Mitek Systems(MITK) - 2021 Q1 - Quarterly Report

Financial Performance - Total revenue for the three months ended December 31, 2020, was $26.0 million, an increase of 18% compared to $22.1 million in the same period of 2019[148] - Net income for the same period was $2.2 million, or $0.05 per diluted share, compared to net income of $0.6 million, or $0.01 per share, in the prior year[148] - Cash provided by operating activities was $8.7 million for the three months ended December 31, 2020, up from $5.2 million in the same period of 2019[148] - Services and other revenue rose by $3.1 million, or 30%, to $13.7 million, driven by a 42% increase in Mobile Verify® transactional SaaS revenue[155] - Cash and cash equivalents increased by $10.6 million, or 17%, to $72.6 million as of December 31, 2020, compared to $62.0 million on September 30, 2020[163] - Net cash provided by operating activities was $8.7 million for the three months ended December 31, 2020, compared to $5.2 million for the same period in 2019[164][165] - The company had working capital of $64.3 million at December 31, 2020, compared to $59.8 million at September 30, 2020[176] Revenue Breakdown - Software and hardware revenue increased by $0.8 million, or 7%, to $12.3 million, primarily due to increased sales of Mobile Deposit® and CheckReader™ products[154] - Cost of revenue increased by $1.2 million, or 41%, to $4.1 million for the three months ended December 31, 2020, compared to $2.9 million for the same period in 2019, representing 16% of revenue[156] Expenses - Selling and marketing expenses rose by $0.7 million, or 11%, to $7.4 million for the three months ended December 31, 2020, down to 28% of revenue from 30% in the same period in 2019[157] - Research and development expenses increased by $0.9 million, or 16%, to $6.2 million for the three months ended December 31, 2020, consistent at 24% of revenue[158] - General and administrative expenses decreased by $0.2 million, or 4%, to $5.1 million for the three months ended December 31, 2020, down to 19% of revenue from 24% in the same period in 2019[159] - Acquisition-related costs increased by $0.1 million, or 5%, to $1.7 million for the three months ended December 31, 2020, remaining at 7% of revenue[160] Tax and Other Income - Other income, net decreased by $0.2 million to $0.1 million for the three months ended December 31, 2020, primarily due to foreign currency exchange losses[161] - The company recorded an income tax benefit of $0.5 million for the three months ended December 31, 2020, yielding an effective tax rate of negative 33%[162] Market and Growth Outlook - The financial services sector represents the largest percentage of users for Mitek's solutions, with accelerated adoption in marketplaces and hospitality sectors[139] - The company anticipates growth in deposits and identity verification products due to trends in payments, online lending, and increasing demand for digital services[143] - The sales cycle for Mitek's software can be lengthy, often taking six months or longer for larger customers, which may impact financial results if delays occur[145] - Mitek's patented technology and growing product portfolio provide a competitive advantage in the mobile image capture and identity verification industry[148] Patents and Innovations - The company added new patents during the first quarter of fiscal 2021, bringing the total number of issued patents to 69, with 17 pending applications[148]