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Investments
 12 Months Ended
Sep. 30, 2021
Investments, Debt and Equity Securities [Abstract]  
INVESTMENTS
4. INVESTMENTS
The Company determines the appropriate designation of investments at the time of purchase and reevaluates such designation as of each balance sheet date. All of the Company’s investments are designated as available-for-sale debt securities. As of September 30, 2021 and 2020, the Company’s short-term investments have maturity dates of less than one year from the balance sheet date. The Company’s long-term investments have maturity dates of greater than one year from the balance sheet date.
Available-for-sale marketable securities are carried at fair value as determined by quoted market prices for identical or similar assets, with unrealized gains and losses, net of taxes, and reported as a separate component of stockholders’ equity. Management reviews the fair value of the portfolio at least monthly and evaluates individual securities with fair value below amortized cost at the balance sheet date. For debt securities, in order to determine whether impairment is other-than-temporary, management must conclude whether the Company intends to sell the impaired security and whether it is more likely than not that the Company will be required to sell the security before recovering its amortized cost basis. If management intends to sell an impaired debt security or it is more likely than not that the Company will be required to sell the security prior to recovering its amortized cost basis, an other-than-temporary impairment is deemed to have occurred. The amount of an other-than-temporary impairment on debt securities related to a credit loss, or securities that management intends to sell before recovery, is recognized in earnings. The amount of an other-than-temporary impairment on debt securities related to other factors is recorded consistent with changes in the fair value of all other available-for-sale securities as a component of stockholders’ equity in other comprehensive income (loss). No other-than-temporary impairment charges
were recognized in the twelve months ended September 30, 2021, 2020, and 2019. There were no realized gains or losses from the sale of available-for-sale securities during the twelve months ended September 30, 2021 and 2020.
The cost of securities sold is based on the specific identification method. Amortization of premiums, accretion of discounts, interest, dividend income, and realized gains and losses are included in other income, net in the consolidated statements of operations and other comprehensive income (loss).
The following tables summarize investments by type of security as of September 30, 2021 and 2020, respectively (amounts shown in thousands):
September 30, 2021:Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Market
Value
Available-for-sale securities:
U.S. Treasury, short-term$4,222 $1 $— $4,223 
Asset-backed securities, short-term4,812 1 (2)4,811 
Corporate debt securities, short-term140,042 6 (25)140,023 
U.S. Treasury, long-term6,996 1 (2)6,995 
Foreign government and agency securities, long-term2,909 — (1)2,908 
Corporate debt securities, long-term38,184 3 (39)38,148 
Total$197,165 $12 $(69)$197,108 
 
September 30, 2020:CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Fair Market
Value
Available-for-sale securities:
U.S. Treasury, short-term$10,245 $38 $— $10,283 
Asset-backed securities, short-term4,723 36 — 4,759 
Corporate debt securities, short-term24,956 37 — 24,993 
Corporate debt securities, long-term1,966 — (3)1,963 
Total$41,890 $111 $(3)$41,998 
Fair Value Measurements and Disclosures
FASB ASC Topic 820, Fair Value Measurements (“ASC 820”) defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 describes a fair value hierarchy based on the following three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which consists of the following:
•Level 1—Quoted prices in active markets for identical assets or liabilities;
•Level 2—Inputs other than Level 1 inputs that are observable, either directly or indirectly, such as 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; and
•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following tables represent the fair value hierarchy of the Company’s investments and acquisition-related contingent consideration as of September 30, 2021 and 2020, respectively (amounts shown in thousands):
September 30, 2021: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$4,223 $4,223 $— $— 
Asset-backed securities4,811 — 4,811 — 
Corporate debt securities65,666 — 65,666 — 
Commercial paper74,357 — 74,357 — 
Total short-term investments at fair value149,057 4,223 144,834 — 
Long-term investments:
U.S. Treasury6,995 6,995 — — 
Foreign government and agency securities2,908 — 2,908 — 
Corporate debt securities38,148 — 38,148 — 
Total long-term investments at fair value48,051 6,995 41,056 — 
Convertible senior notes hedge48,208 — 48,208 — 
Total assets at fair value$245,316 $11,218 $234,098 $— 
Liabilities:
Current liabilities:
Acquisition-related contingent consideration$11,050 $— $— $11,050 
Non-current liabilities:
Acquisition-related contingent consideration5,720 — — 5,720 
Embedded conversion derivative48,208 — 48,208 — 
Total liabilities at fair value$64,978 $— $48,208 $16,770 
September 30, 2020: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$10,283 $10,283 $— $— 
Asset-backed securities4,759 — 4,759 — 
Corporate debt securities9,619 — 9,619 — 
Commercial paper15,374 — 15,374 — 
Total short-term investments at fair value40,035 10,283 29,752 — 
Long-term investments:
Corporate debt securities1,963 — 1,963 — 
Total long-term investments at fair value1,963 — 1,963 — 
Total assets at fair value$41,998 $10,283 $31,715 $— 
Liabilities:
Acquisition-related contingent consideration$753 $— $— $753 
Total liabilities at fair value$753 $— $— $753 
As of September 30, 2021, total acquisition-related contingent consideration related to the ID R&D Acquisition of $11.1 million is recorded in acquisition-related contingent consideration and $5.7 million is recorded in other non-current liabilities, in the consolidated balance sheets. The Company recorded the acquisition-date fair value based on the likelihood of contingent Earnout Payments, 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. The Company uses a Monte Carlo Simulation to estimate fair value of total contingent consideration. 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 NASDAQ to determine the fair value of the shares expected to be issued. The Company classified the contingent consideration as Level 3, due to the lack of relevant observable inputs and market activity. Changes in assumptions described above could have an impact on the payout of contingent consideration with a maximum payout being $22.1 million. The following table includes a summary of the contingent consideration measured at fair value using significant unobservable inputs (Level 3) during the twelve months ended September 30, 2021 (amounts shown in thousands):
 
Balance at September 30, 2020$753 
Contingent consideration associated with ID R&D Acquisition15,690 
Expenses recorded due to changes in fair value1,080 
Payment of contingent consideration associated with the ICAR acquisition(782)
Foreign currency effect on contingent consideration29 
Balance at September 30, 2021$16,770