# Mitek Systems Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [Mitek Systems Inc](/companies/mitk.md) (CIK 807863)
- Form: 10-Q
- Filed: 2025-05-08
- Accepted by EDGAR: May 8, 2025, 20:20 ET
- Period: 2025-03-31
- Accession: 0000807863-25-000092
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/807863/000080786325000092/mitk-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/807863/000080786325000092/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $51.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-10-01 to 2025-03-31 | $89.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $9.8m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2024-10-01 to 2025-03-31 | $18.1m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $11.4m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-10-01 to 2025-03-31 | $8.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $2.4m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2024-10-01 to 2025-03-31 | $4.8m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $916.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-10-01 to 2025-03-31 | $619.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $9.2m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-10-01 to 2025-03-31 | $4.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.20 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-10-01 to 2025-03-31 | $0.10 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.20 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-10-01 to 2025-03-31 | $0.10 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 46,610,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-10-01 to 2025-03-31 | 46,599,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-10-01 to 2025-03-31 | $14.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-10-01 to 2025-03-31 | $567.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2024-10-01 to 2025-03-31 | $3.3m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-03-31 | $104.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $203.9m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $425.3m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $195.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $205.1m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $220.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 50,087 characters.

*This Quarterly Report on Form 10-Q (this “Form 10-Q”), contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or they prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. The forward-looking statements are contained principally in this Item 2—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A—“Risk Factors,” but appear throughout this Form 10-Q. Forward-looking statements may include, but are not limited to, statements relating to our outlook or expectations for earnings, revenues, expenses, asset quality, volatility of our common stock, financial condition or other future financial or business performance, strategies, expectations, or business prospects, our customers, and markets generally, or the impact of legal, regulatory, or supervisory matters on our business, results of operations, or financial condition.*

*Forward-looking statements can be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target”, “will,” “would,” “could,” “can,” “may”, or similar expressions. Forward-looking statements reflect our judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part II, Item 1A—“Risk Factors” in this Form 10-Q and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the SEC on December 16, 2024 (“2024 Annual Report”). Additionally, there may be other factors that could preclude us from realizing the predictions made in the forward-looking statements. We operate in a continually changing business environment and new factors emerge from time to time. We cannot predict such factors or assess the impact, if any, of such factors on our financial position or results of operations. All forward-looking statements included in this Form 10-Q speak only as of the date of this Form 10-Q and you are cautioned not to place undue reliance on any such forward-looking statements. Except as required by law, we undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.*

*In this Form 10-Q, unless the context indicates otherwise, the terms “Mitek,” “the Company,” “we,” “us,” and “our” refer to Mitek Systems, Inc., a Delaware corporation and its subsidiaries.*

### Overview

Mitek Systems, Inc. (“Mitek,” the “Company,” “we,” “us,” and “our”) is a pioneer in mobile image capture and a global provider of solutions in the fraud prevention, digital identity verification, and cybersecurity markets. Our products address the increasing sophistication of fraud in areas such as new account openings, digital account access, and payments. Utilizing artificial intelligence, computer vision, and proprietary biometrics, our enterprise-grade verification tools protect organizations from escalating check fraud, ongoing account opening fraud, and new cyber threats such as deepfakes and voice clones.

Mitek’s Mobile Check Deposit product is trusted by consumers for its convenience and accuracy verifying checks for deposit, facilitating approximately 1.2 billion transactions annually. This solution powers secure, fast, and convenient deposit services for many organizations, enhancing consumer experience.

We serve over 7,900 financial services organizations, financial technology (“fintech”) brands, telecommunications companies, and marketplace brands globally. Our verification and fraud detection technology is embedded directly within mobile and web applications, providing seamless verification at every touchpoint in the customer lifecycle. By equipping banks, marketplaces, and fintech platforms with these tools, we help reduce the costs associated with fraud, impersonation, Know Your Customer (“KYC”) and anti-money laundering (“AML”) compliance. Additionally, our solutions improve the customer experience, help to ensure regulatory compliance, and lower operational costs.

