10-Q 1 mitk-20240331.htm 10-Q mitk-20240331
false2024Q200008078639/30P5YP1YP3Yhttp://fasb.org/us-gaap/2023#ConvertibleLongTermNotesPayable0.0000479731xbrli:sharesiso4217:USDiso4217:USDxbrli:sharesmitk:institutionxbrli:puremitk:tradingDayiso4217:EURmitk:patent00008078632023-10-012024-03-3100008078632024-04-3000008078632024-03-3100008078632023-09-300000807863us-gaap:LicenseMember2024-01-012024-03-310000807863us-gaap:LicenseMember2023-01-012023-03-310000807863us-gaap:LicenseMember2023-10-012024-03-310000807863us-gaap:LicenseMember2022-10-012023-03-310000807863us-gaap:ServiceOtherMember2024-01-012024-03-310000807863us-gaap:ServiceOtherMember2023-01-012023-03-310000807863us-gaap:ServiceOtherMember2023-10-012024-03-310000807863us-gaap:ServiceOtherMember2022-10-012023-03-3100008078632024-01-012024-03-3100008078632023-01-012023-03-3100008078632022-10-012023-03-310000807863us-gaap:CommonStockMember2023-12-310000807863us-gaap:AdditionalPaidInCapitalMember2023-12-310000807863us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310000807863us-gaap:RetainedEarningsMember2023-12-3100008078632023-12-310000807863us-gaap:CommonStockMember2024-01-012024-03-310000807863us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310000807863us-gaap:RetainedEarningsMember2024-01-012024-03-310000807863us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310000807863us-gaap:CommonStockMember2024-03-310000807863us-gaap:AdditionalPaidInCapitalMember2024-03-310000807863us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310000807863us-gaap:RetainedEarningsMember2024-03-310000807863us-gaap:CommonStockMember2022-12-310000807863us-gaap:AdditionalPaidInCapitalMember2022-12-310000807863us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000807863us-gaap:RetainedEarningsMember2022-12-3100008078632022-12-310000807863us-gaap:CommonStockMember2023-01-012023-03-310000807863us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310000807863us-gaap:RetainedEarningsMember2023-01-012023-03-310000807863us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000807863us-gaap:CommonStockMember2023-03-310000807863us-gaap:AdditionalPaidInCapitalMember2023-03-310000807863us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310000807863us-gaap:RetainedEarningsMember2023-03-3100008078632023-03-310000807863us-gaap:CommonStockMember2023-09-300000807863us-gaap:AdditionalPaidInCapitalMember2023-09-300000807863us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300000807863us-gaap:RetainedEarningsMember2023-09-300000807863us-gaap:CommonStockMember2023-10-012024-03-310000807863us-gaap:AdditionalPaidInCapitalMember2023-10-012024-03-310000807863us-gaap:RetainedEarningsMember2023-10-012024-03-310000807863us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-012024-03-310000807863us-gaap:CommonStockMember2022-09-300000807863us-gaap:AdditionalPaidInCapitalMember2022-09-300000807863us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000807863us-gaap:RetainedEarningsMember2022-09-3000008078632022-09-300000807863us-gaap:CommonStockMember2022-10-012023-03-310000807863us-gaap:AdditionalPaidInCapitalMember2022-10-012023-03-310000807863us-gaap:RetainedEarningsMember2022-10-012023-03-310000807863us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-012023-03-310000807863us-gaap:EmployeeStockOptionMember2024-01-012024-03-310000807863us-gaap:EmployeeStockOptionMember2023-01-012023-03-310000807863us-gaap:EmployeeStockOptionMember2023-10-012024-03-310000807863us-gaap:EmployeeStockOptionMember2022-10-012023-03-310000807863us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310000807863us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310000807863us-gaap:RestrictedStockUnitsRSUMember2023-10-012024-03-310000807863us-gaap:RestrictedStockUnitsRSUMember2022-10-012023-03-310000807863mitk:EmployeeStockPurchasePlanMember2024-01-012024-03-310000807863mitk:EmployeeStockPurchasePlanMember2023-01-012023-03-310000807863mitk:EmployeeStockPurchasePlanMember2023-10-012024-03-310000807863mitk:EmployeeStockPurchasePlanMember2022-10-012023-03-310000807863mitk:PerformanceOptionsMember2024-01-012024-03-310000807863mitk:PerformanceOptionsMember2023-01-012023-03-310000807863mitk:PerformanceOptionsMember2023-10-012024-03-310000807863mitk:PerformanceOptionsMember2022-10-012023-03-310000807863us-gaap:PerformanceSharesMember2024-01-012024-03-310000807863us-gaap:PerformanceSharesMember2023-01-012023-03-310000807863us-gaap:PerformanceSharesMember2023-10-012024-03-310000807863us-gaap:PerformanceSharesMember2022-10-012023-03-310000807863us-gaap:ConvertibleDebtSecuritiesMember2024-01-012024-03-310000807863us-gaap:ConvertibleDebtSecuritiesMember2023-01-012023-03-310000807863us-gaap:ConvertibleDebtSecuritiesMember2023-10-012024-03-310000807863us-gaap:ConvertibleDebtSecuritiesMember2022-10-012023-03-310000807863us-gaap:WarrantMember2024-01-012024-03-310000807863us-gaap:WarrantMember2023-01-012023-03-310000807863us-gaap:WarrantMember2023-10-012024-03-310000807863us-gaap:WarrantMember2022-10-012023-03-310000807863mitk:ICARVisionSystemsS.L.Membersrt:MinimumMembermitk:SpanishGovernmentAgenciesMember2017-01-012017-12-310000807863mitk:ICARVisionSystemsS.L.Membersrt:MaximumMembermitk:SpanishGovernmentAgenciesMember2017-01-012017-12-310000807863mitk:ICARVisionSystemsS.L.Membermitk:SpanishGovernmentAgenciesMember2017-12-310000807863mitk:ICARVisionSystemsS.L.Membermitk:SpanishGovernmentAgenciesMember2024-03-310000807863mitk:ICARVisionSystemsS.L.Memberus-gaap:OtherCurrentLiabilitiesMembermitk:SpanishGovernmentAgenciesMember2024-03-310000807863mitk:ICARVisionSystemsS.L.Memberus-gaap:OtherNoncurrentLiabilitiesMembermitk:SpanishGovernmentAgenciesMember2024-03-310000807863mitk:ICARVisionSystemsS.L.Membermitk:SpanishGovernmentAgenciesMember2023-09-300000807863mitk:ICARVisionSystemsS.L.Memberus-gaap:OtherCurrentLiabilitiesMembermitk:SpanishGovernmentAgenciesMember2023-09-300000807863mitk:ICARVisionSystemsS.L.Memberus-gaap:OtherNoncurrentLiabilitiesMembermitk:SpanishGovernmentAgenciesMember2023-09-300000807863mitk:SoftwareMembersrt:MinimumMember2024-03-310000807863srt:MaximumMembermitk:SoftwareMember2024-03-310000807863mitk:DepositsSoftwareAndHardwareMemberus-gaap:TransferredAtPointInTimeMember2024-01-012024-03-310000807863mitk:DepositsSoftwareAndHardwareMemberus-gaap:TransferredAtPointInTimeMember2023-01-012023-03-310000807863mitk:DepositsSoftwareAndHardwareMemberus-gaap:TransferredAtPointInTimeMember2023-10-012024-03-310000807863mitk:DepositsSoftwareAndHardwareMemberus-gaap:TransferredAtPointInTimeMember2022-10-012023-03-310000807863mitk:DepositsServicesAndOtherMemberus-gaap:TransferredOverTimeMember2024-01-012024-03-310000807863mitk:DepositsServicesAndOtherMemberus-gaap:TransferredOverTimeMember2023-01-012023-03-310000807863mitk:DepositsServicesAndOtherMemberus-gaap:TransferredOverTimeMember2023-10-012024-03-310000807863mitk:DepositsServicesAndOtherMemberus-gaap:TransferredOverTimeMember2022-10-012023-03-310000807863mitk:DepositsRevenueMember2024-01-012024-03-310000807863mitk:DepositsRevenueMember2023-01-012023-03-310000807863mitk:DepositsRevenueMember2023-10-012024-03-310000807863mitk:DepositsRevenueMember2022-10-012023-03-310000807863us-gaap:TransferredAtPointInTimeMembermitk:IdentityVerificationSoftwareAndHardwareMember2024-01-012024-03-310000807863us-gaap:TransferredAtPointInTimeMembermitk:IdentityVerificationSoftwareAndHardwareMember2023-01-012023-03-310000807863us-gaap:TransferredAtPointInTimeMembermitk:IdentityVerificationSoftwareAndHardwareMember2023-10-012024-03-310000807863us-gaap:TransferredAtPointInTimeMembermitk:IdentityVerificationSoftwareAndHardwareMember2022-10-012023-03-310000807863mitk:IdentityVerificationServicesAndOtherMemberus-gaap:TransferredOverTimeMember2024-01-012024-03-310000807863mitk:IdentityVerificationServicesAndOtherMemberus-gaap:TransferredOverTimeMember2023-01-012023-03-310000807863mitk:IdentityVerificationServicesAndOtherMemberus-gaap:TransferredOverTimeMember2023-10-012024-03-310000807863mitk:IdentityVerificationServicesAndOtherMemberus-gaap:TransferredOverTimeMember2022-10-012023-03-310000807863mitk:IdentityVerificationRevenueMember2024-01-012024-03-310000807863mitk:IdentityVerificationRevenueMember2023-01-012023-03-310000807863mitk:IdentityVerificationRevenueMember2023-10-012024-03-310000807863mitk:IdentityVerificationRevenueMember2022-10-012023-03-310000807863mitk:OtherCurrentAndNoncurrentAssetsMember2024-03-310000807863mitk:OtherCurrentAndNoncurrentAssetsMember2023-09-300000807863us-gaap:SellingAndMarketingExpenseMember2024-01-012024-03-310000807863us-gaap:SellingAndMarketingExpenseMember2023-01-012023-03-310000807863us-gaap:SellingAndMarketingExpenseMember2023-10-012024-03-310000807863us-gaap:SellingAndMarketingExpenseMember2022-10-012023-03-310000807863us-gaap:ShortTermInvestmentsMemberus-gaap:USTreasurySecuritiesMember2024-03-310000807863us-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2024-03-310000807863us-gaap:ShortTermInvestmentsMemberus-gaap:CorporateDebtSecuritiesMember2024-03-310000807863mitk:LongTermInvestmentsMemberus-gaap:USTreasurySecuritiesMember2024-03-310000807863us-gaap:CorporateDebtSecuritiesMembermitk:LongTermInvestmentsMember2024-03-310000807863us-gaap:ShortTermInvestmentsMemberus-gaap:USTreasurySecuritiesMember2023-09-300000807863us-gaap:ShortTermInvestmentsMemberus-gaap:CorporateDebtSecuritiesMember2023-09-300000807863mitk:LongTermInvestmentsMemberus-gaap:USTreasurySecuritiesMember2023-09-300000807863us-gaap:USTreasurySecuritiesMember2024-03-310000807863us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2024-03-310000807863us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2024-03-310000807863us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2024-03-310000807863us-gaap:CommercialPaperMember2024-03-310000807863us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Member2024-03-310000807863us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2024-03-310000807863us-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2024-03-310000807863us-gaap:CorporateDebtSecuritiesMember2024-03-310000807863us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2024-03-310000807863us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2024-03-310000807863us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2024-03-310000807863us-gaap:FairValueInputsLevel1Member2024-03-310000807863us-gaap:FairValueInputsLevel2Member2024-03-310000807863us-gaap:FairValueInputsLevel3Member2024-03-310000807863us-gaap:USTreasurySecuritiesMember2023-09-300000807863us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2023-09-300000807863us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2023-09-300000807863us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2023-09-300000807863us-gaap:CorporateDebtSecuritiesMember2023-09-300000807863us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2023-09-300000807863us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2023-09-300000807863us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2023-09-300000807863us-gaap:FairValueInputsLevel1Member2023-09-300000807863us-gaap:FairValueInputsLevel2Member2023-09-300000807863us-gaap:FairValueInputsLevel3Member2023-09-300000807863mitk:ContingentConsiderationMember2023-09-300000807863mitk:ContingentConsiderationMember2023-10-012024-03-310000807863mitk:ContingentConsiderationMember2024-03-310000807863srt:MinimumMember2024-03-310000807863srt:MaximumMember2024-03-310000807863mitk:CompletedTechnologiesMember2023-10-012024-03-310000807863mitk:CompletedTechnologiesMember2024-03-310000807863us-gaap:CustomerRelationshipsMember2023-10-012024-03-310000807863us-gaap:CustomerRelationshipsMember2024-03-310000807863us-gaap:TrademarksMember2023-10-012024-03-310000807863us-gaap:TrademarksMember2024-03-310000807863us-gaap:NoncompeteAgreementsMember2023-10-012024-03-310000807863us-gaap:NoncompeteAgreementsMember2024-03-310000807863mitk:CompletedTechnologiesMember2022-10-012023-09-300000807863mitk:CompletedTechnologiesMember2023-09-300000807863us-gaap:CustomerRelationshipsMember2022-10-012023-09-300000807863us-gaap:CustomerRelationshipsMember2023-09-300000807863us-gaap:TrademarksMember2022-10-012023-09-300000807863us-gaap:TrademarksMember2023-09-300000807863us-gaap:NoncompeteAgreementsMember2022-10-012023-09-300000807863us-gaap:NoncompeteAgreementsMember2023-09-300000807863us-gaap:CostOfSalesMember2024-01-012024-03-310000807863us-gaap:CostOfSalesMember2023-01-012023-03-310000807863us-gaap:CostOfSalesMember2023-10-012024-03-310000807863us-gaap:CostOfSalesMember2022-10-012023-03-310000807863us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-03-310000807863us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-03-310000807863us-gaap:ResearchAndDevelopmentExpenseMember2023-10-012024-03-310000807863us-gaap:ResearchAndDevelopmentExpenseMember2022-10-012023-03-310000807863us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-03-310000807863us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-03-310000807863us-gaap:GeneralAndAdministrativeExpenseMember2023-10-012024-03-310000807863us-gaap:GeneralAndAdministrativeExpenseMember2022-10-012023-03-310000807863mitk:A2020IncentivePlanMember2020-01-310000807863mitk:PriorPlansMember2020-01-310000807863us-gaap:RestrictedStockUnitsRSUMembermitk:A2020IncentivePlanMember2024-03-310000807863mitk:A2020IncentivePlanMemberus-gaap:PerformanceSharesMember2024-03-310000807863mitk:A2020IncentivePlanMember2024-03-310000807863mitk:PriorPlansMember2024-03-310000807863us-gaap:RestrictedStockUnitsRSUMembermitk:PriorPlansMember2024-03-310000807863mitk:A2020IncentivePlanMember2023-10-020000807863mitk:EmployeeStockPurchasePlanMember2018-03-070000807863mitk:EmployeeStockPurchasePlanMember2023-10-012024-03-310000807863mitk:EmployeeStockPurchasePlanMember2024-03-310000807863mitk:EmployeeStockPurchasePlanMember2022-10-012023-03-310000807863mitk:DirectorPlanMember2017-03-100000807863us-gaap:RestrictedStockUnitsRSUMembermitk:DirectorPlanMember2024-03-310000807863mitk:DirectorPlanMember2024-03-3100008078632022-10-012023-09-300000807863us-gaap:EmployeeStockOptionMember2023-10-012024-03-310000807863us-gaap:EmployeeStockOptionMember2022-10-012023-03-310000807863us-gaap:EmployeeStockOptionMember2023-01-012023-03-310000807863us-gaap:EmployeeStockOptionMember2024-01-012024-03-310000807863us-gaap:EmployeeStockOptionMember2024-03-310000807863us-gaap:RestrictedStockUnitsRSUMember2023-09-300000807863us-gaap:RestrictedStockUnitsRSUMember2023-10-012024-03-310000807863us-gaap:RestrictedStockUnitsRSUMember2024-03-310000807863us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310000807863us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310000807863us-gaap:RestrictedStockUnitsRSUMember2022-10-012023-03-310000807863us-gaap:PerformanceSharesMember2023-09-300000807863us-gaap:PerformanceSharesMember2023-10-012024-03-310000807863us-gaap:PerformanceSharesMember2024-03-310000807863us-gaap:PerformanceSharesMember2024-01-012024-03-310000807863us-gaap:PerformanceSharesMember2023-01-012023-03-310000807863us-gaap:PerformanceSharesMember2022-10-012023-03-310000807863us-gaap:ConvertibleDebtMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2024-03-310000807863us-gaap:ConvertibleDebtMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2023-09-300000807863us-gaap:ConvertibleDebtMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-280000807863us-gaap:ConvertibleDebtMembermitk:AdditionalNotesDue2026Member2021-02-052021-02-050000807863us-gaap:ConvertibleDebtMembermitk:AdditionalNotesDue2026Member2021-02-050000807863us-gaap:ConvertibleDebtMembermitk:InterestRatePeriodOneMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2023-01-130000807863us-gaap:ConvertibleDebtMembermitk:InterestRatePeriodTwoMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2023-01-130000807863us-gaap:ConvertibleDebtMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-050000807863us-gaap:ConvertibleDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-050000807863us-gaap:ConvertibleDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-052021-02-050000807863us-gaap:ConvertibleDebtMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-052021-02-050000807863us-gaap:ConvertibleDebtMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-050000807863us-gaap:ConvertibleDebtMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-020000807863us-gaap:ConvertibleDebtMemberus-gaap:CommonStockMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-020000807863us-gaap:ConvertibleDebtMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-052021-02-050000807863us-gaap:ConvertibleDebtMemberus-gaap:EmbeddedDerivativeFinancialInstrumentsMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-052021-02-050000807863us-gaap:ConvertibleDebtMemberus-gaap:EmbeddedDerivativeFinancialInstrumentsMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2021-02-050000807863us-gaap:ConvertibleDebtMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2024-01-012024-03-310000807863us-gaap:ConvertibleDebtMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2023-01-012023-03-310000807863us-gaap:ConvertibleDebtMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2023-10-012024-03-310000807863us-gaap:ConvertibleDebtMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2022-10-012023-03-310000807863us-gaap:ConvertibleDebtMemberus-gaap:EmbeddedDerivativeFinancialInstrumentsMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2024-03-310000807863us-gaap:ConvertibleDebtMemberus-gaap:EmbeddedDerivativeFinancialInstrumentsMembermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2023-10-012024-03-310000807863us-gaap:FairValueInputsLevel2Membermitk:ConvertibleSeniorUnsecuredNotesDue2026Member2024-03-310000807863us-gaap:ConvertibleDebtMembermitk:NotesHedgeMember2021-02-052021-02-050000807863us-gaap:ConvertibleDebtMembermitk:NotesHedgeMember2021-02-050000807863us-gaap:ConvertibleDebtMembermitk:NotesHedgeMember2021-02-020000807863us-gaap:ConvertibleDebtMembermitk:NotesHedgeMember2023-10-012024-03-310000807863us-gaap:ConvertibleDebtMembermitk:NotesHedgeMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2024-01-012024-03-310000807863us-gaap:ConvertibleDebtMembermitk:NotesHedgeMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2021-02-052021-02-050000807863us-gaap:ConvertibleDebtMembermitk:NotesHedgeMember2024-03-310000807863us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-02-130000807863us-gaap:LineOfCreditMembermitk:SecuredOvernightFinancingRateSOFRMemberus-gaap:RevolvingCreditFacilityMember2024-02-132024-02-130000807863mitk:SecuredOvernightFinancingRateSOFRMemberus-gaap:RevolvingCreditFacilityMember2024-02-132024-02-130000807863us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-02-132024-02-130000807863mitk:ForeignLetterOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-02-130000807863us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-03-310000807863mitk:GlobalEquityCorporateConsultingSLMembermitk:ICARVisionSystemsSLMemberus-gaap:PendingLitigationMember2022-06-072022-06-070000807863mitk:GlobalEquityCorporateConsultingSLMembermitk:ICARVisionSystemsSLMemberus-gaap:PendingLitigationMember2023-10-012024-03-310000807863mitk:ICARVisionSystemsSLMembermitk:GlobalEquityCorporateConsultingSLBreachOfServicesAgreementMemberus-gaap:PendingLitigationMember2022-09-022022-09-020000807863mitk:ICARVisionSystemsSLMembermitk:GlobalEquityCorporateConsultingSLBreachOfServicesAgreementMemberus-gaap:PendingLitigationMember2022-09-020000807863mitk:WellsFargoBankNAMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2018-07-072018-07-070000807863mitk:WellsFargoBankNAMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2018-08-172018-08-170000807863mitk:WellsFargoBankNAMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2019-11-062019-11-060000807863mitk:WellsFargoBankNAMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2020-01-102020-01-100000807863mitk:WellsFargoBankNAMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2020-11-242021-01-260000807863mitk:PNCBankMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2020-09-302020-09-300000807863mitk:PNCBankMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2020-12-042020-12-040000807863mitk:PNCBankMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2021-03-312021-03-310000807863mitk:PNCBankMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2022-05-012022-05-310000807863us-gaap:SettledLitigationMembermitk:PNCBankMembermitk:UnitedServicesAutomobileAssociationUSAAMember2023-02-162023-02-160000807863mitk:WellsFargoBankNAMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2020-12-062021-02-230000807863mitk:WellsFargoBankNAMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2020-09-012020-09-300000807863mitk:PNCBankMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2021-03-012021-03-310000807863mitk:PNCBankMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2021-07-072021-07-210000807863mitk:PNCBankMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2021-08-272021-08-270000807863mitk:PNCBankMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2021-10-012021-11-300000807863mitk:PNCBankMembermitk:UnitedServicesAutomobileAssociationUSAAMemberus-gaap:PendingLitigationMember2023-10-012024-03-310000807863us-gaap:GeneralAndAdministrativeExpenseMemberus-gaap:PendingLitigationMember2024-01-012024-03-310000807863us-gaap:GeneralAndAdministrativeExpenseMemberus-gaap:PendingLitigationMember2023-10-012024-03-310000807863mitk:UrbanFTIncMemberus-gaap:PendingLitigationMember2019-07-312019-07-310000807863mitk:UrbanFTIncMemberus-gaap:PendingLitigationMember2020-12-182020-12-180000807863mitk:CompensatoryDamagesMemberus-gaap:SettledLitigationMembermitk:UrbanFTIncMember2022-06-022022-06-020000807863us-gaap:SettledLitigationMembermitk:UrbanFTIncMembermitk:CostsOfJudgementAwardedMember2022-06-022022-06-020000807863us-gaap:SettledLitigationMembermitk:UrbanFTIncMembermitk:AttorneysFeesMember2022-06-022022-06-020000807863us-gaap:SettledLitigationMembermitk:UrbanFTIncMember2022-06-022022-06-020000807863us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310000807863mitk:CustomerOneMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310000807863us-gaap:CustomerConcentrationRiskMembermitk:CustomerTwoMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310000807863us-gaap:CustomerConcentrationRiskMembermitk:CustomerThreeMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310000807863us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310000807863mitk:CustomerOneMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310000807863us-gaap:CustomerConcentrationRiskMembermitk:CustomerTwoMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310000807863us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-10-012024-03-310000807863mitk:CustomerOneMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-10-012024-03-310000807863us-gaap:CustomerConcentrationRiskMembermitk:CustomerTwoMemberus-gaap:SalesRevenueNetMember2023-10-012024-03-310000807863us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2022-10-012023-03-310000807863mitk:CustomerOneMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2022-10-012023-03-310000807863us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2024-03-310000807863us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2023-03-310000807863us-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMembermitk:LongTermAssetsBenchmarkMember2023-10-012024-03-310000807863us-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMembermitk:LongTermAssetsBenchmarkMember2022-10-012023-09-300000807863mitk:LongTermAssetsExcludingGoodwillAndIntangiblesBenchmarkMemberus-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMember2023-10-012024-03-310000807863mitk:LongTermAssetsExcludingGoodwillAndIntangiblesBenchmarkMemberus-gaap:NonUsMemberus-gaap:GeographicConcentrationRiskMember2022-10-012023-09-300000807863country:US2024-01-012024-03-310000807863country:US2023-01-012023-03-310000807863country:US2023-10-012024-03-310000807863country:US2022-10-012023-03-310000807863country:GB2023-10-012024-03-310000807863mitk:AllOtherCountriesExcludingUnitedStatesAndUnitedKingdomMember2024-01-012024-03-310000807863mitk:AllOtherCountriesExcludingUnitedStatesAndUnitedKingdomMember2023-01-012023-03-310000807863mitk:AllOtherCountriesExcludingUnitedStatesAndUnitedKingdomMember2023-10-012024-03-310000807863mitk:AllOtherCountriesExcludingUnitedStatesAndUnitedKingdomMember2022-10-012023-03-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .
Commission File Number 001-35231
MITEK SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware87-0418827
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
600 B Street, Suite 100
San Diego, California
92101
(Address of principal executive offices)(Zip Code)
(619269-6800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareMITK
The NASDAQ Capital Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  
There were 46,790,611 shares of the registrant’s common stock outstanding as of April 30, 2024.



