Financial Data and Key Metrics Changes - Mitek reported a revenue growth of 21% year-over-year, reaching $34.7 million in Q2 2022 [9][30] - Non-GAAP net income increased by 49% year-over-year to $10.8 million, or $0.24 per diluted share [9][36] - Cash flow from operations was $7.4 million for the quarter [9][37] - Total GAAP operating expenses rose to $29.9 million from $26.4 million in Q2 of the previous year [33] Business Line Data and Key Metrics Changes - Software and hardware revenue increased by 48% year-over-year to $19.3 million, primarily due to contributions from ID R&D and mobile deposit reorders [30] - Services revenue, which includes transactional SaaS revenue, decreased by 2% year-over-year to $15.4 million, with transactional SaaS revenue down 4% to $10.5 million [31] - Deposit revenue grew by 24% year-over-year to $21.3 million, while identity revenue increased by 16% year-over-year to $13.4 million [32][78] Market Data and Key Metrics Changes - The identity verification market is experiencing increased demand due to rising fraud attacks and data breaches, which increased by 68% in 2021 [22] - The acquisition of HooYu is expected to expand Mitek's addressable market significantly, targeting more customers and accelerating growth in the identity business [10][25] Company Strategy and Development Direction - Mitek's acquisition of HooYu aims to enhance its capabilities in identity verification and authentication, providing a comprehensive orchestration platform [10][25] - The company is focusing on integrating its technology and harmonizing go-to-market efforts to capitalize on growing market opportunities [28][39] - Mitek plans to leverage its low code, no code capabilities to allow businesses of all sizes to quickly implement identity verification solutions [14][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged potential headwinds within the core identity business but emphasized the urgency for orchestration-enabled solutions in the market [28] - The integration of HooYu is expected to take 90 to 180 days, with a focus on demonstrating the combined platform to existing and new customers [66] - Management believes that profitability for the identity business may be pushed back to the second half of fiscal 2024 due to integration costs [39] Other Important Information - Mitek's total cash and investments stood at $93.4 million as of March 31, following the acquisition of HooYu for $127.1 million [37] - The company is making necessary investments to integrate HooYu and enhance its offerings in the identity verification market [39] Q&A Session Summary Question: How are initial customer and partner conversations changing with the new platform? - Management noted that customers are increasingly recognizing the ROI of combining technologies into one platform rather than seeking point solutions [45][46] Question: Can you provide updates on new products like Check Fraud Defender and IDLive Doc? - Management reported positive adoption and interest from large financial institutions for Check Fraud Defender, while IDLive Doc has seen increasing transaction volumes with initial customers [51][56] Question: What were HooYu's revenue and historical losses? - HooYu generated just under $10 million in revenue last year but was a loss-making startup, requiring additional investments for integration and growth [62][64] Question: What is the timeline for integrating HooYu and selling to larger customers? - Management aims to have a demonstrable product in the market within 90 days and to build pipeline sales cycles shortly thereafter [66] Question: Can you explain the decrease in services revenue and the headwinds in the identity segment? - The decrease was attributed to the completion of a large project for a customer, creating a difficult comparison for future quarters [70][71]

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section provides unaudited consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with explanatory notes Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Dec 31, 2021 ($ millions) | Three Months Ended Dec 31, 2020 ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenue** | $32.473 | $25.976 | +25.0% | | Operating Income | $4.829 | $1.537 | +214.2% | | **Net Income** | $3.124 | $2.167 | +44.2% | | Diluted Net Income per Share | $0.07 | $0.05 | +40.0% | Consolidated Balance Sheets Highlights (Unaudited) | Metric | December 31, 2021 ($ millions) | September 30, 2021 ($ millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $24.214 | $30.312 | | Total Assets | $403.001 | $419.693 | | Total Liabilities | $215.572 | $226.863 | | Total Stockholders' Equity | $187.429 | $192.830 | - Net cash provided by operating activities was **$2.3 million** for the three months ended December 31, 2021, a significant decrease from **$8.7 million** in the same period of 2020[17](index=17&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the first quarter fiscal 2022 financial performance, covering revenue growth, cost structures, market opportunities, challenges, liquidity, and capital resources - The company serves over **7,500** financial services organizations and fintech brands globally with its mobile image capture and digital identity verification solutions[20](index=20&type=chunk)[157](index=157&type=chunk) - In May 2021, Mitek acquired ID R&D, an AI-based voice and face biometrics provider, to enhance its security offerings against digital fraud[21](index=21&type=chunk)[158](index=158&type=chunk)[163](index=163&type=chunk) - The company identifies market growth drivers in digital transformation, stringent regulations, and increasing demand for digital services, while acknowledging risks from competition, product concentration, and lengthy