### Second Quarter Fiscal 2025 Highlights

- 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.
- 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.
- 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.
- 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.

### Market Opportunities, Challenges & Risks

We believe that financial institutions, fintech platforms, and other companies see our patented solutions as a way to provide a superior digital customer experience to meet growing consumer demands of trust and convenience online and, at the same time, assist them in meeting regulatory requirements. The value of digital transformation to our customers is a possible increase in top line revenue and a reduction in the cost of sales and service. As the use of new technology increases, so does associated fraud and cyber-attacks. The negative outcomes of fraud and cyber-attacks encompass financial losses, brand damage, and loss of loyal customers, which we predict will lead to growth in demand for identity verification and sophisticated fraud detection, prevention and management products.

Factors adversely affecting the pricing of, or demand for, our digital solutions, such as competition from other products or technologies, any decline in the demand for digital transactions, the imposition of tariffs and other trade disputes, or negative publicity or obsolescence of the software environments in which our products operate, could result in lower revenues or gross margins. Further, because substantially all of our revenues are from a few types of technology, our product concentration may make us especially vulnerable to market demand and competition from other technologies, which could reduce our revenues.

The sales cycle for our software and services can be lengthy and the implementation cycles for our software and services by our channel partners and customers can also be lengthy, often as long as six months and sometimes longer for larger customers. If implementation of our products by our channel partners and customers is delayed or otherwise not completed, our business, financial condition, and results of operations may be adversely affected.

Revenues related to most of our on premise licenses for mobile products are required to be recognized up front upon satisfaction of all applicable revenue recognition criteria. Revenue related to our software as a service (“SaaS”) products is recognized ratably over the life of the contract or as transactions are used depending on the contract criteria. The recognition of future revenues from these licenses is dependent upon a number of factors, including, but not limited to, the term of our license agreements, the timing of implementation of our products by our channel partners and customers, and the timing of any re-orders of additional licenses and/or license renewals by our channel partners and customers.

During each of the last few years, sales of licenses to one or more channel partners have comprised a significant portion of our revenue each year. This is attributable to the timing of renewals or purchases of licenses and does not represent a dependence on any single channel partner. If we were to lose a channel partner relationship, we believe either we or another channel partner could sell our products to the end-users that had purchased products from the channel partner we lost. However, in that case, we or another channel partner must establish a relationship with the end-users, which could take time to develop.

We have a growing number of competitors in the mobile image capture and identity verification industry, many of which have greater financial, technical, marketing, and other resources. However, we believe our patented mobile image capture and identity verification technology, our growing portfolio of products and coverage for the financial services industry, and our market expertise gives us a distinct competitive advantage. To remain competitive, we will continue to offer products that are attractive to the consumer as well as being compliant, accurate, and convenient. To help us remain competitive, we intend to further our investment in research and development as well as partnering with other technology providers.

### Results of Operations

### Comparison of the Three Months Ended March 31, 2025 and 2024

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

| Revenue | Three Months Ended March 31, 2025 | 2024 | Percentage of Total Revenue 2025 | 2024 | Increase (Decrease) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Software and hardware | $26,700 | $24,889 | 51% | 53% | $1,811 | 7% |
| Services and other | 25,229 | 22,079 | 49% | 47% | 3,150 | 14% |
| Total revenue | $51,929 | $46,968 | 100% | 100% | $4,961 | 11% |
| Cost of revenue | 6,531 | 6,215 | 13% | 13% | 316 | 5% |
| Selling and marketing | 10,540 | 11,021 | 20% | 23% | (481) | (4)% |
| Research and development | 9,766 | 9,713 | 19% | 21% | 53 | 1% |
| General and administrative | 10,098 | 14,943 | 19% | 32% | (4,845) | (32)% |
| Amortization and acquisition-related costs | 3,600 | 3,848 | 7% | 8% | (248) | (6)% |
| Restructuring costs | 29 | 530 | —% | 1% | (501) | (95)% |
| Interest expense | 2,407 | 2,303 | 5% | 5% | 104 | 5% |
| Other income, net | 1,110 | 1,190 | 2% | 3% | (80) | (7)% |
| Income tax benefit (provision) | (916) | 697 | 2% | 1% | (1,613) | nm |
| Net income | $9,152 | $282 | 18% | 1% | $8,870 | nm |

nm - not meaningful

#### Revenue

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.

