Mitek Systems(MITK) - 2023 Q4 - Annual Report

PART I. FINANCIAL INFORMATION This section presents Mitek Systems, Inc.'s unaudited condensed consolidated financial statements and management's discussion for Q2 2023 ITEM 1. FINANCIAL STATEMENTS 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 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] - Total liabilities increased by $19.74 million (10.38%) over the nine-month period, with current liabilities seeing a notable rise[10] Condensed Consolidated Statements of Operations and Other Comprehensive Income (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] - 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] Condensed Consolidated Statements of Stockholders' Equity 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] - Accumulated deficit improved significantly, decreasing from $(18.001) million to $(8.530) million, reflecting positive net income over the nine-month period[19] Condensed Consolidated Statements of Cash Flows 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] - 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] Notes to Condensed Consolidated Financial Statements 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 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] - The company's solutions are embedded in mobile apps and web browsers, focusing on trusted online experiences, fraud detection, and KYC/AML compliance[24] - 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][137] 2. REVENUE RECOGNITION 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] 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