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STOCKHOLDERS’ EQUITY
 9 Months Ended
Jun. 30, 2023
Equity [Abstract]  
STOCKHOLDERS’ EQUITY
7. 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 June 30,Nine Months Ended June 30,
 2023202220232022
Cost of revenue$124 $82 $316 $249 
Selling and marketing885 1,273 2,423 3,351 
Research and development644 1,071 2,097 2,875 
General and administrative991 1,262 2,954 3,642 
Stock-based compensation expense included in expenses
$2,644 $3,688 $7,790 $10,117 
No options were granted in either of the nine months ended June 30, 2023 or 2022. As of June 30, 2023, the Company had $22.7 million of unrecognized compensation expense related to outstanding stock options and RSUs 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 June 30, 2023, (i) 2,503,543 RSUs and 808,446 performance-based restricted stock unit awards (“Performance RSUs”) were outstanding under the 2020 Plan, (ii) 1,193,194 shares of Common Stock were reserved for future grants under the 2020 Plan, and (iii) stock options to purchase an aggregate of 435,240 shares of Common Stock and 102,900 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 June 30, 2023, (i) 679,364 shares have been issued to participants pursuant to the ESPP and (ii) 320,636 shares of Common Stock were reserved for future purchases under the ESPP. The Company commenced the initial offering period on April 2, 2018.
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). The Company recognized $0.1 million in stock-based compensation expense related to the ESPP in each of the three months ended June 30, 2023 and 2022. The Company recognized $0.2 million and $0.4 million in stock-based compensation expense related to the ESPP in the nine months ended June 30, 2023 and 2022, 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 June 30, 2023, (i) 259,513 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 nine months ended June 30, 2023:
Number of
Shares
Weighted-Average
Exercise Price
Weighted-Average
Remaining
Contractual Term
(in years)
Aggregate Intrinsic Value
(in thousands)
Outstanding at September 30, 2022781,092 $7.46 3.7$1,512 
Granted— $— 
Exercised(97,802)$7.49 
Canceled(30,871)$9.49 
Outstanding at June 30, 2023652,419 $7.36 4.52,273 
Vested and Expected to Vest at June 30, 2023652,419 $7.36 4.52,273 
Exercisable at June 30, 2023643,018 $7.32 4.52,261 
The Company recognized $29,000 and $0.1 million in stock-based compensation expense related to outstanding stock options during the three months ended June 30, 2023 and 2022, respectively. The Company recognized $0.1 million and $0.4 million in stock-based compensation expense related to outstanding stock options during the nine months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, 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. The total intrinsic value of options exercised during the nine months ended June 30, 2023 and 2022 was $0.7 million and $0.3 million, respectively. There were no options granted during either of the nine months ended June 30, 2023 or 2022.
Restricted Stock Units
The following table summarizes RSU activity under the Company’s equity plans during the nine months ended June 30, 2023:
 
Number of
Shares
Weighted-Average
Fair Market Value
Per Share
Outstanding at September 30, 20222,441,677 $12.29 
Granted929,268 10.04 
Settled(633,364)11.37 
Canceled(610,230)12.57 
Outstanding at June 30, 20232,127,351 11.50 
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 $1.9 million and $2.5 million in stock-based compensation expense related to outstanding RSUs in the three months ended June 30, 2023 and 2022, respectively. The Company recognized $5.4 million and $7.1 million in stock-based compensation expense related to outstanding RSUs during the nine months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, the Company had $17.5 million of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 2.6 years.
Performance Restricted Stock Units
The following table summarizes Performance RSU activity under the Company’s equity plans during the nine months ended June 30, 2023:
 
Number of
Shares
Weighted-Average
Fair Market Value
Per Share
Outstanding at September 30, 2022919,456 $13.43 
Granted325,837 10.23 
Settled(24,723)9.21 
Canceled(241,008)13.20 
Outstanding at June 30, 2023979,562 12.53 
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 $0.6 million and $0.9 million in stock-based compensation expense related to outstanding Performance RSUs in the three months ended June 30, 2023 and 2022, respectively. The Company recognized $2.0 million and $2.1 million in stock-based compensation expense related to outstanding Performance RSUs during the nine months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, the Company had $5.0 million of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 1.9 years.
Performance Options
On November 6, 2018, as an inducement grant pursuant to Nasdaq Listing Rule 5635(c)(4), the Company’s Chief Executive Officer was granted performance options (the “Performance Options”) to purchase up to 800,000 shares of Common Stock at an exercise price of $9.50 per share, the closing market price for a share of Common Stock on the date of the grant. During the fiscal year ended September 30, 2021, the performance conditions were achieved. In November 2021, the time vesting condition was met and the performance options vested in full. The Company did not recognize any stock-based compensation expense related to outstanding Performance Options in either of the three months ended June 30, 2023 or 2022. The Company did not recognize any stock-based compensation expense related to outstanding performance options for the nine months ended June 30, 2023 and recognized $0.1 million during the nine months ended June 30, 2022.
Share Repurchase Program
On June 15, 2021, the Board authorized and approved a share repurchase program for up to $15 million of the currently outstanding shares of our Common Stock. The share repurchase program was completed during the second quarter of fiscal 2022 and as such the Company made no purchases during the three months ended June 30, 2023. The Company made purchases of $14.8 million, or approximately 886,204 shares, during the nine months ended June 30, 2022 at an average price of $16.73 per share and subsequently retired the shares. The share repurchase program expired on June 30, 2022 and as such no purchases were made after this date. The timing, price and volume of repurchases were based on market conditions, relevant securities laws and other factors. The repurchases were made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions or pursuant to a share repurchase trading plan.