sales cycles[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Total revenue for Q1 2022 increased by 25% to $32.5 million, driven by growth in software, hardware, and services, while operating expenses also rose, leading to a 44% net income increase Revenue Breakdown (Three Months Ended Dec 31) | Revenue Category | 2021 ($ millions) | 2020 ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | | Software and hardware | $15.445 | $12.303 | +26% | | Services and other | $17.028 | $13.673 | +25% | | **Total Revenue** | **$32.473** | **$25.976** | **+25%** | Operating Expenses Breakdown (Three Months Ended Dec 31) | Expense Category | 2021 ($ millions) | 2020 ($ millions) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of revenue | $3.356 | $4.138 | -19% | | Selling and marketing | $8.438 | $7.385 | +14% | | Research and development | $7.606 | $6.165 | +23% | | General and administrative | $5.965 | $5.058 | +18% | | Acquisition-related costs | $2.279 | $1.693 | +35% | - The increase in R&D expenses was primarily due to higher personnel-related costs from the ID R&D acquisition and increased headcount[177](index=177&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2021, cash and investments decreased by $9.2 million due to stock repurchases, following the issuance of $155.3 million in convertible senior notes and the near completion of a $15 million share repurchase program - Cash and investments decreased by **$9.2 million** during the quarter, primarily due to **$10.1 million** in stock repurchases[184](index=184&type=chunk) - The company repurchased approximately **598,636** shares for **$10.1 million** during the quarter under its share repurchase program[104](index=104&type=chunk)[201](index=201&type=chunk) - In February 2021, the company issued **$155.3 million** in **0.75%** convertible senior notes due 2026, with net proceeds of approximately **$149.7 million**[112](index=112&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include interest rate fluctuations on its investment portfolio and foreign currency exchange rate volatility, with a focus on principal preservation and minimal impact from interest rate changes - The primary objective of investment activities is to preserve principal while maximizing after-tax yields without significantly increasing risk[210](index=210&type=chunk) - A hypothetical **100 basis point** change in market interest rates would not have a material impact on the fair value of cash equivalents and debt securities due to their short maturities[211](index=211&type=chunk) - The company is exposed to foreign currency risk from operations in France, the Netherlands, Russia, and Spain, particularly from fluctuations in the Euro[212](index=212&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective as of December 31, 2021, with a previously identified material weakness in internal control over financial reporting related to contingent consideration valuation now remediated - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of December 31, 2021[214](index=214&type=chunk) - A material weakness related to the valuation of contingent consideration from the ID R&D Acquisition, identified as of September 30, 2021, was remediated as of December 31, 2021[215](index=215&type=chunk)[216](index=216&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters, including a claim against its subsidiary, ongoing indemnification demands from customers due to patent infringement, and breach of contract lawsuits - A claim for **€0.8 million** (**$0.9 million**) was filed against the company's subsidiary, ICAR, in Spain, for which Mitek expects to be indemnified[130](index=130&type=chunk)[131](index=131&type=chunk) - The company is monitoring and involved in legal actions related to patent infringement claims by USAA against its customers, including Wells Fargo and PNC Bank, but is not a named defendant in those suits[133](index=133&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) - Mitek filed a lawsuit against Maplebear Inc. (Instacart) for breach of contract, seeking over **$2.0 million** in damages[145](index=145&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the company's risk factors from those disclosed in the previous Annual Report on Form 10-K - There have been no material changes in the company's risk factors from those disclosed in the previous Form 10-K[220](index=220&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the quarter ended December 31, 2021, that were not previously disclosed - No unregistered sales of equity securities were made during the quarter that had not been previously reported[221](index=221&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate agreements, CEO and CFO certifications, and financial data files - The filing includes CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act[226](index=226&type=chunk)

Investor presentation : MITK Q1 FY22 © 2022 Mitek Systems Inc. 1 ● ● Safe harbor statement Forward-looking statements contained in this presentation involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to our outlook or expectations for earnings, ...

Mitek Systems, Inc. (NASDAQ:MITK) Q1FY2022 Earnings Conference Call January 27, 2022 4:30 PM ET Company Participants Todd Kehrli ??? Investor Relations Contact Officer Max Carnecchia ??? Chief Executive Officer Frank Teruel ??? Chief Financial Officer Conference Call Participants Bhavan Suri ??? William Blair Mario Cortellacci ??? Jefferies Mike Grondahl ??? Northland Securities Allen Klee ??? Maxim Group Scott Buck ??? H.C. Wainwright Operator Good day, ladies and gentlemen, and welcome to the Mitek System ...

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, 2021 ☐ 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) ...

