MITEK SYSTEMS INC

Previous wording

•Revenue for the three months ended March 31, 2025 was $51.9 million, an increase of 11% compared to revenue of $47.0 million in the three months ended March 31, 2024.

Current wording

•Revenue for the three months ended June 30, 2025 was $45.7 million, an increase of 2% compared to revenue of $45.0 million in the three months ended June 30, 2024.

Previous wording

•Net income was $9.2 million, or $0.20 per diluted share, during the three months ended March 31, 2025, compared to net income of $0.3 million, or $0.01 per diluted share, during the three months ended March 31, 2024.

Current wording

•Net income was $2.4 million, or $0.05 per diluted share, during the three months ended June 30, 2025, compared to net income of $0.2 million, or $0.00 per diluted share, during the three months ended June 30, 2024.

Previous wording

•Cash provided by operating activities was $14.3 million for the six months ended March 31, 2025, compared to cash used in operating activities of $2.4 million for the six months ended March 31, 2024.

Current wording

•Cash provided by operating activities was $35.9 million for the nine months ended June 30, 2025, compared to cash provided by operating activities of $10.6 million for the nine months ended June 30, 2024.

Previous wording

•We added new patents to our portfolio during the three months ended March 31, 2025, bringing our total number of issued patents to 105 as of March 31, 2025. In addition, we had 20 patent applications outstanding as of March 31, 2025.

Current wording

•We added new patents to our portfolio during the three months ended June 30, 2025, bringing our total number of issued patents to 107 as of June 30, 2025. In addition, we had 21 patent applications outstanding as of June 30, 2025.

Previous wording

Total revenue increased $5.0 million, or 11%, to $51.9 million in the three months ended March 31, 2025 compared to $47.0 million in the three months ended March 31, 2024. Software and hardware revenue increased $1.8 million, or 7%, to $26.7 million in the three months ended March 31, 2025 compared to $24.9 million in the three months ended March 31, 2024. This increase is primarily due to an increase in sales of our Mobile Deposit® software products partially offset by a decrease in sales of our CheckReader™ products in the three months ended March 31, 2025 compared to the same period in 2024. Services and other revenue increased $3.2 million, or 14%, to $25.2 million in the three months ended March 31, 2025 compared to $22.1 million in the three months ended March 31, 2024. This increase is primarily due to higher revenue from our MiVIP, Mobile Deposit®, and Check Fraud Defender products in the three months ended March 31, 2025 compared to the same period in 2024.

Current wording

Total revenue increased $0.8 million, or 2%, to $45.7 million in the three months ended June 30, 2025 compared to $45.0 million in the three months ended June 30, 2024. Software and hardware revenue decreased $3.2 million, or 14%, to $19.5 million in the three months ended June 30, 2025 compared to $22.7 million in the three months ended June 30, 2024. This decrease is primarily due to lower multi-year term license renewals of our Mobile Deposit® software products, partially offset by an increase in sales of our standalone biometrics products in the three months ended June 30, 2025 compared to the same period in 2024. Services and other revenue increased $3.9 million, or 18%, to $26.2 million in the three months ended June 30, 2025 compared to $22.3 million in the three months ended June 30, 2024. This increase is primarily due to higher revenue from our HooYu, MiVIP, Mobile Verify®, Mobile Deposit®, and Check Fraud Defender products in the three months ended June 30, 2025 compared to the same period in 2024.

Previous wording

Cost of revenue includes personnel costs related to billable services and software support, direct costs associated with our hardware products, hosting costs, and the costs of royalties for third party products embedded in our products. Cost of revenue increased $0.3 million, or 5%, to $6.5 million in the three months ended March 31, 2025 compared to $6.2 million in the three months ended March 31, 2024. The increase in cost of revenue is primarily due to an increase in transactional SaaS revenue during the three months ended March 31, 2025 compared to the same period in 2024.

Current wording

Cost of revenue includes personnel costs related to billable services and software support, direct costs associated with our hardware products, hosting costs, and the costs of royalties for third party products embedded in our products. Cost of revenue increased $0.5 million, or 8%, to $7.0 million in the three months ended June 30, 2025 compared to $6.5 million in the three months ended June 30, 2024. The increase in cost of revenue is primarily due to an increase in transactional SaaS revenue during the three months ended June 30, 2025 compared to the same period in 2024.

Previous wording

Selling and marketing expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with sales and marketing personnel. Selling and marketing expenses also include non-billable costs of professional services personnel, advertising expenses, product promotion costs, trade shows, and other brand awareness programs. Selling and marketing expenses decreased $0.5 million, or 4%, to $10.5 million in the three months ended March 31, 2025 compared to $11.0 million in the three months ended March 31, 2024. The decrease in selling and marketing expense is primarily due to lower personnel-related and other costs, partially offset by higher product promotion costs in the three months ended March 31, 2025 compared to the same period in 2024.