#### Cost of Revenue

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.

#### Selling and Marketing Expenses

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.

#### Research and Development Expenses

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.

#### General and Administrative Expenses

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.

#### Amortization and acquisition-related costs

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.

#### Restructuring Costs

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.

#### Interest Expense

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.

#### Other Income (Expense), Net

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.

#### Income Tax Benefit (Provision)

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.

### Comparison of the Six Months Ended March 31, 2025 and 2024

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):*

| Revenue | Six Months Ended March 31, 2025 | 2024 | Percentage of Total Revenue 2025 | 2024 | Increase (Decrease) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Software and hardware | $38,685 | $40,869 | 43% | 49% | $(2,184) | (5)% |
| Services and other | 50,498 | 43,016 | 57% | 51% | 7,482 | 17% |
| Total revenue | $89,183 | $83,885 | 100% | 100% | $5,298 | 6% |
| Cost of revenue | 12,475 | 11,749 | 14% | 14% | 726 | 6% |
| Selling and marketing | 20,235 | 20,877 | 23% | 25% | (642) | (3)% |
| Research and development | 18,089 | 18,587 | 20% | 22% | (498) | (3)% |
| General and administrative | 21,999 | 30,481 | 25% | 36% | (8,482) | (28)% |
| Amortization and acquisition-related costs | 7,257 | 7,831 | 8% | 9% | (574) | (7)% |
| Restructuring costs | 837 | 578 | 1% | 1% | 259 | 45% |
| Interest expense | 4,805 | 4,566 | 5% | 5% | 239 | 5% |
| Other income, net | 1,673 | 2,832 | 2% | 3% | (1,159) | (41)% |
| Income tax benefit (provision) | (619) | 2,441 | 1% | 3% | (3,060) | (125)% |
| Net income (loss) | $4,540 | $(5,511) | 5% | 7% | $10,051 | 182% |

#### Revenue

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.

#### Cost of Revenue

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.

#### Selling and Marketing Expenses

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.

#### Research and Development Expenses

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.

#### General and Administrative Expenses

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.

#### Amortization and acquisition-related costs

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.

#### Restructuring Costs

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.

#### Interest Expense

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.

#### Other Income (Expense), Net

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.

#### Income Tax Benefit (Provision)

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.

### Liquidity and Capital Resources

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):*

|  | Six Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Cash provided by (used in) operating activities | $14,308 | $(2,399) |
| Cash provided by investing activities | 460 | 27,384 |
| Cash used in financing activities | (3,093) | (3,015) |

#### Cash Flows from Operating Activities

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.

#### Cash Flows from Investing Activities

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.

#### Cash Flows from Financing Activities

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.

#### 0.75% Convertible Senior Notes due 2026

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

Form 10-Q”) with the SEC. The Company filed its 2023 Annual Report with the SEC on March 19, 2024 and its Q1 Form 10-Q with the SEC on April 15, 2024. As of March 31, 2025, the Company was in compliance with the covenants in the Indenture.

The net proceeds from this offering were approximately $149.7 million, after deducting the Initial Purchasers’ discounts and commissions and the Company’s estimated offering expenses related to the offering. The 2026 Notes will mature on February 1, 2026, unless earlier redeemed, repurchased or converted. The 2026 Notes bear interest from February 5, 2021 at a rate of 0.750% per year payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2021. The 2026 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding August 1, 2025, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021, if the last reported sale price per share of the Company’s Common Stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Common Stock on such trading day and the conversion rate on such trading day; and (3) upon the occurrence of certain corporate events or distributions on the Common Stock. On or after August 1, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of the 2026 Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. Upon conversion, the Company may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash and, if applicable at the Company’s election, shares of Common Stock, based on the applicable conversion rate(s); provided that the Company will be required to settle conversions solely in cash unless and until the Company (i) receives stockholder approval to increase the number of authorized shares of the Common Stock and (ii) reserves such amount of shares of the Common Stock for future issuance as required pursuant to the indenture that will govern the 2026 Notes. The conversion rate for the 2026 Notes will initially be 47.9731 shares of the Common Stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $20.85 per share of the Common Stock. The initial conversion price of the 2026 Notes represents a premium of approximately 37.5% to the $15.16 per share last reported sale price of the Common Stock on February 2, 2021. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture. The impact of the convertible feature will be dilutive to our earnings per share when our average stock price for the period is greater than the conversion price.