Investor presentation : MITK Q4 FY21 © 2021 Mitek Systems Inc. 1 ● ● Safe harbor statement Forward-looking statements contained in this presentation involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to our outlook or expectations for earnings, ...

Mitek Systems, Inc. (NASDAQ:MITK) Q3 2021 Earnings Conference Call November 4, 2021 4:30 PM ET Company Participants Todd Kehrli ??? MKR Group Max Carnecchia ??? Chief Executive Officer Frank Teruel ??? Chief Financial Officer Conference Call Participants Bhavan Suri ??? William Blair and Company Mike Grondahl ??? Northland Securities, Inc. Mario Cortellacci ??? Jefferies Derek Greenberg ??? Maxim Group Operator Good day, ladies and gentlemen, and welcome to the Mitek Systems Fourth Quarter and Fiscal 2021 f ...

PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Mitek Systems' unaudited consolidated financial statements and notes on accounting policies, acquisitions, investments, and debt [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated balance sheets show increased assets and equity, driven by cash, investments, and convertible senior notes issuance Consolidated Balance Sheets (in thousands) | Metric | June 30, 2021 (Unaudited) | September 30, 2020 | | :-------------------------------- | :-------------------------- | :------------------- | | Total assets | $422,398 | $169,154 | | Total liabilities | $233,874 | $36,911 | | Total stockholders' equity | $188,524 | $132,243 | | Cash and cash equivalents | $40,549 | $19,986 | | Short-term investments | $138,302 | $40,035 | | Convertible senior notes | $119,625 | — | [Consolidated Statements of Operations and Other Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Income) The company reported substantial revenue and net income growth for the three and nine months ended June 30, 2021 Consolidated Statements of Operations and Other Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total revenue | $31,778 | $25,413 | $86,526 | $70,672 | | Operating income | $5,432 | $1,434 | $9,352 | $2,796 | | Interest expense | $2,223 | — | $3,543 | — | | Net income | $2,985 | $1,348 | $6,171 | $2,816 | | Net income per share—basic | $0.07 | $0.03 | $0.14 | $0.07 | | Net income per share—diluted | $0.07 | $0.03 | $0.14 | $0.07 | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased significantly due to net income, stock-based compensation, acquisition-related share issuance, and convertible senior notes warrants Consolidated Statements of Stockholders' Equity (in thousands) | Metric | June 30, 2021 | September 30, 2020 | | :--------------------------------- | :-------------- | :----------------- | | Total Stockholders' Equity | $188,524 | $132,243 | | Additional Paid-In Capital | $195,942 | $146,518 | | Accumulated Deficit | $(7,823) | $(13,994) | - Acquisition-related shares issued contributed **$13,944 thousand** to additional paid-in capital for the three months ended June 30, 2021[16](index=16&type=chunk) - Sale of convertible senior notes warrants added **$23,909 thousand** to additional paid-in capital for the nine months ended June 30, 2021[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased, investing activities used more cash for acquisitions and investments, and financing activities provided significant cash from convertible notes Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $25,016 | $17,375 | | Net cash used in investing activities | $(147,423) | $(15,530) | | Net cash provided by financing activities | $142,846 | $260 | | Net increase in cash and cash equivalents | $20,563 | $2,190 | | Cash and cash equivalents at end of period | $40,549 | $18,938 | - Proceeds from the issuance of convertible senior notes totaled **$155,250 thousand** in the nine months ended June 30, 2021[20](index=20&type=chunk) - Acquisitions, net of cash acquired, used **$12,549 thousand** in investing activities for the nine months ended June 30, 2021[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed explanations of Mitek's business, accounting policies, ID R&D acquisition, investments, goodwill, equity, taxes, convertible notes, and legal matters [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 specializes in mobile image capture and digital identity verification, leveraging AI and machine learning, with recent acquisition of ID R&D - Mitek is a leading innovator of mobile image capture and digital identity verification solutions, serving over **7,500 financial services organizations** and fintech brands globally[22](index=22&type=chunk) - Key products include Mobile Deposit® (over **five billion check deposits processed**), Mobile Verify®, Mobile Fill®, and CheckReader™[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - In May 2021, Mitek acquired ID R&D, Inc., a provider of AI-based voice and face biometrics and liveness detection, to simplify and secure the transaction lifecycle[27](index=27&type=chunk) - The company markets products globally through direct sales teams and channel partners in the U.S., Europe, and Latin America[28](index=28&type=chunk) Potentially Dilutive Common Shares Excluded from EPS Calculation (in thousands) | Item | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Stock options | 524 | 207 | 593 | 270 | | RSUs | 1,248 | 1,718 | 1,177 | 1,577 | | ESPP common stock equivalents | 73 | 73 | 27 | — | | Performance options | 263 | — | 224 | — | | Performance RSUs | 98 | 67 | 109 | 26 | | Convertible senior notes | 7,448 | — | 3,983 | — | | Warrants | 7,448 | — | 3,983 | — | | Total potentially dilutive common shares outstanding | 17,102 | 2,065 | 10,096 | 1,873 | [2. REVENUE RECOGNITION](index=15&type=section&id=2.