Current wording

Selling and marketing expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with sales and marketing personnel. Selling and marketing expenses also include non-billable costs of professional services personnel, advertising expenses, product promotion costs, trade shows, and other brand awareness programs. Selling and marketing expenses increased $0.8 million, or 7%, to $11.1 million in the three months ended June 30, 2025 compared to $10.4 million in the three months ended June 30, 2024. The increase in selling and marketing expense is primarily due to higher personnel-related costs, partially offset by lower other costs in the three months ended June 30, 2025 compared to the same period in 2024.

Previous wording

Research and development expenses include payroll, employee benefits, stock-based compensation, third party contractor expenses, and other headcount-related costs associated with software engineering and mobile capture science. Research and development expenses increased $0.1 million, or 1%, to $9.8 million in the three months ended March 31, 2025 compared to $9.7 million in the three months ended March 31, 2024. The increase in research and development expenses in the three months ended March 31, 2025 compared to the same period in 2024 was immaterial.

Current wording

Research and development expenses include payroll, employee benefits, stock-based compensation, third party contractor expenses, and other headcount-related costs associated with software engineering and mobile capture science. Research and development expenses decreased $1.0 million, or 10%, to $9.0 million in the three months ended June 30, 2025 compared to $10.0 million in the three months ended June 30, 2024. The decrease in research and development expenses is primarily due to lower personnel-related and other costs in the three months ended June 30, 2025 compared to the same period in 2024.

Previous wording

General and administrative expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with finance, legal, administration, and information technology functions, as well as third party legal, accounting, and other administrative costs. General and administrative expenses decreased $4.8 million, or 32%, to $10.1 million in the three months ended March 31, 2025 compared to $14.9 million in the three months ended March 31, 2024. The decrease in general and administrative expenses is primarily due to lower audit, accounting and tax fees, lower third-party and professional fees, lower legal fees and other costs, partially offset by higher personnel-related costs during the three months ended March 31, 2025 compared to the same period in 2024.

Current wording

General and administrative expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with finance, legal, administration, and information technology functions, as well as third party legal, accounting, and other administrative costs. General and administrative expenses decreased $1.4 million, or 11%, to $11.3 million in the three months ended June 30, 2025 compared to $12.6 million in the three months ended June 30, 2024. The decrease in general and administrative expenses is primarily due to lower executive transition costs, lower audit, accounting and tax fees and lower third-party and professional fees, partially offset by higher personnel-related costs as we replaced full-time consultants with full-time employees during the three months ended June 30, 2025 compared to the same period in 2024.

Previous wording

Amortization and acquisition-related costs include amortization of intangible assets, adjustments recorded due to changes in the fair value of contingent consideration, and other costs associated with acquisitions. Amortization and acquisition-related costs decreased $0.2 million, or 6%, to $3.6 million in the three months ended March 31, 2025 compared to $3.8 million in the three months ended March 31, 2024. The decrease in amortization and acquisition-related costs is primarily due to a decrease in amortization expense of intangible assets from previous acquisitions that were fully amortized prior to the three months ended March 31, 2025 compared to the same period in 2024.

Current wording

Amortization and acquisition-related costs include amortization of intangible assets, adjustments recorded due to changes in the fair value of contingent consideration, and other costs associated with acquisitions. Amortization and acquisition-related costs decreased $0.2 million, or 5%, to $3.6 million in the three months ended June 30, 2025 compared to $3.8 million in the three months ended June 30, 2024. The decrease in amortization and acquisition-related costs is primarily due to a decrease in amortization expense of intangible assets from previous acquisitions that were fully amortized prior to the three months ended June 30, 2025 compared to the same period in 2024.

Previous wording

Restructuring costs consist of employee severance obligations and other related costs. Restructuring costs were immaterial in the three months ended March 31, 2025. Restructuring costs were $0.5 million in the three months ended March 31, 2024 and related to expenses incurred to relocate employees.

Current wording

Restructuring costs consist of employee severance obligations and other related costs. There were no restructuring costs in the three months ended June 30, 2025. Restructuring costs were $1.1 million in the three months ended June 30, 2024 and related to expenses incurred to a restructuring that occurred in the third quarter of fiscal 2024.

Previous wording

Interest expense includes the amortization of debt discount and issuance costs and coupon interest accrued on our 0.75% convertible senior notes due 2026 (the “2026 Notes”). Interest expense was $2.4 million for the three months ended March 31, 2025 and consisted of $2.1 million of amortization of debt discount and issuance costs and $0.3 million of interest incurred. Interest expense was $2.3 million for the three months ended March 31, 2024 and consisted of $2.0 million of amortization of debt discount and issuance costs and $0.3 million of interest incurred.