In connection with the issuance of the 2026 Notes, we entered into transactions for convertible notes hedge (the “Notes Hedge”) and warrants (the “Warrant Transactions”). The Notes Hedge was entered into with Bank of America, N.A., Jefferies International Limited and Goldman Sachs & Co. LLC, and provided the Company with the option to acquire, on a net settlement basis, approximately 7.4 million shares of Common Stock at a strike price of $20.85, which is equal to the number of shares of Common Stock that notionally underlie and corresponds to the conversion price of the 2026 Notes. The cost of the Notes Hedge was $33.2 million. The Notes Hedge will expire on February 1, 2026, equal to the maturity date of the 2026 Notes. The Notes Hedge is expected to reduce the potential equity dilution upon conversion of the 2026 Notes if the daily volume-weighted average price per share of our Common Stock exceeds the strike price of the Notes Hedge.

In addition, the Warrant Transactions provided us with the ability to acquire up to 7.4 million shares of our Common Stock. The Warrant Transactions will expire ratably during the 80 trading days commencing on and including May 1, 2026 and may be settled in net shares of Common Stock or net cash at the Company’s election. We received $23.9 million in cash proceeds from the Warrant Transactions. As a result of the Warrant Transactions, the Company is required to recognize incremental dilution of earnings per share to the extent the average share price is over $26.53 for any fiscal quarter.

As of May 8, 2025, the 2026 Notes were not convertible, therefore, we had not purchased any shares under the Notes Hedge and the Warrant Transactions had not been exercised and remain outstanding. See Note 8. “Debt” of the notes to condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for more information relating to the Notes Hedge and Warrant Transactions.

#### Revolving Credit Line

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.

The Revolving Line terminates, and any outstanding principal amount of all advances made thereunder, and any accrued and unpaid interest thereon, become immediately due and payable on the earlier of (a) the three year anniversary of the Closing Date and (b) the date that is within 90 days of the maturity date of the 2026 Notes if such notes are outstanding as of such date.

Borrowings under the 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. The Company must also pay the Bank (i) a commitment fee of $87,500 and (ii) an “Unused Revolving Line Facility Fee” of 0.25% per annum of the average unused portion of the Revolving Line.

The Credit Agreement contains representations, warranties, and negative and affirmative covenants customary for transactions of this type. These include covenants limiting the ability of the Company, and any of their subsidiaries, subject to certain exceptions and baskets, to, among other things, (i) incur indebtedness, (ii) incur liens on their assets, (iii) enter into any merger or consolidation with, or acquire all or substantially all of the equity or property of, another person, (iv) dispose of any of their business or property, (v) make or permit any payment on subordinated debt, or (vi) pay any dividend, make any other distribution, or redeem any equity.

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.

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.

#### Amended Credit Agreement

On May 7, 2025, the Company, together with its subsidiaries, A2iA Corp. and ID R&D, Inc., entered into the First Amendment to Loan and Security Agreement (the “Amendment”), amending the Credit Agreement, and as amended by the Amendment (the “Amended Credit Agreement”), by and among the Company and the Bank.

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.

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.

The Amended Credit Agreement contains representations, warranties, and negative and affirmative covenants customary for transactions of this type. These include covenants limiting the ability of Borrower, and any of their subsidiaries, subject to certain exceptions and baskets, to, among other things, (i) incur indebtedness, (ii) incur liens on their assets, (iii) enter into any merger or consolidation with, or acquire all or substantially all of the equity or property of, another person, (iv) dispose of any of their business or property, (v) make or permit any payment on subordinated debt, or (vi) pay any dividend, make any other distribution, or redeem any equity.