%20REVENUE%20RECOGNITION) Mitek recognizes revenue from software and hardware upon delivery, and from services and transactional SaaS over time, applying a five-step recognition process - Software and hardware revenue is recognized upon delivery of licenses or shipment of hardware[71](index=71&type=chunk) - Services and other revenue, including transactional SaaS, maintenance, and professional services, is recognized over the period services are performed[72](index=72&type=chunk) Revenue Disaggregated by Major Product Category (in thousands) | Major Product Category | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Deposits software and hardware | $15,817 | $12,222 | $38,705 | $32,822 | | Deposits services and other | $4,963 | $4,726 | $14,887 | $13,399 | | **Deposits revenue** | **$20,780** | **$16,948** | **$53,592** | **$46,221** | | Identity verification software and hardware | $1,156 | $990 | $3,583 | $3,358 | | Identity verification services and other | $9,842 | $7,475 | $29,351 | $21,093 | | **Identity verification revenue** | **$10,998** | **$8,465** | **$32,934** | **$24,451** | | **Total revenue** | **$31,778** | **$25,413** | **$86,526** | **$70,672** | Contract Balances (in thousands) | Item | June 30, 2021 | September 30, 2020 | | :---------------------------------- | :-------------- | :----------------- | | Contract assets, current | $3,610 | $5,187 | | Contract assets, non-current | $3,723 | $4,468 | | Contract liabilities (deferred revenue), current | $11,896 | $7,973 | | Contract liabilities (deferred revenue), non-current | $614 | $1,597 | [3. BUSINESS COMBINATIONS](index=17&type=section&id=3.%20BUSINESS%20COMBINATIONS) Mitek acquired ID R&D, Inc. on May 28, 2021, for up to $49.0 million, resulting in significant goodwill and intangible assets - Mitek acquired ID R&D, Inc. on May 28, 2021, for up to **$49.0 million**, comprising **$13.0 million cash**, **$13.9 million in common stock**, and up to **$22.1 million in earnout payments**[81](index=81&type=chunk)[82](index=82&type=chunk) - The estimated fair value of earnout consideration was **$15.3 million** at closing, determined using a discounted cash flow methodology[83](index=83&type=chunk) Estimated Fair Values of Assets Acquired and Liabilities Assumed from ID R&D Acquisition (in thousands) | Item | Amount | | :-------------------------- | :------- | | Current assets | $385 | | Property, plant, and equipment | $114 | | Intangible assets | $14,190 | | Goodwill | $30,866 | | Current liabilities | $(397) | | Other non-current liabilities | $(3,236) | | **Net assets acquired** | **$41,922** | Estimated Fair Values and Useful Lives of Intangible Assets Acquired from ID R&D Acquisition (in thousands) | Intangible Asset | Amortization Period | Amount Assigned | | :----------------------- | :------------------ | :-------------- | | Completed technologies | 7.0 years | $11,280 | | Customer relationships | 3.0 years | $2,540 | | Trade names | 5.0 years | $370 | | **Total intangible assets acquired** | | **$14,190** | [4. INVESTMENTS](index=19&type=section&id=4.%20INVESTMENTS) Mitek's investment portfolio, primarily available-for-sale debt securities, significantly increased and is carried at fair value, with detailed fair value hierarchy disclosures Investments by Type of Security (in thousands) | Security Type | June 30, 2021 Fair Market Value | September 30, 2020 Fair Market Value | | :---------------------------------- | :------------------------------ | :------------------------------- | | U.S. Treasury, short-term | $5,241 | $10,283 | | Asset-backed securities, short-term | $6,052 | $4,759 | | Corporate debt securities, short-term | $127,009 | $24,993 | | U.S. Treasury, long-term | $4,997 | — | | Foreign government and agency securities, long-term | $2,919 | — | | Corporate debt securities, long-term | $28,727 | $1,963 | | **Total** | **$174,945** | **$41,998** | - All investments are classified as available-for-sale debt securities, with unrealized gains and losses included in accumulated other comprehensive income (loss)[89](index=89&type=chunk)[90](index=90&type=chunk) - The fair value of the Notes Hedge and embedded conversion derivative are estimated using a Black-Scholes model and classified as Level 2 in the fair value hierarchy[94](index=94&type=chunk) Acquisition-Related Contingent Consideration (Level 3 Fair Value, in thousands) | Item | Amount | | :------------------------------------------ | :------- | | Balance at September 30, 2020 | $753 | | Contingent consideration associated with ID R&D Acquisition | $15,280 | | Foreign currency effect on contingent consideration | $29 | | Payment of contingent consideration | $(782) | | **Balance at June 30, 2021** | **$15,280** | [5. GOODWILL AND INTANGIBLE ASSETS](index=22&type=section&id=5.