Summary
Mitek reported record fiscal third quarter revenue of $31.8 million, up 25% from the prior-year quarter. Growth came from both identity verification and deposit products. The company also launched Check Fraud Defender, an AI-powered cloud-hosted consortium for financial institutions. Twenty percent of the top 25 U.S. banks have already licensed the technology, and early deployments have produced up to 90% savings in manual review time. Mitek acquired ID R&D during the quarter, adding voice and face biometrics and liveness detection. The deal has an aggregate purchase price of up to $49.0 million, with additional payments tied to fiscal 2022 and fiscal 2023 milestones. Mitek serves more than 7,500 organizations, and its Mobile Deposit product has processed approximately five billion check deposits.
The quarter showed much better profitability. GAAP operating income was $5.4 million, up 278.8% from the prior-year quarter. Operating margin was 17.1%, up 11.5 percentage points. GAAP net income was $3.0 million, up 121.4% from the prior-year quarter. Diluted EPS was $0.07, up 133.3%. Non-GAAP net income rose 56% to $10.6 million, or $0.23 per diluted share. The non-GAAP figures exclude stock compensation, acquisition-related costs, and other items. For the first nine months of fiscal 2021, revenue was $86.5 million, up 22% from the prior-year period. GAAP net income for the first nine months was $6.2 million, or $0.14 per diluted share, up 119.1% and 100.0% respectively from the prior-year period. Non-GAAP net income for the first nine months was $24.1 million, or $0.54 per diluted share.
Cash generation remained solid. Operating cash flow was $9.0 million in the quarter, down 0.6% from the prior-year quarter. For the first nine months of fiscal 2021, operating cash flow was $25.0 million, up 44% from the prior-year period. Capital expenditures were $0.3 million in the quarter, up 212.2%, and $1.0 million for the first nine months, up 85.8%. Deferred revenue, current portion, was $11.9 million at June 30, 2021, up 30.9% from a year earlier. The company issued convertible senior notes due 2026 in February 2021, which add interest expense and potential dilution. The notes have an initial conversion price of approximately $20.85 per share, and related warrant transactions can dilute earnings if the average share price exceeds $26.53 in a fiscal quarter.
Management did not provide specific revenue or earnings guidance for the next quarter or full fiscal year in the release. The MD&A points to several risks. The sales cycle for software and services can be lengthy, and implementation cycles can run as long as six months or longer for larger customers. Revenue is concentrated in a few technology types, which makes the company vulnerable to shifts in demand and competition. Mitek faces growing competition from larger, better-resourced companies in mobile image capture and identity verification. The COVID-19 pandemic continues to create uncertainty around business activity, customer demand, and sales cycles. The company also has a share repurchase program for up to $15 million that expires on June 30, 2022, with no shares purchased under it as of June 30, 2021.
Mitek added 73 issued patents as of June 30, 2021, with 15 domestic and international applications pending. The quarter showed strong top-line momentum and much better profitability. The company still depends on digital transaction trends and successful integration of ID R&D to sustain that performance. The Check Fraud Defender consortium could open a new growth channel if banks continue to adopt it. The main question is whether the current growth rate can hold as competition intensifies and customers work through long implementation cycles.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $31.8M | $28.8M | +10.4% | $25.4M | +25.0% |
| Research & development | $6.9M | $6.7M | +3.8% | $5.1M | +35.9% |
| Sales & marketing | $8.1M | $8.5M | -4.7% | $7.8M | +4.4% |
| General & administrative | $5.6M | $5.7M | -1.5% | $5.9M | -4.3% |
| Total operating expenses | $26.3M | $26.4M | -0.2% | $24.0M | +9.9% |
| Operating income (loss) | $5.4M | $2.4M | +127.9% | $1.4M | +278.8% |
| Operating margin | 17.1% | 8.3% | +8.8 pp | 5.6% | +11.4 pp |
| Net income (loss) | $3.0M | $1.0M | +192.9% | $1.3M | +121.4% |
| Net margin | 9.4% | 3.5% | +5.9 pp | 5.3% | +4.1 pp |
| Diluted EPS | $0.07 | $0.02 | +$0.05 | $0.03 | +$0.04 |
Risks
The 0.75% convertible senior notes due 2026 resulted in interest expense of $2.2 million in the quarter ended June 30, 2021 and $3.5 million year to date; the convertible feature will be dilutive to earnings per share when average stock price exceeds the conversion price, and warrant transactions require incremental dilution if average share price is over $26.53 for any fiscal quarter.
Substantially all revenues are from a few types of technology, and product concentration may make Mitek especially vulnerable to market demand and competition from other technologies, which could reduce revenues.
The sales cycle for software and services can be lengthy, and implementation cycles by channel partners and customers can be as long as six months and sometimes longer for larger customers; delays or incomplete implementation may adversely affect business, financial condition, and results of operations.
Mitek faces a growing number of competitors in mobile image capture and identity verification, many with greater financial, technical, marketing, and other resources.
Sales of licenses to one or more channel partners have comprised a significant part of revenue each year; losing a channel partner relationship could require Mitek or another partner to establish end-user relationships, which could take time to develop, if it develops at all.
COVID-19 has created global business disruptions and disruptions in operations, with uncertain impact on business, operations, and financial results depending on duration and severity; workforce transitioned to remote work and travel severely curtailed.
Mitek acquired ID R&D in May 2021 for up to $49.0 million, with additional payments of up to approximately $22.1 million upon achievement of financial milestones during fiscal 2022 and fiscal 2023; acquisition-related costs increased $0.5 million, or 31%, in the quarter ended June 30, 2021.
SaaS KPIs
All quarters →Mobile Verify transactional SaaS revenue
Summary, forecast, risks and KPIs are extracted from MITEK SYSTEMS INC's SEC filings for Q3 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 1, 2026.