Current wording

Interest expense includes the amortization of debt discount and issuance costs and coupon interest accrued on our 0.75% convertible senior notes due 2026 (the “2026 Notes”) and Amended Credit Agreement (as defined below). Interest expense was $2.5 million for the three months ended June 30, 2025 and consisted of $2.2 million of amortization of debt discount and issuance costs and $0.3 million of interest incurred. Interest expense was $2.3 million for the three months ended June 30, 2024 and consisted of $2.0 million of amortization of debt discount and issuance costs and $0.3 million of interest incurred. The increase was due to issuance costs incurred related to our Amended Credit Agreement.

Previous wording

Other income (expense), net includes interest income net of amortization and net realized gains or losses on our marketable securities portfolio, and foreign currency transactional gains or losses. Other income (expense), net decreased $0.1 million, or 7%, to $1.1 million net income in the three months ended March 31, 2025 compared to $1.2 million net income in the three months ended March 31, 2024. The decrease was primarily due to lower interest income net of amortization and other income, partially offset by higher foreign currency exchange transactional gains, in the three months ended March 31, 2025 as compared to the same period in 2024.

Current wording

Other income (expense), net includes interest income net of amortization and net realized gains or losses on our marketable securities portfolio, and foreign currency transactional gains or losses. Other income (expense), net increased $0.4 million, or 26%, to $1.8 million of income in the three months ended June 30, 2025 compared to $1.4 million of income in the three months ended June 30, 2024. The increase was primarily due to higher foreign currency exchange transactional gains, partially offset by a loss on extinguishment related to our Amended Credit Agreement, in the three months ended June 30, 2025 as compared to the same period in 2024.

Previous wording

For the three months ended March 31, 2025, we recorded an income tax provision of $0.9 million which yielded an effective tax rate of 9%. For the three months ended March 31, 2024, we recorded an income tax benefit of $0.7 million which yielded an effective tax rate of 168%. The difference between the U.S. federal statutory tax rate and our effective tax rate for the three months ended March 31, 2025 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation, release of valuation allowances relating to one of the Company's operations in a foreign jurisdiction, as well as the impact of stock-based compensation, and federal, state and foreign research and development credits on the tax provision. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three months ended March 31, 2024 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation as well as the impact of stock-based compensation, and federal, state and foreign research and development credits on its tax provision.

Current wording

For the three months ended June 30, 2025, we recorded an income tax provision of $0.7 million which yielded an effective tax rate of 24%. For the three months ended June 30, 2024, we recorded an income tax benefit of $0.4 million which yielded an effective tax rate of 236%. The difference between the U.S. federal statutory tax rate and our effective tax rate for the three months ended June 30, 2025 and 2024 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation, as well as the impact of stock-based compensation, and federal, state and foreign research and development credits on the tax provision.

Previous wording

The following table summarizes certain aspects of our results of operations for the six months ended March 31, 2025 and 2024 (amounts in thousands, except percentages):

Current wording

The following table summarizes certain aspects of our results of operations for the nine months ended June 30, 2025 and 2024 (amounts in thousands, except percentages):

Previous wording

Total revenue increased $5.3 million, or 6%, to $89.2 million in the six months ended March 31, 2025 compared to $83.9 million in the six months ended March 31, 2024. Software and hardware revenue decreased $2.2 million, or 5%, to $38.7 million in the six months ended March 31, 2025 compared to $40.9 million in the six months ended March 31, 2024. This decrease is primarily due to decreases in sales of our Mobile Deposit® and ID R&D biometrics software products, partially offset by an increase in sales of our CheckReader™ software product in the six months ended March 31, 2025 compared to the same period in 2024. Services and other revenue increased $7.5 million, or 17%, to $50.5 million in the six months ended March 31, 2025 compared to $43.0 million in the six months ended March 31, 2024 primarily due to strong growth in revenue from our MiVIP, Mobile Deposit®, Check Fraud Defender, and CheckReader™ products compared to the same period in 2024.

Current wording

Total revenue increased $6.1 million, or 5%, to $134.9 million in the nine months ended June 30, 2025 compared to $128.9 million in the nine months ended June 30, 2024. Software and hardware revenue decreased $5.3 million, or 8%, to $58.2 million in the nine months ended June 30, 2025 compared to $63.5 million in the nine months ended June 30, 2024. This decrease is primarily due to lower multi-year term license renewals of our Mobile Deposit® software products and a decrease in sales of our legacy identity verification software and hardware products in the nine months ended June 30, 2025 compared to the same period in 2024. Services and other revenue increased $11.4 million, or 17%, to $76.7 million in the nine months ended June 30, 2025 compared to $65.3 million in the nine months ended June 30, 2024 primarily due to strong growth in revenue from our Mobile Verify®, HooYu, MiVIP, Mobile Deposit®, and Check Fraud Defender products, partially offset by a decrease in sales of our legacy identity verification products, compared to the same period in 2024.