MITEK SYSTEMS, INC.
FORM 10-Q
For The Quarterly Period Ended March 31, 2024
INDEX
 




PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
MITEK SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands except share data)
 March 31, 2024 (Unaudited)September 30, 2023
ASSETS  
Current assets:  
Cash and cash equivalents$80,939 $58,913 
Short-term investments42,987 74,700 
Accounts receivable, net52,061 32,132 
Contract assets, current portion15,140 18,355 
Prepaid expenses7,783 3,513 
Other current assets2,705 2,396 
Total current assets201,615 190,009 
Long-term investments6,337 1,304 
Property and equipment, net2,708 2,829 
Right-of-use assets3,313 4,140 
Intangible assets, net58,851 64,674 
Goodwill126,389 123,548 
Deferred income tax assets13,521 11,645 
Contract assets, non-current portion2,692 5,579 
Other non-current assets1,604 1,647 
Total assets$417,030 $405,375 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$9,056 $7,589 
Accrued payroll and related taxes9,592 10,554 
Accrued interest payable210 305 
Income tax payables190 4,329 
Deferred revenue, current portion25,728 17,360 
Lease liabilities, current portion1,168 1,902 
Acquisition-related contingent consideration 7,976 
Other current liabilities1,318 1,482 
Total current liabilities47,262 51,497 
Convertible senior notes139,492 135,516 
Deferred revenue, non-current portion1,020 957 
Lease liabilities, non-current portion2,590 2,867 
Deferred income tax liabilities6,690 6,476 
Other non-current liabilities3,830 2,874 
Total liabilities200,884 200,187 
Stockholders’ equity:  
Preferred stock, $0.001 par value, 1,000,000 shares authorized, none issued and outstanding
  
