, 2023; international sales were **24%** - For the six months ended March 31, 2023, two customers each accounted for **15%** of the company's total revenue[130](index=130&type=chunk) - International sales accounted for approximately **24%** of total revenue for the six months ended March 31, 2023, down from **29%** in the prior year period[131](index=131&type=chunk) [Note 13. Restatement of Previously Reported Financials](index=30&type=section&id=13.%20RESTATEMENT%20OF%20PREVIOUSLY%20REPORTED%20UNAUDITED%20INTERIM%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Q2 2022 financials were restated due to material GAAP errors in revenue recognition, commission capitalization, and HooYu acquisition accounting - The restatement was required due to errors in revenue recognition on multiyear term licenses and SaaS, revenue cut-off, capitalization of commissions, and accounting for HooYu acquisition liabilities[135](index=135&type=chunk) Impact of Restatement on Q2 2022 Statement of Operations (in thousands) | Line Item | As Previously Reported | Total Adjustments | As Restated | | :--- | :--- | :--- | :--- | | Total revenue | $34,714 | $(1,204) | $33,510 | | Operating income | $3,504 | $(824) | $2,680 | | Net income | $1,013 | $(578) | $435 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses **38%** quarterly and **39%** six-month revenue growth for March 31, 2023, driven by Mobile Deposit® and identity verification, including HooYu [Overview](index=36&type=section&id=Overview) Mitek leads in mobile image capture and digital identity verification, expanding capabilities via ID R&D and HooYu acquisitions - The company's growth strategy includes organic development and strategic acquisitions, such as ID R&D for AI-based biometrics and HooYu for KYC technology[155](index=155&type=chunk)[156](index=156&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Q2 2023 revenue increased **38%** to **$46.1 million** and net income to **$5.2 million**; six-month revenue grew **39%** to **$91.8 million** with **178%** net income growth Comparison of Three Months Ended March 31, 2023 and 2022 (in thousands) | Metric | 2023 | 2022 (Restated) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $46,123 | $33,510 | $12,613 | 38% | | Operating Income | $8,686 | $2,680 | $6,006 | 224% | | Net Income | $5,169 | $435 | $4,734 | 1088% | - The **38%** revenue increase in Q2 2023 was driven by a **$7.1 million** (39%) increase in software and hardware revenue and a **$5.5 million** (36%) increase in services and other revenue, the latter boosted by the HooYu acquisition[168](index=168&type=chunk) Comparison of Six Months Ended March 31, 2023 and 2022 (in thousands) | Metric | 2023 | 2022 (Restated) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $91,826 | $65,982 | $25,844 | 39% | | Operating Income | $17,059 | $7,509 | $9,550 | 127% | | Net Income | $9,899 | $3,559 | $6,340 | 178% | - The **54%** increase in software and hardware revenue for the six-month period was primarily due to a significant multiyear Mobile Deposit® contract with an existing customer[180](index=180&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity remains strong with **$114.5 million** in cash and investments at March 31, 2023, and **$11.6 million** cash from operations Summary of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2022 (Restated) | | :--- | :--- | :--- | | Cash provided by operating activities | $11,561 | $9,686 | | Cash provided by (used in) investing activities | $37,728 | $(1,743) | | Cash provided by (used in) financing activities | $1,259 | $(13,736) | - Working capital increased to **$114.9 million** at March 31, 2023, from **$88.6 million** at September 30, 2022[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks are interest rate risk on investments and foreign currency risk from European operations, with no material inflation impact - The company's investment portfolio is subject to interest rate risk, but short maturities mitigate material impact from rate changes[209](index=209&type=chunk) - The company is exposed to foreign currency risk from its operations in France, the Netherlands, and Spain, primarily related to the Euro and British pound sterling[210](index=210&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of March 31, 2023, due to material weaknesses in internal control over financial reporting; remediation is underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2023, due to multiple material weaknesses[213](index=213&type=chunk) - Material weaknesses were identified in controls related to business combination accounting, revenue recognition, risk assessment, IT general controls, contingent consideration valuation, and the financial statement close process[215](index=215&type=chunk)[217](index=217&type=chunk) - A remediation plan is in process, which includes hiring additional accounting personnel, enhancing the risk assessment process, and designing and implementing improved process-level and IT controls[216](index=216&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 10 of the condensed consolidated financial statements - Information regarding legal proceedings is incorporated by reference from Note 10 of the notes to the condensed consolidated financial statements[219](index=219&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors disclosed in the 2022 Annual Report on Form 10-K - There have been no material changes in the company's risk factors from those disclosed in the 2022 Annual Report on Form 10-K[220](index=220&type=chunk) [Item 5. Other Information](index=52&type=section&id=Item%205.