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill increased significantly to **$67.1 million** due to the ID R&D acquisition, with intangible assets also rising and amortization expense of **$5.2 million** Changes in Goodwill Balance (in thousands) | Item | Amount | | :-------------------------- | :------- | | Balance at September 30, 2020 | $35,669 | | Acquisition of ID R&D | $30,866 | | Foreign currency effect on goodwill | $515 | | **Balance at June 30, 2021** | **$67,050** | Intangible Assets (in thousands) | Item | June 30, 2021 Net | September 30, 2020 Net | | :----------------------- | :---------------- | :------------------- | | Completed technologies | $19,761 | $10,925 | | Customer relationships | $8,343 | $8,238 | | Trade names | $453 | $126 | | **Total intangible assets** | **$28,557** | **$19,289** | - Amortization expense related to acquired intangible assets was **$5.2 million** for the nine months ended June 30, 2021, an increase from **$4.8 million** in the prior year[97](index=97&type=chunk) [6. STOCKHOLDERS' EQUITY](index=23&type=section&id=6.%20STOCKHOLDERS'%20EQUITY) Stock-based compensation expense increased, and a new **$15 million** share repurchase program was authorized in June 2021 Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Cost of revenue | $89 | $73 | $258 | $199 | | Selling and marketing | $857 | $693 | $2,537 | $1,859 | | Research and development | $797 | $721 | $2,313 | $2,075 | | General and administrative | $1,124 | $1,014 | $3,474 | $2,979 | | **Total stock-based compensation expense** | **$2,867** | **$2,501** | **$8,582** | **$7,112** | - As of June 30, 2021, **$21.0 million** of unrecognized compensation expense related to outstanding stock options and RSUs is expected to be recognized over approximately **2.4 years**[100](index=100&type=chunk) - A new share repurchase program for up to **$15 million** was authorized on June 15, 2021, expiring June 30, 2022, with no shares purchased as of that date[111](index=111&type=chunk) [7. INCOME TAXES](index=26&type=section&id=7.%20INCOME%20TAXES) Mitek recorded income tax provisions of **$0.3 million** and **$0.2 million** for the three and nine months ended June 30, 2021, respectively, with effective tax rates of **9%** and **3%** Income Tax Provision and Effective Tax Rate (in millions) | Period | Income Tax Provision | Effective Tax Rate | | :------------------------------- | :------------------------------- | :----------------- | | Three Months Ended June 30, 2021 | $0.3 | 9% | | Three Months Ended June 30, 2020 | $0.2 | 15% | | Nine Months Ended June 30, 2021 | $0.2 | 3% | | Nine Months Ended June 30, 2020 | $0.5 | 14% | - The difference from the U.S. federal statutory tax rate is mainly due to excess tax benefits from stock options and RSUs, foreign/state taxes, and federal/state R&D credits[118](index=118&type=chunk) [8. CONVERTIBLE SENIOR NOTES](index=28&type=section&id=8.%20CONVERTIBLE%20SENIOR%20NOTES) In February 2021, Mitek issued **$155.3 million** in 0.75% convertible senior notes due 2026, with a conversion option treated as an embedded derivative liability - Issued **$155.3 million** aggregate principal amount of **0.75%** convertible senior notes due 2026 in February 2021[119](index=119&type=chunk) - Net proceeds from the offering were approximately **$149.7 million**, used for general corporate purposes and to pay for the Notes Hedge[121](index=121&type=chunk) - The conversion option is accounted for as an embedded derivative liability (**$54.3 million** fair value as of June 30, 2021) due to insufficient authorized shares to settle conversions in equity[119](index=119&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk) Interest Cost Recognized Relating to 2026 Notes (in thousands) | Item | Three Months Ended June 30, 2021 | Nine Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------ | | Contractual interest expense | $290 | $463 | | Amortization of debt discount and issuance costs | $1,933 | $3,080 | | **Total interest expense recognized** | **$2,223** | **$3,543** | - The company entered into a Notes Hedge (cost **$33.2 million**) and Warrant Transactions (proceeds **$23.9 million**) to reduce potential dilution from the 2026 Notes[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [9. COMMITMENTS AND CONTINGENCIES](index=30&type=section&id=9.%20COMMITMENTS%20AND%20CONTINGENCIES) Mitek has **$9.1 million** in operating lease liabilities and is involved in legal proceedings, including patent infringement claims against its customers, which it is vigorously defending Operating Lease Liabilities Maturities (in thousands) | Fiscal Year | Operating Leases | | :---------------- | :--------------- | | 2021—remaining | $531 | | 2022 | $2,159 | | 2023 | $2,113 | | 2024 | $1,779 | | 2025 | $693 | | 2026 | $687 | | Thereafter | $1,803 | | **Total lease payments** | **$9,765** | | Less: amount representing interest | $(655) | | **Present value of future lease payments** | **$9,110** | - A claim of **€0.8 million** (**$0.9 million**) was filed against ICAR, with Mitek Holding B.V. indemnified under the acquisition agreement[136](index=136&type=chunk)[137](index=137&type=chunk) - USAA filed lawsuits against Wells Fargo and PNC Bank alleging patent infringement related to mobile deposits, with Wells Fargo settling; Mitek denies infringement and is actively monitoring/defending these claims[139](index=139&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - Mitek filed a lawsuit against UrbanFT, Inc. for delinquent payments and declaratory judgment of non-infringement of patents, with patent claims dismissed for lack of jurisdiction[148](index=148&type=chunk)[149](index=149&type=chunk) [10. REVENUE CONCENTRATION](index=33&type=section&id=10.