Mitek Systems(MITK) - 2025 Q2 - Quarterly Report

Financial Performance - Revenue for Q2 2025 was $51.9 million, an increase of 11% from $47.0 million in Q2 2024[132] - Net income for Q2 2025 was $9.2 million, or $0.20 per diluted share, compared to $0.3 million, or $0.01 per diluted share, in Q2 2024[132] - Total revenue increased by $5.3 million, or 6%, to $89.2 million for the six months ended March 31, 2025, compared to $83.9 million for the same period in 2024[151] - Net income for the six months ended March 31, 2025, was $4.5 million, a significant improvement of $10.1 million compared to a net loss of $5.5 million in the same period in 2024[150] Revenue Breakdown - Software and hardware revenue increased by $1.8 million, or 7%, to $26.7 million in Q2 2025, driven by higher sales of Mobile Deposit® software[140] - Services and other revenue rose by $3.2 million, or 14%, to $25.2 million in Q2 2025, primarily due to increased revenue from MiVIP, Mobile Deposit®, and Check Fraud Defender products[140] - Software and hardware revenue decreased by $2.2 million, or 5%, to $38.7 million, primarily due to lower sales of Mobile Deposit® and ID R&D biometrics software products[151] - Services and other revenue increased by $7.5 million, or 17%, to $50.5 million, driven by strong growth in MiVIP, Mobile Deposit®, Check Fraud Defender, and CheckReader™ products[151] Cash Flow and Liquidity - Cash provided by operating activities was $14.3 million for the six months ended March 31, 2025, compared to cash used of $2.4 million in the same period of 2024[132] - Cash and cash equivalents increased by $10.6 million, or 7%, to $152.4 million as of March 31, 2025, compared to $141.8 million on September 30, 2024[161] - The company believes current cash and cash equivalents, along with expected operational cash generation, will be sufficient to meet working capital needs for at least the next twelve months[187] Expenses - General and administrative expenses decreased by $4.8 million, or 32%, to $10.1 million in Q2 2025, mainly due to lower audit and professional fees[144] - Selling and marketing expenses decreased by $0.5 million, or 4%, to $10.5 million in Q2 2025, due to lower personnel-related costs[142] - General and administrative expenses decreased by $8.5 million, or 28%, to $22.0 million, mainly due to lower audit, accounting, and tax fees[155] Debt and Financing - The Company issued $155.3 million in 0.75% Convertible Senior Notes due February 1, 2026, with an additional $20.25 million purchased by initial purchasers[165] - The net proceeds from the offering of the 2026 Notes were approximately $149.7 million after deducting discounts and commissions[167] - The Company entered into a Credit Agreement providing a revolving line of credit of up to $35.0 million, with an additional $15.0 million at the Bank's discretion[171] - The Amended Credit Agreement includes a delayed draw term loan of up to $75.0 million to pay amounts outstanding under the 2026 Notes[178] Investments and Assets - As of March 31, 2025, the company had investments of $47.7 million in available-for-sale debt securities, representing 11% of total assets[191] - As of March 31, 2025, $31.5 million of available-for-sale securities were classified as current, while $16.2 million were classified as long-term[186] - The remaining maturities of marketable securities range from approximately one to 22 months as of March 31, 2025[191] Compliance and Governance - As of March 31, 2025, the Company was in compliance with the covenants in the Indenture after filing its 2023 Annual Report on March 19, 2024[166] - The net leverage ratio was 1.42 to 1.00 as of March 31, 2025, complying with the covenant of no more than 2.25 to 1.00[176] Shareholder Actions - The Company authorized a share repurchase program for up to $50.0 million effective May 16, 2024, expiring on May 16, 2026[184] - During the six months ended March 31, 2025, the Company repurchased 363,378 shares for $3.3 million at an average price of $8.99 per share[185] Market and Economic Conditions - Inflation has not materially affected the company's financial condition or results of operations during the six months ended March 31, 2025, or 2024[194] - The company has operations in the UK, France, the Netherlands, and Spain, which are exposed to foreign currency exchange rate fluctuations[193] - The fair value of cash equivalents and debt securities is subject to changes in market interest rates, but a hypothetical 100 basis point change would not materially impact their fair value[192] Other Information - Total number of issued patents reached 105 as of March 31, 2025, with 20 patent applications outstanding[132] - There have been no material changes to critical accounting estimates since the 2024 Annual Report[189]