Previous wording

Cost of revenue includes personnel costs related to billable services and software support, direct costs associated with our hardware products, hosting costs, and the costs of royalties for third party products embedded in our products. Cost of revenue increased $0.7 million, or 6%, to $12.5 million in the six months ended March 31, 2025 compared to $11.7 million in the six months ended March 31, 2024. The increase in cost of revenue is primarily due to an increase in transactional SaaS revenue during the six months ended March 31, 2025 compared to the same period in 2024.

Current wording

Cost of revenue includes personnel costs related to billable services and software support, direct costs associated with our hardware products, hosting costs, and the costs of royalties for third party products embedded in our products. Cost of revenue increased $1.3 million, or 7%, to $19.5 million in the nine months ended June 30, 2025 compared to $18.2 million in the nine months ended June 30, 2024. The increase in cost of revenue is primarily due to an increase in transactional SaaS revenue during the nine months ended June 30, 2025 compared to the same period in 2024.

Previous wording

Selling and marketing expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with sales, marketing, and product management personnel. Selling and marketing expenses also include non-billable costs of professional services personnel, advertising expenses, product promotion costs, trade shows, and other brand awareness programs. Selling and marketing expenses decreased $0.6 million, or 3%, to $20.2 million in the six months ended March 31, 2025 compared to $20.9 million in the six months ended March 31, 2024. The decrease in selling and marketing expense is primarily due to lower personnel-related costs and other costs, partially offset by higher product promotion costs in the six months ended March 31, 2025 compared to the same period in 2024.

Current wording

Selling and marketing expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with sales, marketing, and product management personnel. Selling and marketing expenses also include non-billable costs of professional services personnel, advertising expenses, product promotion costs, trade shows, and other brand awareness programs. Selling and marketing expenses increased $0.1 million, or 0%, to $31.4 million in the nine months ended June 30, 2025 compared to $31.2 million in the nine months ended June 30, 2024. The increase in selling and marketing expense is primarily due to higher personnel-related costs, partially offset by lower other costs in the nine months ended June 30, 2025 compared to the same period in 2024.

Previous wording

Research and development expenses include payroll, employee benefits, stock-based compensation, third party contractor expenses, and other headcount-related costs associated with software engineering and mobile capture science. Research and development expenses decreased $0.5 million, or 3%, to $18.1 million in the six months ended March 31, 2025 compared to $18.6 million in the six months ended March 31, 2024. The decrease in research and development expenses is primarily due to lower personnel-related costs, partially offset by higher third-party contractor expenses, in the six months ended March 31, 2025 compared to the same period in 2024.

Current wording

Research and development expenses include payroll, employee benefits, stock-based compensation, third party contractor expenses, and other headcount-related costs associated with software engineering and mobile capture science. Research and development expenses decreased $1.5 million, or 5%, to $27.0 million in the nine months ended June 30, 2025 compared to $28.6 million in the nine months ended June 30, 2024. The decrease in research and development expenses is primarily due to lower personnel-related and other costs, partially offset by higher third-party contractor expenses, in the nine months ended June 30, 2025 compared to the same period in 2024.

Previous wording

General and administrative expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with finance, legal, administration, and information technology functions, as well as third party legal, accounting, and other administrative costs. General and administrative expenses decreased $8.5 million, or 28%, to $22.0 million in the six months ended March 31, 2025 compared to $30.5 million in the six months ended March 31, 2024. The decrease was primarily due to lower audit, accounting and tax fees, lower third-party and professional fees, lower legal and other costs, partially offset by higher personnel-related costs during the six months ended March 31, 2025 compared to the same period in 2024.

Current wording

General and administrative expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with finance, legal, administration, and information technology functions, as well as third party legal, accounting, and other administrative costs. General and administrative expenses decreased $9.8 million, or 23%, to $33.3 million in the nine months ended June 30, 2025 compared to $43.1 million in the nine months ended June 30, 2024. The decrease was primarily due to lower audit, accounting and tax fees, lower third-party and professional fees, lower executive transition costs, lower legal and other costs, partially offset by higher personnel-related costs as we continue to replace full-time consultants with full-time employee during the nine months ended June 30, 2025 compared to the same period in 2024.

Previous wording

Amortization and acquisition-related costs include amortization of intangible assets, adjustments recorded due to changes in the fair value of contingent consideration, and other costs associated with acquisitions. Amortization and acquisition-related costs decreased $0.6 million, or 7%, to $7.3 million in the six months ended March 31, 2025 compared to $7.8 million in the six months ended March 31, 2024. The decrease in amortization and acquisition-related costs is primarily due to a decrease in amortization expense of intangible assets from previous acquisitions that had been fully amortized during the six months ended March 31, 2025 compared to the same period in 2024.