%20REVENUE%20CONCENTRATION) Mitek experiences revenue concentration from a few key customers and channel partners, with international sales contributing **23%** and **26%** of total revenue for the three and nine months ended June 30, 2021, respectively - For the three months ended June 30, 2021, three customers accounted for **16%**, **13%**, and **11%** of total revenue, respectively[152](index=152&type=chunk) - For the nine months ended June 30, 2021, two customers accounted for **17%** and **10%** of total revenue[152](index=152&type=chunk) - International sales accounted for approximately **23%** and **25%** of total revenue for the three months ended June 30, 2021 and 2020, respectively[155](index=155&type=chunk) - International sales accounted for approximately **26%** and **25%** of total revenue for the nine months ended June 30, 2021 and 2020, respectively[155](index=155&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=34&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Mitek's financial performance, strategic initiatives, market opportunities, and risks, highlighting revenue growth and changes in operating expenses and liquidity [Overview](index=34&type=section&id=Overview) Mitek Systems is a leading innovator in mobile image capture and digital identity verification, leveraging AI and machine learning, with solutions like Mobile Deposit® and Mobile Verify® - Mitek is a leading innovator of mobile image capture and digital identity verification solutions, serving over **7,500 financial services organizations** and fintech brands[160](index=160&type=chunk) - Key products include Mobile Deposit® (mobile check deposit), Mobile Verify® (online identity verification and fraud detection), Mobile Fill® (application prefill), and CheckReader™ (check data extraction)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - The acquisition of ID R&D in May 2021 adds AI-based voice and face biometrics and liveness detection to Mitek's offerings[165](index=165&type=chunk) [Third Quarter Fiscal 2021 Highlights](index=35&type=section&id=Third%20Quarter%20Fiscal%202021%20Highlights) Mitek's third quarter of fiscal 2021 saw **25%** revenue growth and **121%** net income increase, alongside the ID R&D acquisition and patent portfolio expansion Third Quarter Fiscal 2021 Financial Highlights | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Change (%) | | :--------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Revenue | $31.8 million | $25.4 million | 25% | | Net income | $3.0 million | $1.3 million | 121% | | Net income per diluted share | $0.07 | $0.03 | 133% | | Cash provided by operating activities (nine months) | $9.0 million | $17.4 million | (48%) | - Acquired ID R&D, Inc. on May 28, 2021, for an aggregate purchase price of up to **$49.0 million**[168](index=168&type=chunk) - Increased patent portfolio to **73 issued patents** as of June 30, 2021, with **15 additional patent applications** pending[167](index=167&type=chunk) [Market Opportunities, Challenges & Risks](index=35&type=section&id=Market%20Opportunities,%20Challenges%20%26%20Risks) Mitek sees market opportunities in digital transformation and regulatory compliance but faces competition, demand fluctuations, lengthy sales cycles, and COVID-19 uncertainties - Market opportunities are driven by financial institutions, fintechs, and other companies seeking superior digital customer experiences, fraud detection, and regulatory compliance[169](index=169&type=chunk) - Anticipated growth in deposits and identity verification products based on trends in payments, online lending, regulations, and digital service demand[169](index=169&type=chunk) - Challenges include competition, potential declines in demand for digital transactions, negative publicity, and obsolescence of software environments[170](index=170&type=chunk) - Sales and implementation cycles can be lengthy, potentially impacting business and financial results[171](index=171&type=chunk) - The COVID-19 pandemic's impact on business activity, operations, and financial results remains uncertain, though it may accelerate digital technology adoption[176](index=176&type=chunk)[178](index=178&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Mitek experienced strong revenue growth for both the three and nine months ended June 30, 2021, driven by Mobile Deposit® and Mobile Verify® sales, with increased operating expenses offset by lower litigation costs [Comparison of the Three Months Ended June 30, 2021 and 2020](index=37&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202021%20and%202020) For the three months ended June 30, 2021, total revenue increased by **25%** to **$31.8 million**, and net