%20Other%20Information) Q2 2023 revenue increased by **$0.8 million** due to revised variable consideration; new deadlines for 2024 stockholder proposals are announced - Adjustments were made to the second quarter of fiscal 2023 financial results, increasing services revenue by **$0.8 million** due to revisions in estimates of variable consideration for certain SaaS contracts[224](index=224&type=chunk) - Due to a postponed 2023 annual meeting, the company has set new deadlines for stockholder proposals for the 2024 annual meeting[227](index=227&type=chunk)[228](index=228&type=chunk)

Financial Data and Key Metrics Changes - For Q2 of fiscal 2023, Mitek generated revenue of $45.3 million, representing a 35% increase year-over-year [8][50] - GAAP net income for the quarter was $4.4 million, or $0.10 per diluted share, with a diluted share count of 45.6 million [9][64] - Non-GAAP net income for Q2 was $13.1 million, or $0.29 per diluted share, compared to $9.7 million, or $0.21 per share, for the same period last year [64] - Cash flow from operations was $6.3 million during the quarter, bringing total cash and investments to $114.5 million as of March 31, 2023 [25][64] Business Line Data and Key Metrics Changes - Identity revenue increased 35% year-over-year to $16.6 million, driven by the addition of HooYu SaaS revenue and strong contributions from ID R&D and Mobile Verify products [55][51] - Deposits revenue for Q2 increased 35% year-over-year to $28.8 million, driven by mobile deposit reorders [24][88] - Services and other revenue, including transactional SaaS revenue, maintenance, and professional services, was $20.1 million for the quarter, up 31% year-over-year [24] Market Data and Key Metrics Changes - Deposits revenue for the first six months increased 47% year-over-year to $59 million, driven by solid mobile deposit reorders and a large multiyear contract [65] - Identity revenue for the first six months increased 24% year-over-year to $32 million, driven by the addition of HooYu revenue and strong contributions from ID R&D and Mobile Verify products [65] Company Strategy and Development Direction - Mitek is focused on enhancing its identity verification solutions, positioning itself strategically to meet growing customer demands in a digital landscape [89] - The company is committed to innovation, with products like IDLive Face Plus aimed at combating deep fakes and digital injection attacks [90] - Mitek's strategy includes a principled approach to pricing, allowing for potential price increases as contracts are renewed [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging macroeconomic environment impacting new enterprise spending, with expectations of slower growth in the second half of the fiscal year [62][23] - The company reiterated its annual guidance, expecting revenue growth of 18% year-over-year and a non-GAAP operating margin in the range of 30% to 31% for the full fiscal year [26][23] - Management expressed confidence in the growth potential of the Check Fraud Defender and Mobile Deposit solutions, despite anticipated deceleration in growth [27][68] Other Important Information - Mitek is currently involved in litigation related to USAA patents, with positive developments as the U.S. Patent Trial and Appeal Board has invalidated several USAA patents [20][59] - The company has introduced MiPass, a multimodal biometric solution for continuous identity authentication, which combines voice and face recognition [60] Q&A Session Summary Question: What are the highest contributors to growth in the check business? - Management ranked growth drivers as follows: mobile check deposit adoption, Check Fraud Defender, and price increases [27][68] Question: Can you discuss the impact of the macro environment on transactional volumes? - Management noted that the impact from the macro environment became more pronounced in Q3 and Q4, with some headwinds observed in Q2 [98] Question: What are the plans for capital allocation moving forward? - Management indicated that the priority is to become current on filings before considering M&A or stock buybacks [83][109] Question: What should be expected regarding the ongoing patent situation with USAA? - Management advised to keep an eye on PTAB rulings and the ongoing declaratory judgment action on appeal [42][59]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 001-35231 MITEK SYSTEMS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) ...