Current wording

Amortization and acquisition-related costs include amortization of intangible assets, adjustments recorded due to changes in the fair value of contingent consideration, and other costs associated with acquisitions. Amortization and acquisition-related costs decreased $0.8 million, or 7%, to $10.8 million in the nine months ended June 30, 2025 compared to $11.6 million in the nine months ended June 30, 2024. The decrease in amortization and acquisition-related costs is primarily due to a decrease in amortization expense of intangible assets from previous acquisitions that had been fully amortized during the nine months ended June 30, 2025 compared to the same period in 2024.

Previous wording

Restructuring costs consist of employee severance obligations and other related costs. Restructuring costs were $0.8 million in the six months ended March 31, 2025 related to a restructuring that occurred in the first quarter of fiscal 2025. Restructuring costs were $0.6 million in the six months ended March 31, 2024 and related to expenses incurred to relocate employees.

Current wording

Restructuring costs consist of employee severance obligations and other related costs. Restructuring costs were $0.8 million in the nine months ended June 30, 2025 related to a restructuring that occurred in the first quarter of fiscal 2025. Restructuring costs were $1.6 million in the nine months ended June 30, 2024 and related to expenses incurred to relocate employees.

Previous wording

Interest expense includes the amortization of debt discount and issuance costs and coupon interest accrued on the 2026 Notes. Interest expense was $4.8 million for six months ended March 31, 2025 and consisted of $4.2 million of amortization of debt discount and issuance costs and $0.6 million of interest incurred. Interest expense was $4.6 million for six months ended March 31, 2024 and consisted of $4.0 million of amortization of debt discount and issuance costs and $0.6 million of interest incurred. As we amortize the debt discount and issuance costs using the effective interest method, amortization expense increases over the term of the agreement.

Current wording

Interest expense includes the amortization of debt discount and issuance costs and coupon interest accrued on the 2026 Notes and Amended Credit Agreement (as defined below). Interest expense was $7.3 million for nine months ended June 30, 2025 and consisted of $6.4 million of amortization of debt discount and issuance costs and $0.9 million of interest incurred. Interest expense was $6.9 million for nine months ended June 30, 2024 and consisted of $6.0 million of amortization of debt discount and issuance costs and $0.9 million of interest incurred. As we amortize the debt discount and issuance costs using the effective interest method, amortization expense increases over the term of the agreement.

Previous wording

Other income (expense), net includes interest income net of amortization and net realized gains or losses on our marketable securities portfolio and foreign currency transactional gains or losses. Other income (expense), net decreased $1.2 million, or 41%, to $1.7 million net income in the six months ended March 31, 2025 compared to $2.8 million net income in the six months ended March 31, 2024. The decrease was primarily due to higher foreign currency transactional losses and a decrease in interest income net of amortization as compared to the same period in 2024.

Current wording

Other income (expense), net includes interest income net of amortization and net realized gains or losses on our marketable securities portfolio and foreign currency transactional gains or losses. Other income (expense), net decreased $0.8 million, or 19%, to $3.5 million income in the nine months ended June 30, 2025 compared to $4.3 million income in the nine months ended June 30, 2024. The decrease was primarily due to a decrease in interest income net of amortization and a loss on extinguishment related to our Amended Credit Agreement in the nine months ended June 30, 2025 as compared to the same period in 2024.

Previous wording

For the six months ended March 31, 2025, we recorded an income tax provision of $0.6 million which yielded an effective tax rate of 12%. For the six months ended March 31, 2024, we recorded an income tax benefit of $2.4 million which yielded an effective tax rate of 31%. The difference between the U.S. federal statutory tax rate and our effective tax rate for the six months ended March 31, 2025 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation, release of valuation allowances relating to one of the Company's operations in a foreign jurisdiction, as well as the impact of stock-based compensation, and federal, state and foreign research and development credits on the tax provision. The difference between the U.S. federal statutory tax rate and our effective tax rate for the six months ended March 31, 2024 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation as well as the impact of stock-based compensation, and federal, state and foreign research and development credits on its tax provision.

Current wording

For the nine months ended June 30, 2025, we recorded an income tax provision of $1.4 million which yielded an effective tax rate of 16%. For the nine months ended June 30, 2024, we recorded an income tax benefit of $2.8 million which yielded an effective tax rate of 35%. The difference between the U.S. federal statutory tax rate and our effective tax rate for the nine months ended June 30, 2025 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation, release of valuation allowances relating to one of the Company's operations in a foreign jurisdiction, as well as the impact of stock-based compensation, and federal, state and foreign research and development credits on the tax provision. The difference between the U.S. federal statutory tax rate and our effective tax rate for the nine months ended June 30, 2024 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation as well as the impact of stock-based compensation, and federal, state and foreign research and development credits on its tax provision.

