Summary
Mitek Systems reported fiscal 2024 third quarter revenue of $45.0 million, up 4% from $43.1 million a year earlier. GAAP operating income was $0.7 million, an operating margin of 1.6%, compared with $1.8 million and 4.2% a year ago. GAAP net income was $0.2 million, or $0.00 per diluted share, compared with a net loss of $0.4 million, or negative $0.01 per diluted share. The quarter swung to a GAAP profit, but operating income fell 59.0% from the prior-year quarter. Cash flow from operations was $13.0 million, down from $16.6 million.
Non-GAAP results showed a similar split. Non-GAAP operating income was $11.6 million and non-GAAP operating margin was 26%, compared with $12.0 million and 28% a year ago. Non-GAAP net income increased 27% to $12.0 million, or $0.25 per diluted share, compared with $9.5 million, or $0.20 per diluted share. The difference between GAAP and non-GAAP results reflects adjustments for acquisition-related costs, stock-based compensation, litigation and other legal costs, executive transition costs, non-recurring audit fees, restructuring costs, and amortization of debt discount and issuance costs. Those adjustments remain large enough to turn a small GAAP profit into double-digit non-GAAP profitability.
Deposits led the revenue growth, while Identity product revenue disappointed. Executive Chairman and Interim CEO Scott Carter said he was disappointed in fiscal Q3 Identity product revenue and the revenue outlook for fiscal year 2024. Mitek revised its full-year guidance for the fiscal year ending September 30, 2024. The company now expects full-year revenue to decrease 1% at the midpoint of its range compared with last year's revenue. It also guided full-year non-GAAP operating margin to between 23% and 25%. The company noted that in fiscal 2023 it signed a large multi-year mobile deposit reorder with one customer that locked in favorable pricing over a four-year period. Due to the unique terms of that contract, Mitek recognized additional license revenue relating to future years in fiscal 2023. If the company backs out that future-year revenue and attributes the portion that would have been attributable to fiscal 2024 to the midpoint of its fiscal 2024 revenue guidance, it estimates growth of approximately 5% at the midpoint. Adjusted non-GAAP operating margin would be approximately 25% at the midpoint. That context matters because the headline guidance decline is tied to a prior-year contract timing issue.
Balance sheet and cash flow trends add pressure. Total cash and investments was $133.2 million at June 30, 2024, an increase of $2.9 million from $130.3 million at March 31, 2024. Mitek repurchased 819,623 shares at an average price of $12.25, totaling approximately $10.0 million. From July 1, 2024 through August 7, 2024, it repurchased 555,581 shares at an average price of $11.57, totaling $6.4 million. Deferred revenue, current portion, was $23.75 million, up 16.1% from the prior-year quarter. Capital expenditures were $0.43 million, up 51.8%. Operating cash flow year to date was $10.59 million, down 62.3% from $28.11 million. Revenue year to date was $128.86 million, down 4.5%. Net loss year to date was $5.30 million, and operating loss year to date was $5.48 million. Operating margin year to date was -4.3%, down from 14.0%. These year-to-date figures show the drag from the prior-year license revenue and higher costs.
Risks remain concentrated in Identity verification and the company's capital structure. Mitek faces competition from larger and better-funded rivals, lengthy sales and implementation cycles that can run six months or longer, and product concentration in mobile image capture and identity verification. The company had 99 issued patents and 12 domestic and international patent applications pending as of June 30, 2024. It serves more than 7,900 financial services organizations and fintech brands. The 2026 Notes had a covenant issue after late SEC filings, but as of June 30, 2024, Mitek was in compliance with the Indenture. The credit agreement net leverage ratio was 2.02 to 1.00, above the 2.00 to 1.00 limit that applies when the company engages in share repurchases, and Mitek obtained a waiver from the bank for the compliance period ended June 30, 2024. No borrowings were outstanding under the credit agreement. Other named risks include negative global economic conditions, lack of demand for products, integration of HooYu, quarterly revenue variations, the profitability of certain sectors, the performance of growth initiatives, the outcome of pending or threatened litigation, and the timing of product launches by signed customers.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $45.0M | $47.0M | -4.2% | $43.1M | +4.4% |
| Research & development | $10.0M | $9.7M | +2.8% | $7.5M | +33.8% |
| Sales & marketing | $10.4M | $11.0M | -6.1% | $10.3M | +0.6% |
| General & administrative | $12.6M | $14.9M | -15.7% | $11.6M | +8.8% |
| Total operating expenses | $44.2M | $46.3M | -4.4% | $41.3M | +7.2% |
| Operating income (loss) | $734.0K | $698.0K | +5.2% | $1.8M | -59.0% |
| Operating margin | 1.6% | 1.5% | +0.1 pp | 4.2% | -2.5 pp |
| Net income (loss) | $216.0K | $282.0K | -23.4% | -$428.0K | +150.5% |
| Net margin | 0.5% | 0.6% | -0.1 pp | -1.0% | +1.5 pp |
| Diluted EPS | $0.00 | $0.01 | -$0.01 | -$0.01 | +$0.01 |
Risks
The company is cooperating with an ongoing SEC formal investigation following its October 2022 and May 2023 restatements, and the duration, scope, and outcome are difficult to predict. Compliance with Section 404 and public disclosure rules may require additional accounting and financial staff and could reveal material weaknesses in internal control over financial reporting.
The risk factor states the company has limited internal audit capabilities and may need to hire additional accounting and financial staff with public company experience. If deficiencies or material weaknesses are identified, the stock price could decline and the company could face SEC sanctions or investigations.
Year-to-date revenue decreased 4.5% to $128.86 million for the nine months ended June 30, 2024. The MD&A attributes the decline partly to a significant multiyear Mobile Deposit contract recognized in the prior-year period that did not recur, contributing to the year-to-date operating loss.
Operating income for the quarter ended June 30, 2024 decreased 59.0% to $0.73 million, and year-to-date operating income swung to a loss of $5.48 million from income of $18.85 million. Net income year to date swung to a loss of $5.30 million, and operating cash flow year to date decreased 62.3% to $10.59 million.
At June 30, 2024, the company's net leverage ratio was 2.02 to 1.00, exceeding the Credit Agreement's 2.00 to 1.00 limit applicable after share repurchases, and it obtained a waiver from the Bank. The 2026 Notes also previously accrued special interest after late SEC filings, though the company was in compliance with the Indenture as of June 30, 2024.
The sales cycle for the company's 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 implementations may adversely affect business, financial condition, and results of operations.
Substantially all revenues come from a few types of technology, and product concentration may make the company especially vulnerable to market demand and competition from other technologies. The company also faces a growing number of competitors, many with greater financial, technical, and marketing resources.
Sales of licenses to one or more channel partners have comprised a significant part of revenue each year, driven by the timing of renewals or purchases. If a channel partner relationship were lost, establishing a direct relationship with end-users could take time to develop, if it develops at all.
The company recorded restructuring costs related to a fiscal 2024 restructuring and relocation of ID R&D employees from Russia to Spain. These actions increased personnel-related costs and may continue to disrupt operations.
SaaS KPIs
All quarters →Summary, forecast, risks and KPIs are extracted from MITEK SYSTEMS INC's SEC filings for Q3 FY2024 (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.