Financial Data and Key Metrics Changes - Mitek reported record revenue of $143.9 million for fiscal 2022, representing a 20% year-over-year growth [3] - Non-GAAP net income reached $40 million or $0.87 per diluted share, up 17% year-over-year [3] - Cash flow from operations was strong at $26 million for the year [3] - GAAP net income for fiscal 2022 was $3 million or $0.07 per share, down from $8 million or $0.18 per share in fiscal 2021 [16] - Non-GAAP net income increased 16% for the year to $39.6 million or $0.87 per share compared to $34.2 million or $0.76 per share in fiscal 2021 [16] Business Line Data and Key Metrics Changes - Services and other revenue for fiscal 2022 was $71 million, a 19% increase over $59.7 million in fiscal 2021 [15] - Transactional SaaS revenue increased 31% year-over-year to $13.4 million, driven by increased mobile verified volumes and the addition of HooYu SaaS revenue [12] - Deposits revenue increased 14% year-over-year to $58.1 million, primarily due to the adoption of Mobile Deposit and Check Fraud Defender product lines [31] - Identity verification revenue increased 31% to $58.1 million, driven by 25% growth in transactional revenue and additional SaaS revenue from HooYu [31] Market Data and Key Metrics Changes - The identity verification market is experiencing significant growth due to the increasing sophistication of financial crimes and the demand for secure online experiences [9] - Mitek's identity business grew 31% year-over-year, reflecting the strong demand for its solutions [88] Company Strategy and Development Direction - Mitek is focusing on expanding its identity verification solutions and enhancing its product offerings to combat digital identity fraud [3][9] - The company plans to hold an Investor Day event to discuss its long-term strategy and growth opportunities in the identity products sector [10] - Mitek launched MiPass, a multi-modal biometrics solution for continuous identity authentication, to strengthen its market position [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal 2023 revenue guidance of $163 million to $165 million, representing a 14% year-over-year increase [17] - The company is optimistic about its long-term prospects and the ability to penetrate its target addressable markets [91] - Management noted that the macroeconomic environment has changed significantly, impacting the identity business, particularly in interest-sensitive sectors [70] Other Important Information - Mitek is actively pursuing a declaratory judgment action against USAA to prove that its products do not infringe on USAA's patents, with positive developments in the litigation process [87] - The company continues to generate meaningful cash flow from operations, with total cash and investments reaching $101 million as of September 30, 2022 [32] Q&A Session Summary Question: Can you discuss transaction activity and trends in Mobile Check and Mobile ID? - Management noted increased transaction volumes from existing customers and new customer additions in identity verifications and mobile check deposits [20] Question: What are the expectations for the timing on the 10-K and subsequent filings? - Management indicated that the 10-K would be filed within a week to ten days, with a return to a regular filing schedule expected soon [40][77] Question: How do you view the growth rates of deposits versus the identity business in fiscal 2023? - Management expects deposits to grow at a high-single digit to low double-digit rate, while the identity business is anticipated to achieve high-teens growth [56][74] Question: What factors could impact the timeline for achieving profitability in the identity segment? - Management highlighted that faster top-line growth could lead to earlier profitability, while slower growth could delay it [49] Question: How is the macro environment impacting each business unit? - Management noted that the identity business is facing challenges in interest-sensitive areas, while the deposits business is benefiting from increased focus on fraud prevention [64][70]

Mitek Systems, Inc. (NASDAQ:MITK) Q3 2022 Earnings Conference Call July 28, 2022 4:30 PM ET Company Participants Todd Kehrli - Investor Relations Max Carnecchia - Chief Executive Officer Frank Teruel - Chief Financial Officer Conference Call Participants Jake Roberge - William Blair Mike Grondahl - Northland Securities Scott Buck - H.C. Wainwright Allen Klee - Maxim Group Operator Good day, and welcome to Mitek's Third Quarter 2022 Earnings conference call. All participants will be in a listen-only mode. [O ...