Common stock, $0.001 par value, 120,000,000 and 120,000,000 shares authorized, 46,790,611 and 45,591,199 issued and outstanding, as of March 31, 2024 and September 30, 2023, respectively
47 46 
Additional paid-in capital240,521 228,691 
Accumulated other comprehensive loss(9,599)(14,237)
Accumulated deficit(14,823)(9,312)
Total stockholders’ equity216,146 205,188 
Total liabilities and stockholders’ equity$417,030 $405,375 


See accompanying notes to condensed consolidated financial statements.
1


MITEK SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)  
(Unaudited)
(amounts in thousands except per share data)
 
 Three Months Ended March 31,Six Months Ended March 31,
 2024202320242023
Revenue  
Software and hardware$24,889 $25,260 $40,869 $51,636 
Services and other22,079 20,863 43,016 40,190 
Total revenue46,968 46,123 83,885 91,826 
Operating costs and expenses  
Cost of revenue—software and hardware (exclusive of depreciation & amortization)29 219 69 388 
Cost of revenue—services and other (exclusive of depreciation & amortization)6,186 5,679 11,680 10,579 
Selling and marketing11,021 9,623 20,877 19,138 
Research and development9,713 7,373 18,587 15,043 
General and administrative14,943 10,059 30,481 18,538 
Amortization and acquisition-related costs3,848 4,274 7,831 9,095 
Restructuring costs530 210 578 1,986 
Total operating costs and expenses46,270 37,437 90,103 74,767 
Operating income (loss)698 8,686 (6,218)17,059 
Interest expense2,303 2,163 4,566 4,300 
Other income, net1,190 454 2,832 794 
Income (loss) before income taxes(415)6,977 (7,952)13,553 
Income tax benefit (provision)697 (1,808)2,441 (3,654)
Net income (loss)$282 $5,169 $(5,511)$9,899 
Net income (loss) per share—basic$0.01 $0.11 $(0.12)$0.22 
Net income (loss) per share—diluted$0.01 $0.11 $(0.12)$0.22 
Shares used in calculating net income (loss) per share—basic
46,896 45,377 46,593 45,317 
Shares used in calculating net income (loss) per share—diluted
48,041 45,780 46,593 45,932 
Comprehensive income (loss)  
Net income (loss)$282 $5,169 $(5,511)$9,899 
Other comprehensive income (loss)
Foreign currency translation adjustment(1,966)3,022 4,578 15,725 
Unrealized gain (loss) on investments(42)296 60 648 
Other comprehensive income (loss)
(2,008)3,318 4,638 16,373 
Comprehensive income (loss)$(1,726)$8,487 $(873)$26,272 
 
See accompanying notes to condensed consolidated financial statements.
2


MITEK SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(amounts in thousands)
Three Months Ended March 31, 2024
Common StockAdditional Paid-In CapitalAccumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total Stockholders’ Equity
SharesAmount
Balance, December 31, 202346,632 $47 $236,447 $(7,591)$(15,105)$213,798 
Exercise of stock options71 — 186 — — 186 
Settlement of restricted stock units88 — — — —  
Stock-based compensation expense— — 3,888 — — 3,888 
Components of comprehensive loss:
Net income— — — — 282 282 
Currency translation adjustment— — — (1,966)— (1,966)
Change in unrealized gain (loss) on investments— — — (42)— (42)
Balance, March 31, 202446,791 $47 $240,521 $(9,599)$(14,823)$216,146 

Three Months Ended March 31, 2023
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance, December 31, 202245,249 $45 $219,596 $(15,164)$(12,609)$191,868 
Exercise of stock options3 — 14 — — 14 
Settlement of restricted stock units86 — — — —  
Issuance of common stock under employee stock purchase plan71 — 619 — — 619 
Stock-based compensation expense— — 2,704 — — 2,704 
Components of comprehensive income:
Net income— — — — 5,169 5,169 
Currency translation adjustment— — — 3,022 — 3,022 
Change in unrealized gain (loss) on investments— — — 296 — 296 
Balance, March 31, 202345,409 $45 $222,933 $(11,846)$(7,440)$203,692 

See accompanying notes to condensed consolidated financial statements.
3


MITEK SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY CONTINUED
(Unaudited)
(amounts in thousands)

Six Months Ended March 31, 2024
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance, September 30, 202345,591 $46 $228,691 $(14,237)$(9,312)$205,188 
Exercise of stock options167 — 1,042 — — 1,042 
Settlement of restricted stock units722 1 (1)— —  
Acquisition-related shares issued311 — 3,471 — — 3,471 
Stock-based compensation expense— — 7,318 — — 7,318 
Components of comprehensive loss:
Net loss— — — — (5,511)(5,511)
Currency translation adjustment— — — 4,578 — 4,578 
Change in unrealized gain (loss) on investments— — — 60 — 60 
Balance, March 31, 202446,791 $47 $240,521 $(9,599)$(14,823)$216,146 

Six Months Ended March 31, 2023
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance, September 30, 202244,680 $44 $216,493 $(28,219)$(17,339)$170,979 
Exercise of stock options86 — 676 — — 676 
Settlement of restricted stock units572 1 (1)— —  
Issuance of common stock under employee stock purchase plan71 — 619 — — 619 
Stock-based compensation expense— — 5,146 — — 5,146 
Components of other comprehensive income:
Net income— — — — 9,8999,899
Currency translation adjustment— — — 15,725 — 15,725 
Change in unrealized gain (loss) on investments— — — 648 — 648 
Balance, March 31, 202345,409 $45 $222,933 $(11,846)$(7,440)$203,692 

See accompanying notes to condensed consolidated financial statements.
4


MITEK SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(amounts in thousands)
Six Months Ended March 31,
 20242023
Operating activities:  
Net income (loss)$(5,511)$9,899 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:  
Stock-based compensation expense7,318 5,146 
Amortization of intangible assets7,694 9,007 
Amortization of costs capitalized to obtain revenue contracts847 724 
Depreciation and amortization842 767 
Bad debt expense927 386 
Amortization of investment premiums & other(1,339)(26)
Accretion and amortization on debt securities3,975 3,700 
Net changes in estimated fair value of acquisition-related contingent consideration136 150 
Deferred taxes(1,859)(6,827)
Changes in assets and liabilities, net of acquisitions:  
Accounts receivable(20,608)(11,534)
Contract assets6,147 (4,969)
Other assets(5,055)(1,477)
Accounts payable1,424 367 
Accrued payroll and related taxes(1,058)(2,724)
Income taxes payable(4,086)8,672 
Deferred revenue8,300 1,334 
Restructuring accrual (956)
Other liabilities(493)(78)
Net cash provided by (used in) operating activities(2,399)11,561 
Investing activities:  
Purchases of investments(26,813) 
Sales and maturities of investments54,921 38,100 
Purchases of property and equipment, net(724)(372)
Net cash provided by (used in) investing activities27,384 37,728 
Financing activities:  
Payment of revolving credit line issuance costs(290) 
Proceeds from the issuance of equity plan common stock1,042 1,295 
Payment of acquisition-related contingent consideration(4,641) 
Proceeds from other borrowings956  
Principal payments on other borrowings(82)(36)
Net cash provided by (used in) financing activities(3,015)1,259 
Foreign currency effect on cash and cash equivalents56 440 
Net increase in cash and cash equivalents22,026 50,988 
Cash and cash equivalents at beginning of period58,913 32,059 
Cash and cash equivalents at end of period$80,939 $83,047 
Supplemental disclosures of cash flow information:  
Issuance of common stock for acquisition-related contingent consideration$3,471 $ 
Cash paid for interest$582 $602 
Cash paid for income taxes$8,509 $2,057 
Supplemental disclosures of non-cash investing and financing activities:  
Unrealized holding gain on available for sale investments$60 $648 
  