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 $0.5 million. 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 105% of any undrawn letters of credit denominated in U.S. Dollars or 115% of any undrawn letters of credit denominated in a foreign currency.

#### Other Borrowings

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

$2.4 million is recorded in other current liabilities and other non-current liabilities, respectively, in the condensed consolidated balance sheets.

#### Share Repurchase Program

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 our Common Stock. The share repurchase program was effective as of May 16, 2024 and will expire on May 16, 2026. The timing, price and actual number of shares of Common Stock repurchased will depend on a variety of factors including price, market conditions and corporate and regulatory requirements. The repurchases may be made from time (i) through open market purchases, block trades, privately negotiated transactions, one or more trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any combination of the foregoing, in each case in accordance with applicable laws, rules and regulations or (ii) in such other manner as will comply with the provisions of the Exchange Act. The share repurchase program does not require the Company to repurchase shares of its Common Stock and it may be discontinued, suspended or amended at any time.

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.

#### Other Liquidity Matters

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.

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.

### Changes in Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements and accompanying notes, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of the condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. We review our estimates on an on-going basis, including those related to revenue recognition, stock-based compensation, income taxes and the valuation of goodwill, intangibles and other long-lived assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. The critical accounting policies and estimates used in the preparation of our condensed consolidated financial statements are described in Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2024 Annual Report.

There have been no material changes to our critical accounting estimates from those disclosed in our 2024 Annual Report.

## Market risk

As filed, 3,478 characters.

For a complete discussion of the Company’s quantitative and qualitative disclosures about market risks, see the section titled Quantitative and Qualitative Disclosures About Market Risks in our 2024 Annual Report. Except as described below, there has been no material change in this information as of March 31, 2025.

#### Interest Rates

The primary objective of our investment activities is to preserve principal while at the same time maximizing after-tax yields without significantly increasing risk. To achieve this objective, we maintain our investment portfolio of cash equivalents and marketable securities in a variety of securities, including corporate debt securities, commercial paper, certificates of deposit, and asset-backed securities. We have not used derivative financial instruments in our investment portfolio, and none of our investments are held for trading or speculative purposes. Short-term and long-term debt securities are generally classified as available-for-sale and consequently are recorded on the condensed consolidated balance sheets at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income, net of estimated tax. As of March 31, 2025, our marketable securities had remaining maturities between approximately one and 22 months and a fair market value of $47.7 million, representing 11% of our total assets.

The fair value of our cash equivalents and debt securities is subject to change as a result of changes in market interest rates and investment risk related to the issuers’ credit worthiness. We do not utilize financial contracts to manage our investment portfolio’s exposure to changes in market interest rates. A hypothetical 100 basis point increase or decrease in market interest rates would not have a material impact on the fair value of our cash equivalents and debt securities due to the relatively short maturities of these investments. While changes in market interest rates may affect the fair value of our investment portfolio, any gains or losses will not be recognized in our results of operations unless the investment is sold prior to maturity or if the reduction in fair value was determined to be an other-than-temporary impairment.

#### Foreign Currency Risk

We have operations in the United Kingdom, France, the Netherlands, and Spain that are exposed to fluctuations in the foreign currency exchange rate between the U.S. dollar, the Euro, and the British pound sterling. The functional currency of our French, Dutch, and Spanish operations is the Euro and the functional currency of our United Kingdom operations is the British pound sterling. Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Translation adjustments resulting from translating the functional currency financial statements into U.S. dollar equivalents are reported separately in the condensed consolidated statements of operations and comprehensive income (loss).

#### Inflation

We do not believe that inflation had a material effect on our business, financial condition or results of operations during either of the six months ended March 31, 2025 or 2024. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

## Controls and procedures

As filed, 7,415 characters.

### Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in *Internal Control – Integrated Framework (2013)*. We recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as March 31, 2025 due to the previously reported material weaknesses at September 30, 2024, that continued to exist.

