Mitek Systems(US:MITK)2022-05-07 01:34Financial Performance - Total revenue for the three months ended March 31, 2022, was $34.7 million, an increase of 21% compared to $28.8 million for the same period in 2021[190] - Net income for the three months ended March 31, 2022, was $1.9 million, or $0.04 per diluted share, compared to $1.0 million, or $0.02 per share, for the same period in 2021[190] - Total revenue increased by $12.4 million, or 23%, to $67.2 million for the six months ended March 31, 2022, compared to $54.7 million for the same period in 2021[201] - Net income increased by $1.8 million, or 58%, to $5.0 million for the six months ended March 31, 2022, compared to $3.2 million in the same period in 2021[200] Revenue Breakdown - Software and hardware revenue increased by $6.3 million, or 48%, to $19.3 million, primarily due to increased sales of Mobile Deposit® and IDLive® software products[191] - Software and hardware revenue rose by $9.4 million, or 37%, to $34.7 million, primarily driven by a $10.5 million increase in sales of Mobile Deposit® and IDLive® software products[201] Expenses - Research and development expenses increased by 23% to $8.2 million for the three months ended March 31, 2022, compared to $6.7 million for the same period in 2021[190] - Selling and marketing expenses increased by $1.7 million, or 11%, to $17.6 million, but as a percentage of revenue, they decreased to 26% from 29%[203] - Research and development expenses rose by $2.9 million, or 23%, to $15.8 million, accounting for 24% of total revenue, up from 23%[204] - General and administrative expenses increased by $1.2 million, or 12%, to $12.0 million, with a decrease in percentage of revenue to 18% from 20%[205] - Acquisition-related costs increased by $2.0 million, or 59%, to $5.3 million, representing 8% of total revenue, up from 6%[206] Cash Flow and Liquidity - Cash provided by operating activities was $9.7 million for the six months ended March 31, 2022, compared to $16.1 million for the same period in 2021[190] - As of March 31, 2022, the company had $93.4 million in cash and cash equivalents, a decrease of $134.0 million, or 59%, from $227.4 million on September 30, 2021, primarily due to acquisitions and stock repurchases[210] - Net cash provided by operating activities for the six months ended March 31, 2022, was $9.7 million, driven by net income of $5.0 million and net non-cash charges of $15.2 million[211] - The company used $1.7 million in investing activities during the six months ended March 31, 2022, mainly for acquisitions and capital expenditures, partially offset by net sales and maturities of investments of $125.5 million[214] - Net cash used in financing activities was $13.7 million during the six months ended March 31, 2022, primarily due to $14.8 million in stock repurchases[216] Acquisitions - The acquisition of ID R&D was completed for an aggregate purchase price of up to $49.0 million, including $13.0 million in cash and $13.9 million in common stock[179] - The acquisition of HooYu Ltd was completed for £97.8 million in cash, enhancing Mitek's KYC capabilities[180] Tax and Interest - For the six months ended March 31, 2022, the company recorded an income tax provision of $0.5 million, resulting in an effective tax rate of 9%[209] - Interest expense for the six months ended March 31, 2022, was $4.0 million, significantly up from $1.3 million in the same period in 2021[207] Market and Operational Insights - The company anticipates growth in deposits and identity verification products due to trends in payments, online lending, and increasing demand for digital services[181] - The sales cycle for software and services can be lengthy, often taking up to six months or longer for larger customers[183] Assets and Securities - As of March 31, 2022, the company had $69.4 million in available-for-sale debt securities, with $37.9 million classified as current and $31.5 million as long-term[231] - The fair market value of the company's marketable securities was $69.4 million, representing 18% of total assets[237] - The company's investment portfolio includes cash equivalents and marketable securities such as corporate debt securities, commercial paper, certificates of deposit, and asset-backed securities[237] - A hypothetical 100 basis point change in market interest rates would not materially impact the fair value of cash equivalents and debt securities due to their relatively short maturities[238] Currency Exposure - The company has operations in the United Kingdom, France, the Netherlands, Russia, and Spain, which are exposed to foreign currency exchange rate fluctuations[239] - The functional currency for the company's French, Dutch, and Spanish operations is the Euro, affecting results and cash flows due to exchange rate changes[239]