See accompanying notes to condensed consolidated financial statements... ..
5


MITEK SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Mitek Systems, Inc. (“Mitek,” the “Company,” “we,” “us,” and “our”) is a provider of mobile image capture and digital identity verification solutions. We are a software development company with expertise in artificial intelligence and machine learning. We currently serve more than 7,900 financial services organizations and financial technology (“fintech”) brands around the globe. Mitek markets and sells its products and services worldwide through internal, direct sales teams located in the U.S., Europe, and Latin America as well as through channel partners. Our partner sales strategy includes channel partners who are financial services technology providers and identity verification providers. These partners integrate our products into their solutions to meet the needs of their customers, typically provisioning Mitek services through their respective platforms.
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company as of and for the three and six months ended March 31, 2024 have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and, accordingly, they do not include all information and footnote disclosures required by accounting principles generally accepted in the U.S. (“GAAP”). The Company believes the footnotes and other disclosures made in the financial statements are adequate for a fair presentation of the results of the interim periods presented. The financial statements include all adjustments (solely of a normal recurring nature) which are, in the opinion of management, necessary to make the information presented not misleading. You should read these financial statements and the accompanying notes in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 19, 2024.
Certain amounts within the prior period’s condensed consolidated statement of cash flows have been reclassified and revised to conform to the current period presentation. Within “Changes in assets and liabilities, net of acquisitions,” “Income taxes payable,” which had previously been combined with “Other liabilities,” was reclassified as a separate line item. Non-cash expense associated with amortization of costs capitalized to obtain revenue contracts and bad debt expense were revised to be presented separately as adjustments to reconcile net income to net cash provided by operating activities The reclassification and revision, which is considered to be immaterial to the previously issued condensed consolidated financial statements for the corresponding prior period in fiscal 2023, had no impact on net cash provided by operating activities, and did not change other amounts reported within the condensed consolidated balance sheet, statement of operations and comprehensive income (loss), or statement of stockholders’ equity.
Results for the three and six months ended March 31, 2024, are not necessarily indicative of results for any other interim period or for a full fiscal year.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, deferred taxes, and related disclosure of contingent assets and liabilities. On an ongoing basis, management reviews its estimates based upon currently available information. Actual results could differ materially from those estimates. These estimates include, but are not limited to, assessing the collectability of accounts receivable, estimation of the value of stock-based compensation awards, fair value of assets and liabilities acquired, impairment of goodwill, useful lives of intangible assets, fair value of debt derivatives, standalone selling price related to revenue recognition, contingent consideration, and income taxes.
6


Net Income (Loss) Per Share
For the three and six months ended March 31, 2024 and 2023, the following potentially dilutive common shares were excluded from the calculation of net income (loss) per share, as they would have been antidilutive (amounts in thousands):
 Three Months Ended March 31,Six Months Ended March 31,
 2024202320242023
Stock options310 453 542 457 
RSUs1,822 1,077 2,519 1,015 
ESPP common stock equivalents30 213 16 95 
Performance options665 794 800 766 
Performance RSUs994 483 706 483 
Convertible senior notes7,448 7,448 7,448 7,448 
Warrants7,448 7,448 7,448 7,448 
Total potentially dilutive common shares outstanding18,717 17,916 19,479 17,712 
The calculation of basic and diluted net income (loss) per share is as follows (amounts in thousands, except per share data):
 Three Months Ended March 31,Six Months Ended March 31,
 2024202320242023
Net income (loss)$282 $5,169 $(5,511)$9,899 
Weighted-average shares outstanding—basic46,896 45,377 46,593 45,317 
Common stock equivalents1,145 403  615 
Weighted-average shares outstanding—diluted48,041 45,780 46,593 45,932 
Net income (loss) per share:
Basic$0.01 $0.11 $(0.12)$0.22 
Diluted$0.01 $0.11 $(0.12)$0.22 
Other Borrowings
The Company has certain loan agreements with Spanish government agencies which were assumed when the Company acquired ICAR Vision Systems, S.L. ("ICAR") in 2017. These agreements have repayment periods of five to twelve years and bear no interest. As of March 31, 2024, $2.1 million was outstanding under these agreements and $0.2 million and $2.0 million is recorded in other current liabilities and other non-current liabilities, respectively, in the condensed consolidated balance sheets. As of September 30, 2023, $1.3 million was outstanding under these agreements and approximately $0.2 million and $1.1 million is recorded in other current liabilities and other non-current liabilities, respectively, in the condensed consolidated balance sheets.
Recently Adopted Accounting Pronouncements
The Company did not adopt any new accounting pronouncements in the six months ended March 31, 2024.
Change in Significant Accounting Policy
The Company’s significant accounting policies are disclosed in the Company’s audited condensed consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2023, filed with the SEC on March 19, 2024. There have been no changes to these accounting policies through March 31, 2024.
Recently Issued Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, amending existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. The ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis. The Company is currently evaluating the ASU to determine its impact on its income tax disclosures.
7


In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and also issued subsequent amendments to the initial guidance (collectively, Topic 848). Topic 848 provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. The Company will adopt Topic 848 when the relevant contracts are modified upon transition to alternative reference rates. The Company does not expect the adoption of Topic 848 will have a material impact on the condensed consolidated financial statements.
No other new accounting pronouncement issued or effective during the six months ended March 31, 2024 had, or is expected to have, a material impact on the Company’s condensed consolidated financial statements.

2. REVENUE RECOGNITION
Nature of Goods and Services
The following is a description of principal activities from which the Company generates its revenue. Contracts with customers are evaluated on a contract-by-contract basis as contracts may include multiple types of goods and services as described below.
Software and Hardware
Software and hardware revenue is generated from on premise software license sales, as well as sales of hardware scanner boxes and on premise appliance products. Software is typically sold as a time-based license with a term of one to three years. For software license agreements that are distinct, the Company recognizes software license revenue upon delivery and after evidence of a contract exists. Hardware revenue is recognized at a point in time upon shipment and after evidence of a contract exists.
Services and Other
Services and other revenue is generated from the sale of software as a service (“SaaS”) products and services, maintenance associated with the sale of on premise software licenses and consulting and professional services. The Company’s SaaS offerings give customers the option to be charged upon their incurred usage in arrears (“Pay as You Go”), or commit to a minimum spend over their contracted period, with the ability to purchase unlimited additional transactions above the minimum during the contract term. Revenue related to Pay as You Go contracts are recognized based on the customer’s actual usage, in the period of usage. For contracts which include a minimum commitment, the Company is standing ready to provide as many transactions as desired by the customer throughout the contract term, and revenue is recognized on a ratable basis over the contract period including an estimate of usage above the minimum commitment. Usage above minimum commitment is estimated by looking at historical usage, expected volume, and other factors to project out for the remainder of the contract term. The estimated usage-based revenues are constrained to the amount the Company expects to be entitled to receive in exchange for providing access to its platform. If professional services are deemed to be distinct, revenue is recognized as services are performed. The Company does not view the signing of the contract or the provision of initial setup services as discrete earnings events that are distinct.
Significant Judgments in Application of the Guidance
The Company uses the following methods, inputs, and assumptions in determining amounts of revenue to recognize:
Identification of Performance Obligations
For contracts that contain multiple performance obligations, which include combinations of software licenses, maintenance, and services, the Company accounts for individual goods or services as a separate performance obligation if they are distinct. The good or service is distinct if the good or service is separately identifiable from other items in the arrangement and if a customer can benefit from it on its own or with other resources that are readily available to the customer. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation.
Determination of Transaction Price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products or services to the customer. The Company includes any fixed charges within its contracts as part of the total transaction price. To the extent that variable consideration is not constrained, the Company includes an estimate of the variable amount, as appropriate, within the total transaction price and updates its assumptions over the duration of the contract. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.
8


Assessment of Estimates of Variable Consideration
Many of the Company’s contracts with customers contain some component of variable consideration; however, variable consideration will only be included in the transaction price to the extent it is probable that a significant reversal of revenues recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company may constrain the estimated transaction price in the event of a high degree of uncertainty as to the final consideration amount owed because of an extended length of time over which the fees may be adjusted or due to uncertainty surrounding collectability. The Company estimates variable consideration in its contracts primarily using the expected value method as the Company believes this method represents the most appropriate estimate for this consideration, based on historical usage trends, the individual contract considerations, and its best judgment at the time.
Allocation of Transaction Price
The transaction price, including any discounts, is allocated between separate goods and services in a contract that contains multiple performance obligations based on their relative standalone selling prices. The standalone selling prices are based on the prices at which the Company separately sells each good or service. For items that are not sold separately, the Company estimates the standalone selling prices using available information such as market conditions and internally approved pricing guidelines. In certain situations, primarily transactional SaaS revenue described above, the Company allocates variable consideration to a series of distinct goods or services within a contract. The Company allocates variable payments to one or more, but not all, of the distinct goods or services or to a series of distinct goods or services in a contract when (i) the variable payment relates specifically to the Company’s efforts to transfer the distinct good or service and (ii) the variable payment is for an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised goods or services to its customer.
9


