Mitek Systems(MITK) - 2025 Q3 - Quarterly Results

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