income surged by **121%** to **$3.0 million**, with notable interest expense from new convertible notes Results of Operations (Three Months Ended June 30, in thousands) | Metric | 2021 | 2020 | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------- | :----- | :----- | :-------------------- | :-------------------- | | Total revenue | $31,778 | $25,413 | $6,365 | 25% | | Software and hardware revenue | $16,973 | $13,212 | $3,761 | 28% | | Services and other revenue | $14,805 | $12,201 | $2,604 | 21% | | Cost of revenue | $3,410 | $3,496 | $(86) | (2)% | | Selling and marketing | $8,133 | $7,011 | $1,122 | 16% | | Research and development | $6,946 | $5,891 | $1,055 | 18% | | General and administrative | $5,633 | $5,884 | $(251) | (4)% | | Acquisition-related costs and expenses | $2,224 | $1,697 | $527 | 31% | | Interest expense | $2,223 | — | $2,223 | 100% | | Net income | $2,985 | $1,348 | $1,637 | 121% | - Increase in software and hardware revenue primarily due to higher Mobile Deposit® software sales, partially offset by declines in CheckReader™ and ID_CLOUD™[181](index=181&type=chunk) - Services and other revenue growth driven by a **33%** increase in Mobile Verify® transactional SaaS revenue and higher Mobile Deposit® transactional SaaS revenue[181](index=181&type=chunk) - General and administrative expenses decreased due to lower intellectual property litigation costs (**$0.9 million**), partially offset by higher executive transition and personnel-related costs[186](index=186&type=chunk) [Comparison of the Nine Months Ended June 30, 2021 and 2020](index=39&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20June%2030,%202021%20and%202020) For the nine months ended June 30, 2021, total revenue increased by **22%** to **$86.5 million**, and net income more than doubled to **$6.2 million**, with rising operating expenses and new interest costs Results of Operations (Nine Months Ended June 30, in thousands) | Metric | 2021 | 2020 | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------- | :----- | :----- | :-------------------- | :-------------------- | | Total revenue | $86,526 | $70,672 | $15,854 | 22% | | Software and hardware revenue | $42,288 | $36,180 | $6,108 | 17% | | Services and other revenue | $44,238 | $34,492 | $9,746 | 28% | | Cost of revenue | $11,340 | $9,615 | $1,725 | 18% | | Selling and marketing | $24,048 | $20,345 | $3,703 | 18% | | Research and development | $19,801 | $16,764 | $3,037 | 18% | | General and administrative | $16,409 | $16,382 | $27 | —% | | Acquisition-related costs and expenses | $5,576 | $4,884 | $692 | 14% | | Interest expense | $3,543 | — | $3,543 | 100% | | Net income | $6,171 | $2,816 | $3,355 | 119% | - Software and hardware revenue increased due to higher Mobile Deposit® software sales and identity verification hardware products[193](index=193&type=chunk) - Services and other revenue growth driven by **$8.3 million** increase in Mobile Verify® transactional SaaS revenue, plus higher maintenance and hosted mobile deposit transactional revenue[193](index=193&type=chunk) - Selling and marketing expenses increased due to higher personnel-related costs (**$4.1 million**) and product promotion costs (**$0.4 million**), partially offset by decreased travel expenses (**$0.8 million**) due to COVID-19[195](index=195&type=chunk) - General and administrative expenses remained consistent, with higher personnel and executive transition costs offset by decreased intellectual property litigation costs (**$1.3 million**)[197](index=197&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Mitek's cash and investments significantly increased by **248%** to **$215.5 million**, primarily from convertible senior notes issuance, with sufficient liquidity for the next twelve months - Cash and cash equivalents and investments increased by **$153.5 million** (**248%**) to **$215.5 million** as of June 30, 2021, from **$62.0 million** on September 30, 2020[203](index=203&type=chunk) - Net cash provided by operating activities was **$25.0 million** for the nine months ended June 30, 2021[204](index=204&type=chunk) - Net cash used in investing activities was **$147.4 million**, primarily for net purchases of investments (**$133.9 million**) and the ID R&D acquisition (**$12.5 million**)[206](index=206&type=chunk) - Net cash provided by financing activities was **$142.8 million**, mainly from **$149.7 million** net proceeds from 2026 Notes issuance[208](index=208&type=chunk) - Working capital was **$167.6 million** at June 30, 2021, up from **$59.8 million** at September 30, 2020[225](index=225&type=chunk) [Off Balance Sheet Arrangements](index=43&type=section&id=Off%20Balance%20Sheet%20Arrangements) Mitek Systems, Inc. had no off-balance sheet arrangements as of June 30, 2021 - The Company had no off balance sheet arrangements as of June 30, 2021[226](index=226&type=chunk) [Changes in Critical Accounting Policies](index=43&type=section&id=Changes%20in%20Critical%20Accounting%20Policies) The primary change in critical accounting policies relates to the Convertible Senior Notes Hedge and Embedded Conversion Derivative, established in February 2021 - A new accounting policy was established for Convertible Senior