Previous wording

Cash generated from operations has historically been our primary source of liquidity to fund operations and investments to grow our business. Our additional sources of liquidity include available cash balances and proceeds from the issuance of the 2026 Notes (as defined below). On March 31, 2025, we had $152.4 million in cash and cash equivalents and investments compared to $141.8 million on September 30, 2024, an increase of $10.6 million, or 7%. In summary, our cash flows from continuing operations were as follows (amounts in thousands):

Current wording

Cash generated from operations and proceeds from the issuance of the 2026 Notes (as defined below) have historically been our primary sources of liquidity to fund operations and investments to grow our business. Our additional sources of liquidity include available cash balances and the Amended Credit Agreement (as defined below). On June 30, 2025, we had $175.4 million in cash and cash equivalents and investments compared to $141.8 million on September 30, 2024, an increase of $33.6 million, or 24%. In summary, our cash flows from continuing operations were as follows (amounts in thousands):

Previous wording

Cash flows related to operating activities are dependent on net income, adjustments to net income and changes in working capital. Net cash provided by operating activities during the six months ended March 31, 2025 was $14.3 million and resulted primarily from net non-cash charges of $15.8 million and net income of $4.5 million, partially offset by unfavorable changes in operating assets and liabilities of $6.0 million. Net cash used in operating activities during the six months ended March 31, 2024 was $2.4 million and resulted primarily from a net loss of $5.5 million and by unfavorable changes in operating assets and liabilities of $15.4 million, partially offset by non-cash charges of $18.5 million. The increase in cash provided by operating activities of $16.7 million during the six months ended March 31, 2025 compared to six months ended March 31, 2024 was primarily due to net income and a related increase in income taxes payable and a decrease in accounts receivable in the six months ended March 31, 2025.

Current wording

Cash flows related to operating activities are dependent on net income, adjustments to net income and changes in working capital. Net cash provided by operating activities during the nine months ended June 30, 2025 was $35.9 million and resulted primarily from net non-cash charges of $25.1 million, net income of $6.9 million, and by unfavorable changes in operating assets and liabilities of $3.8 million. Net cash provided by operating activities during the nine months ended June 30, 2024 was $10.6 million and resulted primarily from a net loss of $5.3 million and by unfavorable changes in operating assets and liabilities of $12.4 million, partially offset by non-cash charges of $28.3 million. The increase in cash inflows from operating activities of $25.3 million during the nine months ended June 30, 2025 compared to nine months ended June 30, 2024 was primarily due to net income, a related increase in income taxes payable and the timing of income tax payments in the nine months ended June 30, 2025.

Previous wording

Net cash provided by investing activities was $0.5 million during the six months ended March 31, 2025, which consisted primarily of net maturities of investments of $1.0 million, partially offset by capital expenditures of $0.5 million. Net cash provided by investing activities was $27.4 million during the six months ended March 31, 2024, which consisted primarily of net sales and maturities of investments of $28.1 million partially offset by capital expenditures of $0.7 million. The decrease in cash provided by investing activities of $26.9 million during the six months ended March 31, 2025 compared to six months ended March 31, 2024 was primarily due to a decrease in net maturities of investments.

Current wording

Net cash used in investing activities was $0.2 million during the nine months ended June 30, 2025, which consisted primarily of net maturities of investments of $0.7 million, partially offset by capital expenditures of $0.5 million. Net cash provided by investing activities was $27.8 million during the nine months ended June 30, 2024, which consisted primarily of net sales and maturities of investments of $29.0 million partially offset by capital expenditures of $1.2 million. The decrease in cash inflows from investing activities of $28.0 million during the nine months ended June 30, 2025 compared to nine months ended June 30, 2024 was primarily due to a decrease in net maturities of investments.

Previous wording

Net cash used in financing activities was $3.1 million during the six months ended March 31, 2025, primarily due to repurchases and retirements of Common Stock of $3.3 million and principal payments on other borrowings of $0.1 million, partially offset by $0.3 million of net proceeds from the issuance of Common Stock under our equity plans. Net cash used in financing activities was $3.0 million during the six months ended March 31, 2024, primarily due to the payment of $4.6 million of acquisition-related contingent consideration, partially offset by $0.9 million of net proceeds from the issuance of equity plan Common Stock and $1.0 million of proceeds from other borrowings. The increase in cash used in financing activities was immaterial during the six months ended March 31, 2025 compared to the six months ended March 31, 2024.

