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STOCKHOLDERS’ EQUITY
 12 Months Ended
Sep. 30, 2023
Equity [Abstract]  
STOCKHOLDERS' EQUITY
7. STOCKHOLDERS’ EQUITY
Stock-Based Compensation Expense
The following table summarizes stock-based compensation expense related to RSUs, stock options, and ESPP shares for the twelve months ended September 30, 2023, 2022, and 2021, which were allocated as follows (amounts in thousands):
202320222021
Cost of revenue$468 $289 $339 
Selling and marketing3,023 4,383 3,399 
Research and development2,757 3,701 3,218 
General and administrative4,215 4,973 4,576 
Stock-based compensation expense included in expenses
$10,463 $13,346 $11,532 
No options were granted in the twelve months ended September 30, 2023 or 2022. As of September 30, 2023, the Company had $20.3 million of unrecognized compensation expense related to outstanding stock options and RSUs expected to be recognized over a weighted-average period of approximately 2.3 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 September 30, 2023, (i) 1,834,474 RSUs and 730,393 performance-based restricted stock unit awards (“Performance RSUs”) were outstanding under the 2020 Plan, (ii) 1,425,042 shares of Common Stock were reserved for future grants under the 2020 Plan, and (iii) stock options to purchase an aggregate of 434,090 shares of Common Stock and 94,309 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 September 30, 2023, (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.
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 $0.3 million, $0.4 million and $0.6 million in stock-based compensation expense related to the ESPP during each of the twelve months ended September 30, 2023, 2022, and 2021, 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 September 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 twelve months ended September 30, 2023, 2022, and 2021:
Number of
Shares
Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual Term
(in years)
Aggregate Intrinsic Value (in thousands)
Outstanding at September 30, 20201,162,505 $7.51 6.1$6,081 
Granted— $— 
Exercised(329,878)$7.63 $2,670 
Canceled(15,910)$9.41 
Outstanding at September 30, 2021816,717 $7.42 5.8$9,046 
Granted— $— 
Exercised(35,625)$6.68 $279 
Canceled— $— 
Outstanding at September 30, 2022781,092 $7.46 3.7$1,512 
Granted— $— 
Exercised(98,952)$7.44 $338 
Canceled(30,871)$9.49 
Outstanding at September 30, 2023651,269 $7.37 3.6$2,185 
Vested and Expected to Vest at September 30, 2023651,269 $7.37 3.6$2,185 
Exercisable at September 30, 2023647,884 $7.35 3.6$2,181 
The Company recognized $0.4 million, $0.5 million, and $0.7 million in stock-based compensation expense related to outstanding stock options during the twelve months ended September 30, 2023, 2022, and 2021, respectively. As of September 30, 2023, the Company had $9,000 of unrecognized compensation expense related to outstanding stock options expected to be recognized over a weighted-average period of approximately 0.1 years.
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 twelve months ended September 30, 2023, 2022, or 2021.
Restricted Stock Units
The following table summarizes RSU activity under the Company’s equity plans during the twelve months ended September 30, 2023, 2022, and 2021:
Number of
Shares
Weighted-
Average
Fair Value
Per Share
Outstanding at September 30, 20202,661,943 $7.95 
Granted887,049 $13.35 
Settled(975,764)$7.64 
Canceled(161,961)$8.94 
Outstanding at September 30, 20212,411,267 $9.99 
Granted1,272,917 $14.43 
Settled(898,178)$9.57 
Canceled(344,329)$11.16 
Outstanding at September 30, 20222,441,677 $12.29 
Granted1,101,925 $10.24 
Settled(665,635)$11.33 
Canceled(689,671)$12.49 
Outstanding at September 30, 20232,188,296 $11.49 
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 $7.1 million, $9.4 million, and $8.1 million in stock-based compensation expense related to outstanding RSUs in the twelve months ended September 30, 2023, 2022, and 2021, respectively. As of September 30, 2023, the Company had $16.7 million of unrecognized compensation expense related to outstanding RSUs, which is expected to be recognized over a weighted-average period of approximately 2.5 years.
Performance Restricted Stock Units
The following table summarizes Performance RSU activity under the Company’s equity plans during the twelve months ended September 30, 2023, 2022, and 2021:
Number of
Shares
Weighted-
Average
Fair Market Value
Per Share
Outstanding at September 30, 2020353,556 $6.06 
Granted284,765 $11.84 
Settled(90,345)$6.06 
Canceled(19,252)$6.06 
Outstanding at September 30, 2021528,724 $9.17 
Granted629,279 $15.60 
Settled(176,864)$8.42 
Canceled(61,683)$13.51 
Outstanding at September 30, 2022919,456 $13.43 
Granted325,837 $10.23 
Settled(27,245)$9.25 
Canceled(487,655)$11.61 
Outstanding at September 30, 2023730,393 $13.37 
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 $2.7 million, $3.0 million, and $1.3 million in stock-based compensation expense related to outstanding Performance RSUs in the twelve months ended September 30, 2023, 2022, and 2021, respectively. As of September 30, 2023, the Company had $3.4 million of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 1.7 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 recognized $0.1 million and $0.8 million in stock-based compensation expense related to outstanding Performance Options in the twelve months ended September 30, 2022 and 2021, respectively. The Company did not recognize any stock-based compensation expense related to outstanding performance options for the twelve months ended September 30, 2023.
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 purchase during the twelve months ended September 30, 2023.
The Company made purchases of $14.8 million, or approximately 886,204 shares, during twelve months ended September 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.
Rights Agreement
On October 23, 2018, the Company entered into the Section 382 Rights Agreement (the “Rights Agreement”) and issued a dividend of one preferred share purchase right (a “Right”) for each share of Common Stock payable on November 2, 2018 to the stockholders of record of such shares on that date. Each Right entitles the registered holder, under certain circumstances, to purchase from the Company one one-thousandth of a share of Series B Junior Preferred Stock, par value $0.001 per share (the “Preferred Shares”), of the Company, at a price of $35.00 per one one-thousandth of a Preferred Share represented by a Right, subject to adjustment. The description and terms of the Rights are set forth in the Rights Agreement.
The Rights are not exercisable until the Distribution Date (as defined in the Rights Agreement). Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.
At any time prior to the time any person becomes an Acquiring Person (as defined in the Rights Agreement), the Board may redeem the Rights in whole, but not in part, at a price of $0.0001 per Right (the “Redemption Price”). The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.
On February 28, 2019, the Company entered into an Amendment No. 1 to the Rights Agreement for the purpose of (i) modifying the definitions of “Beneficial Owner,” “Beneficially Own,” and “Beneficial Ownership” under the Rights Agreement to more closely align such definitions to the actual and constructive ownership rules under Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”) or such similar provisions of the Tax Cuts and Jobs Act of 2017 and the rules and regulations promulgated thereunder, and (ii) adding an exemption request process for persons to seek an exemption from becoming an “Acquiring Person” under the Rights Agreement in the event such person wishes to acquire 4.9% or more of the Common Stock then outstanding.
The Rights expired on October 22, 2021 and no Rights were redeemed or exchanged.