Disaggregation of Revenue
The following table presents the Company's revenue disaggregated by major product category (amounts in thousands):
Three Months Ended March 31,Six Months Ended March 31,
2024
2023
2024
2023
Major product category
Deposits software and hardware$22,494 $22,226 $36,542 $46,679 
Deposits services and other7,010 6,534 14,038 12,362 
Deposits revenue29,504 28,760 50,580 59,041 
Identity verification software and hardware2,395 3,034 4,327 4,957 
Identity verification services and other15,069 14,329 28,978 27,828 
Identity verification revenue17,464 17,363 33,305 32,785 
Total revenue$46,968 $46,123 $83,885 $91,826 
Contract Balances
The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers (amounts in thousands):
March 31, 2024September 30, 2023March 31, 2023September 30, 2022
Accounts receivable, net
$52,061 $32,132 $47,869 $35,922 
Contract assets, current15,140 18,355 9,609 7,037 
Contract assets, non-current2,692 5,579 6,839 4,218 
Contract liabilities (deferred revenue), current25,728 17,360 23,779 21,350 
Contract liabilities (deferred revenue), non-current1,020 957 1,211 1,775 
Contract assets, reported within a separate line in current assets and the other non-current assets line in the condensed consolidated balance sheets, primarily result from when the right to consideration is conditional upon factors other than the passage of time. Contract liabilities primarily relate to advance consideration received from customers (deferred revenue), for which transfer of control occurs, and therefore revenue is recognized as services are provided. Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period. The Company recognized $4.6 million and $3.3 million of revenue during the three months ended March 31, 2024, and 2023, respectively, and $13.7 million and $9.9 million of revenue during the six months ended March 31, 2024 and 2023, respectively, which was included in the contract liability balance at the beginning of each such period. Unbilled receivables are included within accounts receivable, net on the condensed consolidated balance sheets and were $10.7 million and $0.9 million as of March 31, 2024 and September 30, 2023, respectively. The Company maintained an allowance for credit losses of $2.4 million and $1.5 million as of March 31, 2024 and September 30, 2023, respectively.
Contract assets, current and contract liabilities (deferred revenue), current, as of March 31, 2023 and September 30, 2022 have been revised, as previously disclosed in Note 15 in the Annual Report on Form 10-K for the year ended September 30, 2023, filed with the SEC on March 19, 2024. These immaterial revisions are made for consistency.
Contract Costs
Contract costs included in other current and non-current assets on the condensed consolidated balance sheets totaled $2.4 million and $2.6 million as of March 31, 2024 and September 30, 2023, respectively. Contract origination costs consist primarily of: (1) sales commissions and incentive payments made to the Company’s direct and indirect sales personnel, and (2) the associated payroll taxes and fringe benefit costs associated with the payments to the Company’s employees. Contract origination costs are amortized based on the transfer of goods or services to which the asset relates, including consideration of the expected customer benefit period. Contract fulfillment costs related to goods or services transferred under a specific anticipated contract have historically been immaterial. These costs are included in selling and marketing expenses in the condensed consolidated statement of operations and comprehensive income (loss) and totaled $0.4 million during each of the three months ended March 31, 2024 and 2023, and $0.8 million and $0.7 million during the six months ended March 31, 2024 and 2023, respectively. There were no impairment losses recognized during both the six months ended March 31, 2024 and 2023 related to capitalized contract costs.

10


3. INVESTMENTS
The following tables summarize investments by type of security as of March 31, 2024 and September 30, 2023 (amounts in thousands):
March 31, 2024:Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Market
Value
Available-for-sale securities:    
U.S. Treasury, short-term$19,203 $ $(51)$19,152 
Commercial paper, short-term16,252 1 (10)16,243 
Corporate debt securities, short-term7,626 1 (35)7,592 
U.S. Treasury, long-term4,397  (18)4,379 
Corporate debt securities, long-term1,961  (3)1,958 
Total$49,439 $2 $(117)$49,324 
September 30, 2023:
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Market
Value
Available-for-sale securities:
U.S. Treasury, short-term$40,329 $1 $(76)$40,254 
Corporate debt securities, short-term34,545  (99)34,446 
U.S. Treasury, long-term1,371  (67)1,304 
Total$76,245 $1 $(242)$76,004 
All of the Company’s investments are designated as available-for-sale debt securities. As of March 31, 2024 and September 30, 2023, the Company’s short-term investments have maturity dates of less than one year from the balance sheet date and the Company’s long-term investments have maturity dates of greater than one year from the balance sheet date. The contractual maturities of the available-for-sale securities held at March 31, 2024 are as follows: $43.0 million within one year and $6.3 million beyond one year to five years. As of September 30, 2023, the contractual maturities of the available-for-sale securities were $74.7 million within one year and $1.3 million beyond one year to five years.
11


The following tables represent the fair value hierarchy of the Company’s investments and acquisition-related contingent consideration as of March 31, 2024 and September 30, 2023, respectively (amounts in thousands):
March 31, 2024:BalanceQuoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets:
    
Short-term investments:    
U.S. Treasury$19,152 $19,152 $ $ 
Commercial paper16,243  16,243  
Corporate debt securities7,592  7,592  
Total short-term investments at fair value42,987 19,152 23,835  
Long-term investments:
U.S. Treasury4,379 4,379   
Corporate debt securities1,958  1,958  
Total long-term investments at fair value6,337 4,379 1,958  
Total assets at fair value$49,324 $23,531 $25,793 $ 

September 30, 2023:BalanceQuoted Prices in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets:
    
Short-term investments:    
U.S. Treasury$40,254 $40,254 $ $ 
Corporate debt securities34,446  34,446  
Total short-term investments at fair value74,700 40,254 34,446  
Long-term investments:
U.S. Treasury1,304 1,304   
Total long-term investments at fair value1,304 1,304   
Total assets at fair value$76,004 $41,558 $34,446 $ 
Liabilities:
Acquisition-related contingent consideration$7,976 $ $7,976 
Total liabilities at fair value$7,976 $ $7,976 $ 

Level 1: Includes investments in U.S. Government and agency securities, which are valued based on recently executed transactions in the same or similar securities.
Level 2: Corporate debt securities. Corporate debt securities are valued using quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
As of March 31, 2024, no acquisition-related contingent consideration is recorded in the condensed consolidated balance sheets. The Company recorded the acquisition date fair value based on the likelihood of contingent earnout payments related to the Company’s acquisition of ID R&D Inc., as part of the consideration transferred. The earnout payments consist of cash payments and issuances of Common Stock and are subsequently remeasured to fair value each reporting date. Additionally, for contingent consideration to be settled in a variable number of shares of Common Stock, the Company used the most recent Mitek share price as reported by the Nasdaq Capital Market to determine the fair value of the shares expected to be issued. The Company previously classified the contingent consideration as Level 3, due to the lack of relevant observable inputs and market activity. The second earnout period ended on May 28, 2023 and the Company recorded the value based on the calculated final payout and reclassified the contingent consideration as Level 2 during the third quarter of fiscal 2023. The contingent consideration was settled during the three months ended December 31, 2023.
12


The following table includes a roll-forward of the contingent consideration liability during the six months ended March 31, 2024 (amounts in thousands):
Balance at September 30, 2023$7,976 
Expenses recorded due to changes in fair value136 
Cash payment of contingent consideration associated with the ID R&D acquisition(4,641)
Issuance of common stock as contingent consideration associated with the ID R&D acquisition(3,471)
Balance at March 31, 2024$ 

4. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The Company had a goodwill balance of $126.4 million at March 31, 2024, representing the excess of costs over fair value of assets of businesses acquired. The following table summarizes changes in the balance of goodwill during the six months ended March 31, 2024 (amounts shown in thousands):
Balance at September 30, 2023$123,548 
Foreign currency effect on goodwill2,841 
Balance at March 31, 2024$126,389 
There was no impairment loss recognized related to goodwill in the three or six months ended March 31, 2024 or 2023.
Intangible Assets
Intangible assets include the value assigned to purchased completed technology, customer relationships, trade names and covenants not to compete. The estimated useful lives for all of these intangible assets range from three to seven years and they are amortized on a straight-line basis. Intangible assets as of March 31, 2024 and September 30, 2023, respectively, are summarized as follows (amounts in thousands, except for years):
March 31, 2024:Weighted Average Amortization Period (in years)CostAccumulated AmortizationNet
Completed technologies6.9$95,761 $43,715 $52,046 
Customer relationships4.725,168 22,187 2,981 
Trade names5.07,088 3,452 3,636 
Covenants not to compete3.0600 412 188 
Total intangible assets $128,617 $69,766 $58,851 
September 30, 2023:Weighted Average Amortization Period (in years)CostAccumulated AmortizationNet
Completed technologies6.9$95,761 $39,254 $56,507 
Customer relationships4.725,168 21,396 3,772 
Trade names5.07,088 2,967 4,121 
Covenants not to compete3.0600 326 274 
Total intangible assets $128,617 $63,943 $64,674 
Amortization expense related to acquired intangible assets was $3.8 million and $7.7 million during the three and six months ended March 31, 2024, respectively, compared to $4.5 million and $9.0 million during the three and six months ended March 31, 2023, respectively, and is recorded within amortization and acquisition-related costs on the condensed consolidated statements of operations and comprehensive income (loss). There were no impairment losses recognized related to intangible assets in the three or six months ended March 31, 2024 or 2023.
13


The estimated future amortization expense related to intangible assets for each of the five succeeding fiscal years is expected to be as follows (amounts in thousands):
 Estimated Future Amortization Expense
20247,375 
202513,779 
202612,557 
202711,408 
20289,698 
Thereafter4,034 
Total$58,851 