Current wording

Net cash used in financing activities was $3.1 million during the nine months ended June 30, 2025, primarily due to repurchases and retirements of Common Stock of $3.3 million, payment of debt issuance costs of $0.2 million, and principal payments on other borrowings of $0.1 million, partially offset by $0.5 million of net proceeds from the issuance of Common Stock under our equity plans. Net cash used in financing activities was $12.9 million during the nine months ended June 30, 2024, primarily due to repurchases and retirements of Common Stock of $10.0 million, the payment of $4.6 million of acquisition-related contingent consideration, and payment of debt issuance costs of $0.3 million, partially offset by $1.0 million of net proceeds from the issuance of equity plan Common Stock and $1.2 million of proceeds from other borrowings. The decrease in cash outflows from financing activities during the nine months ended June 30, 2025 was primarily due to higher repurchases and retirements of Common Stock and the payment of acquisition-related consideration, partially offset by proceeds from other borrowings in the nine months ended June 30, 2024.

Previous wording

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 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 Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (“2023 Annual Report”) 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

Current wording

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 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 June 30, 2025, the Company was in compliance with the covenants in the Indenture.

Previous wording

On February 13, 2024, the Company, together with its subsidiaries A2iA Corp. and ID R&D, Inc., 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 to interest expense using the straight-line method over the term of the Credit Agreement.

Current wording

On February 13, 2024, the Company, together with its subsidiaries A2iA Corp. and ID R&D, Inc., 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 provided for a revolving line of credit whereby the Company could 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 was secured on a first priority basis by the Company’s assets.

Previous wording

The Amendment provides for, among other things, (i) the establishment of a delayed draw term loan (the “Term Loan”) in an aggregate principal amount of up to $75.0 million that may be drawn prior to February 28, 2026 for the sole purpose of paying amounts outstanding under the 2026 Notes due February 1, 2026 and customary fees and expenses in connection therewith, (ii) a reduction in the aggregate principal amount available under the existing revolving line of credit (the “Revolving Line”) to $25.0 million, (iii) an adjustment of the financial covenants set forth in the Amended Credit Agreement, (iv) an extension of the maturity date of the Revolving Line to May 1, 2030, and (v) an adjustment to the interest rate margins applicable to advances. The Term Loan and the Revolving Line both mature on May 1, 2030. Commencing on April 1, 2026, the Borrower must make amortization payments on any advances under the Term Loan at the percentages set forth in the Amendment.

Current wording

The Amended Credit Agreement provides for, among other things, (i) the establishment of a delayed draw term loan (the “Term Loan”) in an aggregate principal amount of up to $75.0 million that may be drawn prior to February 28, 2026 for the sole purpose of paying amounts outstanding under the 2026 Notes due February 1, 2026 and customary fees and expenses in connection therewith, (ii)

Previous wording

Borrowings under the Amended Credit Agreement generally bear interest at a variable rate equal to (a) term SOFR plus a specified margin or (b) WSJ prime plus a specified margin, in each case which will be adjusted based on the Company’s net leverage ratio at the time of borrowing. Borrower must also pay the Bank (i) a commitment fee of $0.1 million and (ii) an “Unused Revolving Line Facility Fee” of 0.25% per annum of the average unused portion of the Revolving Line.

Current wording

Borrowings under the Amended Credit Agreement generally bear interest at a variable rate equal to (a) term SOFR plus a specified margin or (b) WSJ prime plus a specified margin, in each case which will be adjusted based on the Company’s net leverage ratio at the time of borrowing. Borrower must also pay the Bank (i) a commitment fee of $125,000 and (ii) an “Unused Revolving Line Facility Fee” of 0.25% per annum of the average unused portion of the Revolving Line.

Previous wording

The Credit Agreement contains customary events of default and also provides that an event of default includes any default resulting in a right by third parties to accelerate maturity of indebtedness in excess of $500,000. If any event of default occurs and is not cured within applicable grace periods set forth in the Credit Agreement or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated. In addition, the Company may be required to deposit cash with the Bank in an amount equal to 115% of any undrawn letters of credit denominated in a foreign currency.

Current wording

The Amended Credit Agreement contains customary events of default and also provides that an event of default includes any default resulting in a right by third parties to accelerate maturity of indebtedness in excess of $500,000. If any event of default occurs and is not cured within applicable grace periods set forth in the Amended Credit Agreement or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated. In addition, Borrower may be required to deposit cash with the Bank in an amount equal to 1.05 of any undrawn letters of credit denominated in U.S. Dollars or 1.15

Previous wording

The Credit Agreement requires the Company to maintain a net leverage ratio of no more than 2.25 to 1.00 and if the Company engages in a share repurchase program, the net leverage ratio may not exceed 2.00 to 1.00. As disclosed in Note 6, on May 13, 2024, the Board authorized and approved a share repurchase program for up to $50.0 million of the currently outstanding shares of Common Stock. As of March 31, 2025 the Company’s net leverage ratio was 1.42 to 1.00 and as such the Company was in compliance with the net leverage ratio covenant of the Credit Agreement. There are no outstanding borrowings under the Credit Agreement as of March 31, 2025.

