Summary
Mitek reported record first quarter fiscal 2021 results. Total revenue was $26.0 million for the quarter ended December 31, 2020, up 17.7% from the prior-year quarter. Operating income was $1.54 million, up 415.8%. Net income was $2.17 million, up 287.0%. Diluted EPS was $0.05, up 400.0%. Operating margin was 5.9%, up 4.6 percentage points. Non-GAAP net income increased 23% to $6.2 million, or $0.14 per diluted share. The company said the quarter was driven by demand for mobile deposit and identity verification solutions as commerce shifts to digital channels.
Cash generation was strong. Operating cash flow was $8.73 million, up 68.2%. Capital expenditures were $0.40 million, up 95.1%. Current deferred revenue was $9.74 million, up 22.1%. The company added patents during the quarter, bringing total issued patents to 69 as of December 31, 2020. It had 17 domestic and international patent applications pending as of that date. Mitek serves more than 7,500 financial services organizations and leading marketplace and fintech brands. Its Mobile Deposit solution has processed over four billion check deposits. The company markets Mobile Verify for identity verification, Mobile Fill for application prefill, and CheckReader for check data extraction.
The company sees growth opportunities in deposits and identity verification. It points to trends in payments, online lending, more stringent regulations, sharing apps, online marketplaces, and rising demand for digital services. Risks include competition from other products or technologies, a decline in demand for digital transactions, negative publicity, and obsolescence of software environments. Product concentration could make Mitek vulnerable to market demand and competition. Sales and implementation cycles can be lengthy, often as long as six months and sometimes longer for larger customers. Channel partner concentration is another risk, though the company does not believe losing a channel partner would adversely affect operations because it or another partner could sell to end-users.
COVID-19 remains a major uncertainty. The company said the pandemic began creating global business disruptions in the second quarter of fiscal 2020, and the World Health Organization declared it a pandemic on March 11, 2020. Mitek's workforce has transitioned to remote work, and employee travel, including to international subsidiaries, has been severely curtailed. The company anticipates that the pandemic will negatively impact business activity across the globe, but it cannot predict the overall impact. It also expects stay-at-home orders may accelerate adoption of digital technologies and create future opportunities. Fraud and cyber-attacks are rising with new technology, which can cause financial losses, brand damage, and loss of loyal customers.
Other items include the expiration of the share repurchase program on December 16, 2020. Total purchases under the program were $1.0 million, or approximately 137,000 shares at an average price of $7.33. The Rights Agreement expires on October 22, 2021. Mitek had no off-balance sheet arrangements as of December 31, 2020. Management believes current cash and cash equivalents and cash expected from operations will be adequate to satisfy working capital needs for the next twelve months. The company continues to monitor COVID-19 and may take further actions that alter business operations as required by authorities or as it determines is in the best interests of employees, customers, partners, and stockholders.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $26.0M | $30.6M | -15.2% | $22.1M | +17.7% |
| Research & development | $6.2M | $8.3M | -25.9% | $4.6M | +33.7% |
| Sales & marketing | $7.4M | $5.1M | +45.5% | $7.3M | +0.8% |
| General & administrative | $5.1M | $5.9M | -14.3% | $5.3M | -4.3% |
| Total operating expenses | $24.4M | $24.6M | -0.5% | $21.8M | +12.3% |
| Operating income (loss) | $1.5M | $6.1M | -74.7% | $298.0K | +415.8% |
| Operating margin | 5.9% | 19.8% | -13.9 pp | 1.4% | +4.6 pp |
| Net income (loss) | $2.2M | $5.0M | -56.6% | $560.0K | +287.0% |
| Net margin | 8.3% | 16.3% | -8.0 pp | 2.5% | +5.8 pp |
| Diluted EPS | $0.05 | $0.12 | -$0.07 | $0.01 | +$0.04 |
Risks
Substantially all revenues are from a few types of technology, so product concentration may make Mitek especially vulnerable to market demand and competition, which could reduce revenues. MD&A also notes that sales of licenses to one or more channel partners have comprised a significant part of revenue each year.
MD&A states that COVID-19 created global business disruptions and disruptions in Mitek's operations, with the workforce transitioned to remote work and employee travel severely curtailed. The extent and duration of the pandemic's impact on business, operations, and financial results remains uncertain and difficult to predict.
Mitek says the sales cycle for its software and services can be lengthy, and implementation cycles by channel partners and customers can also be lengthy, often as long as six months and sometimes longer for larger customers. Delays or non-completion of implementations could adversely affect business, financial condition, and results of operations.
Mitek faces a growing number of competitors in mobile image capture and identity verification, many of which have greater financial, technical, marketing, and other resources. It must continue to offer attractive, secure, accurate, and convenient products to remain competitive.
MD&A states that as use of new technology increases, associated fraud and cyber-attacks increase, and the negative outcomes include financial losses, brand damage, and loss of loyal customers.
Cost of revenue increased 41% to $4.1 million in the three months ended December 31, 2020 from $2.9 million in the prior-year quarter, and rose as a percentage of revenue to 16% from 13%. The increase was driven by higher hardware revenues and higher variable personnel and hosting costs tied to higher Mobile Verify transaction volume.
SaaS KPIs
All quarters →Mobile Verify transactional SaaS revenue
Summary, forecast, risks and KPIs are extracted from MITEK SYSTEMS INC's SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.