Notwithstanding the identified material weaknesses, management believes the condensed consolidated financial statements included in this Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations and cash flows as of and for the periods presented, in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

### Remediation of Previously Reported Material Weaknesses in Internal Control Over Financial Reporting

As previously reported in our 2024 Annual Report, the Company identified material weaknesses which continued to exist related to the following:

- Management did not maintain effective controls related to the financial statement close process to ensure the completeness and accuracy of certain amounts and disclosures, specifically related to balance sheet account reconciliations and the Company’s review and preparation of the consolidation and financial statements.
- Management did not design and maintain effective controls to ensure proper revenue recognition, including the accounting review of customer contracts.
- Management did not perform sufficient risk assessment procedures in order to design and implement effective controls, including consideration of improper segregation of duties, for substantially all of the Company's financial statement areas.
- Management did not design or maintain controls to verify the completeness and accuracy of information used by control owners in the operation of controls across substantially all of the Company’s financial statement areas.
- Management did not maintain sufficient evidence of the operation of certain management review controls and activity level controls across substantially all of the Company's financial statement areas.

### Remediation Plan, and ongoing Remediation Efforts for Existing Material Weaknesses in Internal Control over Financial Reporting

With respect to the material weaknesses mentioned above, we have designed and continue to implement a plan to address these material weaknesses in internal control over financial reporting. We have devoted and intend to continue to devote significant time and resources to enhance the design and implementation of our existing controls and procedures and to create new complementary and compensating controls as needed.

The material weaknesses remediated as of September 30, 2024 are, in some respects, prerequisites to the steps required to fully remediate the remaining material weaknesses. Ensuring we have a robust and comprehensive risk assessment process, as well as ensuring effective information technology general controls are critical to ensuring we can fully remediate the remaining material weaknesses.

We have enhanced the execution of financial statement close controls as follows:

- Implemented standard templates and processes to ensure consistency across all legal entities;
- Deployed a close management tool in fiscal year 2025 to ensure completeness and accuracy of all reconciliations and procedures; and
- Conducted training sessions with control owners to emphasize the necessary steps to achieve compliance with the Sarbanes-Oxley Act of 2002 and to reinforce a strong tone at the top and control owner accountability.

With respect to segregation of duties controls, completeness and accuracy of information controls and management review controls, we have further enhanced the execution of these controls as follows:

- Designed, implemented and tested new user roles to mitigate systemic system issues; and
- Documented completeness and accuracy of all inputs, and information produced by the entity.

With respect to revenue recognition controls, we are further enhancing revenue recognition controls as follows:

- Created cross functional working groups to help ensure all key contract terms are identified and accurately input into our information systems;
- Identifying and implementing systems for order-to-cash management and billing to eliminate reliance on manual processes and spreadsheets; and
- Designed and implemented a new monthly process to verify completeness of revenue recognized each quarter.

The Company is committed to remediating the material weaknesses and continues to make progress, each quarter, to that effort. The actions the Company has taken are subject to ongoing senior management review, as well as oversight from the Company’s Audit

Committee. When fully implemented and operational, the Company believes the measures described above will remediate the underlying causes of the control deficiencies that gave rise to the material weaknesses and strengthen the Company’s internal control over financial reporting. These remediation efforts are in process as of the fiscal quarter ended March 31, 2025. The Company will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time. The Company may also identify additional measures that may be required to remediate the material weaknesses in the Company’s internal control over financial reporting, necessitating further action.

### Changes in Internal Control over Financial Reporting

The Company has implemented processes and procedures to remediate the material weaknesses noted above. Except as described above, there have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### PART II

### OTHER INFORMATION

## Risk factors

As filed, 664 characters.

While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Item 1A—“Risk Factors” in our 2024 Annual Report describes some of the risks and uncertainties associated with our business, which we strongly encourage you to review. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects. There have been no material changes in our risk factors from those disclosed in our 2024 Annual Report.

Filed May 8, 2025.
Source: SEC EDGAR, the filing index for accession 0000807863-25-000092. Last ingested by Listed: Oct 24, 2026, 14:57 ET. No prices; not investment advice.