Notes Hedge and Embedded Conversion Derivative due to the issuance of the 2026 Notes in February 2021[228](index=228&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=44&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Mitek is exposed to market risks from interest rates on its investment portfolio and foreign currency fluctuations, primarily the Euro, but a **100 basis point** interest rate change would not materially impact short-maturity investments - Investment portfolio consists of cash equivalents and marketable securities (corporate debt, commercial paper, U.S. Treasury, asset-backed securities), with a primary objective to preserve principal[229](index=229&type=chunk) - A hypothetical **100 basis point** increase or decrease in market interest rates would not materially impact the fair value of investments due to their relatively short maturities[230](index=230&type=chunk) - Exposed to foreign currency exchange risks, particularly between the U.S. dollar and the Euro, due to operations in France, the Netherlands, Russia, and Spain[231](index=231&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=44&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Mitek's disclosure controls were effective as of June 30, 2021, excluding the newly acquired ID R&D, with no other material changes to internal controls despite remote work - Disclosure controls and procedures were effective as of June 30, 2021, based on management's evaluation[233](index=233&type=chunk) - Management's assessment of internal control over financial reporting did not include ID R&D's internal controls due to the recent acquisition[235](index=235&type=chunk) - No other material changes to internal control over financial reporting occurred during the quarter, and remote work due to COVID-19 has not materially impacted controls[235](index=235&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=46&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Mitek is involved in various legal proceedings, but management believes their aggregate disposition will not materially affect the company's financial condition or results of operations - The company is subject to various claims and legal proceedings arising in the ordinary course of business[238](index=238&type=chunk) - Management believes the disposition of these matters, in aggregate, will not materially affect the company's financial condition or results of operations[238](index=238&type=chunk) [ITEM 1A. RISK FACTORS](index=46&type=section&id=ITEM%201A.%20RISK%20FACTORS) Mitek's business is subject to various risks and uncertainties, consistent with prior disclosures, with no material changes reported - No material changes in risk factors from those disclosed in the Annual Report on Form 10-K and the Form 10-Q for the period ended March 31, 2021[239](index=239&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=46&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of Mitek's equity securities during the quarter ended June 30, 2021, that were not previously disclosed - No unregistered sales of equity securities occurred during the quarter ended June 30, 2021, that were not previously disclosed[240](index=240&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=46&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) Mitek reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[241](index=241&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=46&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) Mitek had no mine safety disclosures to report - No mine safety disclosures were reported[242](index=242&type=chunk) [ITEM 5. OTHER INFORMATION](index=46&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information was reported in this section - No other information was reported[243](index=243&type=chunk) [ITEM 6. EXHIBITS](index=47&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including various agreements, corporate documents, and certifications - Includes the Agreement and Plan of Merger for the ID R&D acquisition (Exhibit 2.3)[245](index=245&type=chunk) - Lists the Indenture for the **0.75%** Convertible Senior Notes due 2026 (Exhibit 4.1)[245](index=245&type=chunk) - Contains certifications from the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, 32.1)[245](index=245&type=chunk) [Signatures](index=49&type=section&id=Signatures) The report is duly signed on behalf of Mitek Systems, Inc. by its Chief Executive Officer and Chief Financial Officer on August 5, 2021 - Report signed by Scipio Maximus Carnecchia (Chief Executive Officer) and Frank Teruel (Chief Financial Officer) on August 5, 2021[249](index=249&type=chunk)[250](index=250&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (I.R.S. Employer Identification No.) 600 B Street, Suite 100 San Diego, California 92101 (Address of principal executive offices) (Zip Code) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 ☐ 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 ...

Investor presentation : MITK Q2 FY21 © 2021 Mitek Systems Inc. 1 ● Safe harbor statement Forward-looking statements contained in this presentation involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to our outlook or expectations for earnings, r ...