Current wording

The Amended Credit Agreement requires the Company to maintain a net leverage ratio of no more than 2.50 to 1.00 and if the Company consummates a permitted acquisition during the trailing twelve-month period, the net leverage ratio may not exceed 2.75 to 1.00. As of June 30, 2025, the Company’s net leverage ratio was 1.20 to 1.00 and as such the Company was in compliance with the net leverage ratio covenant of the Amended Credit Agreement. There are no outstanding borrowings under the Amended Credit Agreement as of June 30, 2025.

Previous wording

The Company has certain loan agreements with Spanish government agencies. These agreements have repayment periods of five to twelve years and bear no interest. As of March 31, 2025, $2.5 million was outstanding under these agreements and $0.3 million and $2.2 million is recorded in other current liabilities and other non-current liabilities, respectively, in the condensed consolidated balance sheets. As of September 30, 2024, $2.7 million was outstanding under these agreements and approximately $0.3 million and

Current wording

The Company has certain loan agreements with Spanish government agencies. These agreements have repayment periods of five to twelve years and bear no interest. As of June 30, 2025, $2.7 million was outstanding under these agreements and $0.3 million and $2.4 million is recorded in other current liabilities and other non-current liabilities, respectively, in the condensed consolidated balance sheets. As of September 30, 2024, $2.7 million was outstanding under these agreements and approximately $0.3 million and $2.4 million is recorded in other current liabilities and other non-current liabilities, respectively, in the condensed consolidated balance sheets.

Previous wording

The Company made no purchases during the three months ended March 31, 2025. The change in accumulated deficit during the three months ended March 31, 2025 is due to a change in the estimate associated with excise tax accruals related to share repurchases made during fiscal 2025. The Company made purchases of $3.3 million, or 363,378 shares, during the six months ended March 31, 2025 at an average price of $8.99 per share and subsequently retired the shares.

Current wording

The Company made no purchases during the three months ended June 30, 2025. The Company made purchases of $3.3 million, or 369,978 shares, during the nine months ended June 30, 2025 at an average price of $8.99 per share and subsequently retired the shares. The Company made purchases of $10.0 million, or 819,623 shares, during each of the three and nine months ended June 30, 2024 at an average price of $12.25 per share and subsequently retired the shares.

Previous wording

At March 31, 2025, we had investments of $47.7 million, designated as available-for-sale debt securities, which consisted of commercial paper, corporate issuances, and asset-backed securities, carried at fair value as determined by quoted market prices for identical or similar assets, with unrealized gains and losses, net of tax, and reported as a separate component of stockholders’ equity. All securities for which maturity or sale is expected within one year are classified as “current” on the condensed consolidated balance sheets. All other securities are classified as “long-term” on the condensed consolidated balance sheets. At March 31, 2025, we had $31.5 million of our available-for-sale securities classified as current and $16.2 million of our available-for-sale securities classified as long-term. At September 30, 2024, we had $36.9 million of our available-for-sale securities classified as current and $11.4 million of our available-for-sale securities classified as long-term.

Current wording

All securities for which maturity or sale is expected within one year are classified as “current” on the condensed consolidated balance sheets. All other securities are classified as “long-term” on the condensed consolidated balance sheets. At June 30, 2025, we had $39.9 million of our available-for-sale securities classified as current and $8.3 million of our available-for-sale securities classified as long-term. At September 30, 2024, we had $36.9 million of our available-for-sale securities classified as current and $11.4 million of our available-for-sale securities classified as long-term.

Previous wording

We had working capital of $8.4 million at March 31, 2025 compared to $142.9 million at September 30, 2024. The decrease in working capital is the result of reclassifying the 2026 Notes of $147.8 million to current liabilities at March 31, 2025 as the 2026 Notes mature on Feb 1, 2026. Our material cash requirements include repayment of the 2026 Notes as well as those related to leases as described in Note 10. “Leases” of the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q. Based on our current operating plan we believe the current cash and cash equivalents, cash received from proceeds under the Amended Credit Agreement, and cash expected to be generated from operations will be adequate to satisfy our working capital needs for at least the next twelve months from the date the financial statements are filed for the foreseeable future.

Current wording

We had working capital of $27.1 million at June 30, 2025 compared to $142.9 million at September 30, 2024. The decrease in working capital is the result of reclassifying the 2026 Notes of $150.0 million to current liabilities at June 30, 2025 as the 2026 Notes mature on Feb 1, 2026. Our material cash requirements include repayment of the 2026 Notes as well as those related to leases as described in Note 10. “Leases” of the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q. Based on our current operating plan we believe the current cash and cash equivalents, cash received from proceeds under the Amended Credit Agreement, and cash expected to be generated from operations will be adequate to satisfy our working capital needs for at least the next twelve months from the date the financial statements are filed for the foreseeable future.