MITEK SYSTEMS INC

GAAP Net Income to Adjusted EBITDA Reconciliation

This Proxy Statement includes information about adjusted EBITDA which is a non-GAAP financial measure of financial performance that is not prepared in accordance with U.S. generally accepted accounting principles and computational methods may differ from those used by other companies. Adjusted EBITDA is not meant to be considered in isolation or as a substitute for comparable GAAP measure and should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP. Management uses both GAAP and adjusted EBITDA when planning, monitoring, and evaluating the company’s performance.

The primary purpose of using non-GAAP financial measures is to provide supplemental information that may prove useful to investors and to enable investors to evaluate the company’s results in the same way management does. Management believes that supplementing GAAP disclosure with non-GAAP disclosure provides investors with a more complete view of the company’s operational performance and allows for meaningful period-to-period comparisons and analysis of trends in the company’s business. Further, to the extent that other companies use similar methods in calculating non-GAAP financial measures, the provision of supplemental non-GAAP information can allow for a comparison of the company’s relative performance against other companies that also report non-GAAP operating results.

Adjusted EBITDA excludes the impact of the following items: interest, taxes, depreciation, amortization, litigation and other legal costs, executive transition costs, stock-based compensation expense, non-recurring audit fees, and restructuring costs.

Please see the table below for the reconciliation of GAAP net income to adjusted EBITDA (in thousands, except data expressed as a percentage of revenues).

Operating Cash Flow to Free Cash Flow Reconciliation

Free cash flow is calculated as net cash provided by operating activities, less cash used for purchases of property and equipment and management believes that free cash flow is useful to investors as a liquidity measure because it measures the company's ability to generate or use cash in excess of our capital investments in property and equipment in order to enhance the strength of our balance sheet and further invest in our business and potential strategic initiatives. A limitation of the

APPENDIX A

utility of free cash flow as a measure of the company's liquidity is that it does not represent the total increase or decrease in the company's cash balance for the period. Management uses free cash flow in conjunction with traditional U.S. GAAP measures as part of our overall assessment of the company's liquidity, including the preparation of our annual operating budget and quarterly forecasts and to evaluate the effectiveness of our business strategies. There are a number of limitations related to the use of free cash flow as compared to net cash provided by operating activities, including that free cash flow includes capital expenditures, the benefits of which are realized in periods subsequent to those when expenditures are made.

Please see the table below for the reconciliation of GAAP net cash provided by (used in) operating activities to free cash flow (in thousands).