5. STOCKHOLDERS’ EQUITY
Stock-Based Compensation Expense
The following table summarizes stock-based compensation expense related to restricted stock units (“RSUs”), stock options, and Employee Stock Purchase Plan (“ESPP”) shares, which was allocated as follows (amounts in thousands):
Three Months Ended March 31,Six Months Ended March 31,
 2024202320242023
Cost of revenue$124 $66 $253 $192 
Selling and marketing940 1,047 1,761 1,538 
Research and development1,366 899 2,407 1,453 
General and administrative1,458 692 2,897 1,963 
Stock-based compensation expense included in expenses
$3,888 $2,704 $7,318 $5,146 
As of March 31, 2024, the Company had $31.7 million of unrecognized compensation expense expected to be recognized over a weighted-average period of approximately 2.4 years.
2020 Incentive Plan
In January 2020, the Company’s Board of Directors (the “Board”) adopted the Mitek Systems, Inc. 2020 Incentive Plan (the “2020 Plan”) upon the recommendation of the Compensation Committee of the Board. On March 4, 2020, the Company’s stockholders approved the 2020 Plan. The total number of shares of Common Stock reserved for issuance under the 2020 Plan is 4,500,000 shares plus such number of shares, not to exceed 107,903, as remained available for issuance under the 2002 Stock Option Plan, 2006 Stock Option Plan, 2010 Stock Option Plan, and 2012 Incentive Plan (collectively, the “Prior Plans”) as of January 17, 2020, plus any shares underlying awards under the Prior Plans that are terminated, forfeited, cancelled, expire unexercised or are settled in cash after January 17, 2020. As of March 31, 2024, (i) 2,448,032 RSUs and 1,256,663 performance-based restricted stock unit awards (“Performance RSUs”) were outstanding under the 2020 Plan, (ii) 4,345,217 shares of Common Stock were reserved for future grants under the 2020 Plan, and (iii) stock options to purchase an aggregate of 267,456 shares of Common Stock and 8,850 RSUs were outstanding under the Prior Plans.
On October 2, 2023, the Company held an annual meeting of its stockholders (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders approved an amendment and restatement of the 2020 Plan to increase the number of shares authorized for issuance thereunder by 5,108,000 shares (the 2020 Plan as so amended and restated, the “A&R 2020 Plan”).
The A&R 2020 Plan had been previously approved, subject to stockholder approval, by the Company’s Board of Directors (the “Board”), upon recommendation of the Compensation Committee of the Board, on August 9, 2023. A summary of the A&R 2020 Plan was included in the Company’s definitive proxy statement for the Annual Meeting filed with the U.S. Securities and Exchange Commission on August 22, 2023, as supplemented and amended on September 19, 2023 (the “Proxy Statement”).
Employee Stock Purchase Plan
In January 2018, the Board adopted the ESPP. On March 7, 2018, the Company’s stockholders approved the ESPP. The total number of shares of Common Stock reserved for issuance thereunder is 1,000,000 shares. As of March 31, 2024, (i) 729,124 shares have been issued to participants pursuant to the ESPP and (ii) 270,876 shares of Common Stock were reserved for future purchases under the ESPP. The Company commenced the initial offering period on April 2, 2018.
14


The ESPP enables eligible employees to purchase shares of Common Stock at a discount from the market price through payroll deductions, subject to certain limitations. Eligible employees may elect to participate in the ESPP only during an open enrollment period. The offering period immediately follows the open enrollment window, at which time ESPP contributions are withheld from the participant's regular paycheck. The ESPP provides for a 15% discount on the market value of the stock at the lower of the grant date price (first day of the offering period) and the purchase date price (last day of the offering period). Stock-based compensation expense related to the ESPP was immaterial in each of the three months ended March 31, 2024 and 2023. The Company recognized $41,000 and $0.1 million in stock-based compensation expense related to the ESPP in the six months ended March 31, 2024 and 2023, respectively.
Director Restricted Stock Unit Plan
In January 2011, the Board adopted the Mitek Systems, Inc. Director Restricted Stock Unit Plan, as amended and restated (the “Director Plan”). On March 10, 2017, the Company’s stockholders approved an amendment to the Director Plan to increase the number of shares of Common Stock available for future grants. The total number of shares of Common Stock reserved for issuance thereunder is 1,500,000 shares. The Director Plan expired on December 31, 2022. As of March 31, 2024, (i) 177,054 RSUs were outstanding under the Director Plan and (ii) no shares of Common Stock were reserved for future grants under the Director Plan.
Stock Options
The following table summarizes stock option activity under the Company’s equity plans during the six months ended March 31, 2024:
Number of
Shares
Weighted-Average
Exercise Price
Weighted-Average
Remaining
Contractual Term
(in years)
Aggregate Intrinsic Value
(in thousands)
Outstanding at September 30, 2023651,269 $7.37 3.6$2,185 
Granted $ 
Exercised(166,634)$6.25 833 
Canceled $ 
Outstanding at March 31, 2024484,635 $7.75 4.21,440 
Vested and Expected to Vest at March 31, 2024484,635 $7.75 4.21,440 
Exercisable at March 31, 2024484,635 $7.75 4.21,440 
Stock-based compensation expense related to outstanding stock options was immaterial during each of the three and six months ended March 31, 2024 and 2023. As of March 31, 2024, the Company had no unrecognized compensation expense related to outstanding stock options.
Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the fiscal period in excess of the weighted-average exercise price, multiplied by the number of options outstanding and exercisable. There were no options granted during either of the six months ended March 31, 2024 or 2023.
Restricted Stock Units
The following table summarizes RSU activity under the Company’s equity plans during the six months ended March 31, 2024:
 
Number of
Shares
Weighted-Average
Fair Market Value
Per Share
Outstanding at September 30, 20232,188,296 $11.49 
Granted1,136,418 11.24 
Settled(534,146)10.98 
Canceled(116,632)11.73 
Outstanding at March 31, 20242,673,936 11.47 
The cost of RSUs is determined using the fair value of Common Stock on the award date, and the compensation expense is recognized ratably over the vesting period. The Company recognized $2.6 million and $1.9 million in stock-based compensation expense related to outstanding RSUs during the three months ended March 31, 2024 and 2023, respectively. The Company recognized $4.9 million and $3.5 million in stock-based compensation expense related to outstanding RSUs during the six months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the Company had $23.3 million of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 2.6 years.
15


Performance Restricted Stock Units
The following table summarizes Performance RSU activity under the Company’s equity plans during the six months ended March 31, 2024:
 
Number of
Shares
Weighted-Average
Fair Market Value
Per Share
Outstanding at September 30, 2023730,393 $13.37 
Granted778,232 11.05 
Settled(187,454)11.23 
Canceled(64,508)13.64 
Outstanding at March 31, 20241,256,663 12.24 
The cost of Performance RSUs is determined using a Monte Carlo simulation to estimate the fair value on the award date, and the compensation expense is recognized ratably over the vesting period. The Company recognized $1.3 million and $0.7 million in stock-based compensation expense related to outstanding Performance RSUs during the three months ended March 31, 2024 and 2023, respectively. The Company recognized $2.3 million and $1.4 million during the six months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the Company had $8.3 million of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 2.0 years.

6. INCOME TAXES
The Company’s tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, management updates the estimate of the annual effective tax rate, and any changes are recorded in a cumulative adjustment in that quarter. The quarterly tax provision and quarterly estimate of the annual effective tax rate are subject to significant volatility due to several factors, including management’s ability to accurately predict the portion of income (loss) before income taxes in multiple jurisdictions, the tax effects of our stock-based compensation awards, and the effects of acquisitions and the integration of those acquisitions.
For the three and six months ended March 31, 2024, the Company recorded an income tax benefit of $0.7 million and $2.4 million, respectively, which yielded an effective tax rate of 168% and 31%, respectively. For the three and six months ended March 31, 2023 the Company recorded an income tax provision of $1.8 million and $3.7 million, respectively, which yielded an effective tax rate of 26% and 27%, respectively. The effective tax rate for the three months ended March 31, 2024 is not meaningful due to near break-even pre-tax income for the period, which results in any discrete tax adjustments significantly impacting the rate. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three and six months ended March 31, 2024 and 2023 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation as well as the impact of state taxes, and federal, state and foreign research and development credits on the tax provision.

7. DEBT
Convertible Senior Notes
The carrying values of the 0.75% convertible notes due 2026 issued by the Company in an initial aggregate principal amount of $155.3 million (the “2026 Notes”) are as follows (amounts in thousands):

2026 Notes:
March 31, 2024September 30, 2023
Principal amount$155,250 $155,250 
Less: unamortized discount and issuance costs, net of amortization(15,758)(19,734)
Carrying amount$139,492 $135,516 

In February 2021, the Company issued $155.3 million aggregate principal amount of the 2026 Notes (including the Additional Notes, as defined below). The 2026 Notes are senior unsecured obligations of the Company. The 2026 Notes were issued pursuant to an Indenture, dated February 5, 2021 (the “Indenture”), between the Company and UMB Bank, National Association, as trustee. The Indenture includes customary covenants and sets forth certain events of default after which the 2026 Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company after which the 2026 Notes become automatically due and payable. The Company granted the initial purchasers of the 2026 Notes (collectively, the “Initial Purchasers”) a 13-day option to purchase up to an additional $20.25 million aggregate principal amount of
16


the 2026 Notes (the “Additional Notes”), which was exercised in full. The 2026 Notes were purchased in a transaction that was completed on February 5, 2021. As of January 13, 2024 (“Date of Noncompliance”), the Company was not in compliance with certain of the covenants in the Indenture as a result of the Company not timely filing its Form 10-K for the fiscal year ended September 30, 2023 (“Form 10-K”) with the SEC. As a result of not being in compliance, the 2026 Notes began to accrue additional special interest of 0.25% of the outstanding principal of the 2026 Notes for the 90 days after the Date of Noncompliance and 0.50% of the outstanding principal of the 2026 Notes for the 91st through 180th day after the Date of Noncompliance. The Company subsequently did not timely file its Form 10-Q for the quarter ended December 31, 2023 (the “Q1 Form 10-Q”) with the SEC. The Company filed its Form 10-K with the SEC on March 19, 2024 and its Q1 Form 10-Q with the SEC on April 15, 2024. As of March 31, 2024, the Company is in compliance with the covenants in the Indenture.
The 2026 Notes will mature on February 1, 2026, unless earlier redeemed, repurchased or converted. The 2026 Notes bear interest from February 5, 2021 at a rate of 0.75% per year payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2021. The 2026 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding August 1, 2025, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021, if the last reported sale price per share of Common Stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Common Stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Common Stock. On or after August 1, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2026 Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. Upon conversion, the Company may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash and, if applicable at the Company’s election, shares of the Common Stock, based on the applicable conversion rate(s); provided that the Company will be required to settle conversions solely in cash unless and until the Company (i) receives stockholder approval to increase the number of authorized shares of the Common Stock and (ii) reserves such amount of shares of the Common Stock for future issuance as required pursuant to the Indenture that governs the 2026 Notes. The conversion rate for the 2026 Notes will initially be 47.9731 shares of the Common Stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $20.85 per share of the Common Stock. The initial conversion price of the 2026 Notes represents a premium of approximately 37.5% to the $15.16 per share last reported sale price of the Common Stock on February 2, 2021. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture.
The net proceeds from this offering were approximately $149.7 million, after deducting the Initial Purchasers’ discounts and commissions and the Company’s estimated offering expenses related to the offering. The Company used approximately $9.3 million of the net proceeds from the offering to pay the cost of the Notes Hedge, after such cost is partially offset by the proceeds from the Warrant Transactions described below. The Initial Purchasers exercised their option to purchase Additional Notes in full and the Company used a portion of the net proceeds from the sale of such Additional Notes to enter into additional Notes Hedges, after such cost is partially offset by the proceeds from the additional Warrant Transactions, with the Option Counterparties (as defined below).
As of March 31, 2024, the number of authorized and unissued shares of Common Stock that are not reserved for other purposes is sufficient to settle the 2026 Notes into equity. Accordingly, the Company has the option to settle conversions of notes through payment or delivery, as the case may be, of cash, shares of Common Stock or a combination of cash and shares of Common Stock, at the Company’s election.
In accounting for the issuance of the 2026 Notes, the conversion option of the 2026 Notes was deemed an embedded derivative requiring bifurcation from the 2026 Notes (“host contract”) and separate accounting as an embedded derivative liability, as a result of the Company not having the necessary number of authorized but unissued shares of its Common Stock available to settle the conversion option of the 2026 Notes in shares. The proceeds from the 2026 Notes were first allocated to the embedded derivative liability and the remaining proceeds were then allocated to the host contract. On February 5, 2021, the fair value of the embedded derivative liability representing the conversion option was $33.2 million and the remaining $116.5 million was allocated to the host contract. The difference between the principal amount of the 2026 Notes and the fair value of the host contract (the “debt discount”) is amortized to interest expense using the effective interest method over the term of the 2026 Notes.
In the second quarter of fiscal 2022, the stockholders of the Company approved an increase to the number of authorized shares of Common Stock, to an amount sufficient to settle the conversion of the 2026 Notes. As a result of the increase to the number of authorized shares of Common Stock, the Company reclassified the embedded conversion derivative to additional paid-in capital.
As of March 31, 2024, the embedded conversion derivative is included in additional paid-in capital in the condensed consolidated balance sheets and will not be remeasured provided the requirements to qualify for the scope exception in Accounting Standards Codification (“ASC”) 815-10-15-74(a) continue to be met.
17


Debt issuance costs for the issuance of the 2026 Notes were approximately $5.5 million, consisting of initial purchasers' discount and other issuance costs. In accounting for the transaction costs, the Company allocated the total amount incurred to the 2026 Notes. Transaction costs were recorded as debt issuance cost (presented as contra debt in the condensed consolidated balance sheet) and are being amortized using the effective interest method to interest expense over the term of the 2026 Notes.

The following table presents the total amount of interest cost recognized relating to the 2026 Notes (amounts in thousands):
Three Months Ended March 31,Six Months Ended March 31,
2024202320242023
Contractual interest expense$298 $307 $591 $600 
Amortization of debt discount and issuance costs2,006 1,857 3,975 3,701 
Total interest expense recognized$2,304 $2,164 $4,566 $4,301 

The derived effective interest rate on the 2026 Notes host contract was determined to be 6.71%, which remains unchanged from the date of issuance. The remaining unamortized debt discount was $15.8 million as of March 31, 2024, and will be amortized over approximately 1.84 years. The fair value, based on a quoted market price (Level 2), of the 2026 Notes at March 31, 2024 was approximately $154.7 million.

Convertible Senior Notes Hedge and Warrants
In connection with the pricing of the 2026 Notes, the Company entered into the Notes Hedge with Bank of America, N.A., Jefferies International Limited and Goldman Sachs & Co. LLC (the “Option Counterparties”). The Notes Hedge provided the Company with the option to acquire, on a net settlement basis, approximately 7.4 million shares of Common Stock at a strike price of $20.85, which is equal to the number of shares of Common Stock that notionally underlie and correspond to the conversion price of the 2026 Notes. The Company also entered into Warrant Transactions with the Option Counterparties relating to the same number of shares of the Common Stock, subject to customary anti-dilution adjustments. The strike price of the Warrant Transactions is $26.53 per share, which represents a 75.0% premium to the last reported sale price of the Common Stock on the Nasdaq Capital Market on February 2, 2021, and is subject to certain adjustments under the terms of the Warrant Transactions.
The Company was initially required to settle the Notes Hedge in cash, as they did not qualify for the scope exception for contracts involving an issuer’s own equity in ASC 815 and were accounted for as a derivative asset. Upon initial purchase, the Notes Hedge was recorded in convertible senior notes hedge at $33.2 million in our condensed consolidated balance sheets. In the second quarter of fiscal 2022, the stockholders of the Company approved an increase to the number of authorized shares of Common Stock, to an amount sufficient to settle the conversion of the 2026 Notes. As a result of the increase to the number of authorized shares of Common Stock, the Company reclassified the Notes Hedge to additional paid-in capital.
As of March 31, 2024, the Notes Hedge is included in additional paid-in capital in the condensed consolidated balance sheet and will not be remeasured provided the requirements to qualify for the scope exception in ASC 815-10-15-74(a) continue to be met and the Company had not purchased any shares under the Notes Hedge.
As a result of the Warrant Transactions, the Company is required to recognize incremental dilution of earnings per share to the extent the average share price is over $26.53 for any fiscal quarter. During the three months ended March 31, 2024, there was no dilution of earnings per share. The Warrant Transactions expire over a period of 80 trading days commencing on May 1, 2026 and may be settled in net shares of Common Stock or net cash at the Company’s election. Upon initial sale, the Warrant Transactions were recorded as an increase in additional paid-in capital within stockholders’ equity of $23.9 million. As of March 31, 2024, the Warrant Transactions had not been exercised and remained outstanding.

Revolving Credit Line
On February 13, 2024, the Company entered into a Loan and Security Agreement (the “Credit Agreement”) with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Bank”) that provides for a revolving line of credit whereby the Company may borrow up to $35.0 million (the “Revolving Line”) with an additional $15.0 million to be advanced under the Revolving Line at the sole discretion of the Bank. The Revolving Line is secured on a first priority basis by the Company’s assets. In connection with the Credit Agreement, the Company incurred issuance costs of $0.3 million which will be amortized over the term of the Credit Agreement.
The Revolving Line terminates, and any outstanding principal amount of all advances made thereunder, and any accrued and unpaid interest thereon, become immediately due a